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Age, morbidity, or something else? A residual approach using microdata to measure the impact of technological progress on health care expenditure

Mauro Laudicella (), Paolo Di Donni (), Kim Rose Olsen () and Dorte Gyrd-Hansen ()
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Paolo Di Donni: University of Palermo, Economics Department & University of Southern Denmark, DaCHE, Postal: DaCHE - Danish Centre for Health Economics, Institut for Sundhedstjenesteforskning, Syddansk Universitet, J.B. Winsløws Vej 9B, 2. sal, DK-5000 Odense, Denmark
Kim Rose Olsen: University of Southern Denmark, DaCHE - Danish Centre for Health Economics, Postal: DaCHE - Danish Centre for Health Economics, Institut for Sundhedstjenesteforskning, Syddansk Universitet, J.B. Winsløws Vej 9B, 2. sal, DK-5000 Odense, Denmark

No 2020:4, DaCHE discussion papers from University of Southern Denmark, Dache - Danish Centre for Health Economics

Abstract: This study measures the increment of health care expenditure (HCE) that can be attributed to technological progress and change in medical practice by using a residual approach and microdata. We examine repeated cross-sections of individuals experiencing an initial health shock at different point in time over a ten-year window and capture the impact of unobservable technology and medical practice to which they are exposed after allowing for differences in health and socioeconomic characteristics. We decompose the residual increment in the part that is due to the effect of delaying time to death, i.e. individuals surviving longer after a health shock and thus contributing longer to the demand of care, and the part that is due to increasing intensity of resource use, i.e. the basket of services becoming more expensive to allow for the cost of innovation. We use data from the Danish National Health System that offers universal coverage and is free of charge at the point of access. We find that technological progress and change in medical practice can explain about 60% of the increment of HCE, in line with macroeconomic studies that traditionally investigate this subject.

Keywords: Health care expenditure; Time-to-death; Ageing; Morbidity; Technological impact (search for similar items in EconPapers)
JEL-codes: H51 I18 O33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2020-12-15
New Economics Papers: this item is included in nep-age, nep-eur and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sduhec:2020_004

DOI: 10.21996/9e6k-ad27

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