Health Care System in the Industrialised Countries and the Role of Private Insurance

Compared with the past, in the future population ageing is expected to accelerate, mainly because of the progressive ageing of the post-war generation (the so-called baby boomers), a period characterized by high birth rates. Therefore, problems due to demographic development are likely to worsen.
The shift of population toward older age groups will imply more treatments, as evidenced by the fact that health care spending grows as people get older The morbidity rate trends illustrated above, as well as medical technology costs and the income elasticity of demand for health services will have an impact on health care expenditure. Since these phenomena seem to be interconnected, expenditure trends are hard to project.
The Economic Policy Committee established a Working Group on Ageing Population (AWG) to examine the long-term consequences of population ageing on social security costs. This group has formulated new projections concerning health expenditure until 2050 in the above-mentioned scenarios.
The rather prudent AWG reference scenario takes into account the combined effects of the health care status of the population, demographics and the income elasticity of demand for health care. The projections show an intermediate scenario, half-way between the ‘pure ageing’ and the ‘constant health’ scenario.
In most of the expenditure projections submitted by the different countries, a distinction is made between health and long-term care expenditure. Public health expenditure has increased from 4.9% to 6.2% for EU-10. In general, all countries have witnessed a rise in growth, with France recording the highest growth (9.5% in 2050). In Eastern countries expenditure is lower though significantly increasing. Long-term care increases more in countries like Denmark, the Netherlands, Sweden and Finland, where coverage is state-run. Indeed, Sweden has the highest costs going from 3.8% in 2004 to 5.5% in 2050. Presumably, the same occurs in Germany, but no projections have been made for welfare costs. The increase in health care and long-term care ranges from 1.7% to 3.9% of GDP in the different countries, and in 2050 is expected to range from 7.3% to 13.2% for Italy and Sweden respectively.
Furthermore, total health expenditure of EU-10 is 2% lower than expenditure in EU-15, although it is on the rise. In 2050, the Czech Republic is expected to have a 2.4% increase in total expenditure and Slovenia almost 3%. Overall, the assistance expenditure will increase from 7.3% to 9.4% of GDP.

Table 2: Projections of gross public health expenditure as a share of GDP (AWG Scenario)
Fonte: OECD.

The OECD (2006) has formulated its own projections on health care spending, but its conceptual approach differs from that of the AWG working group. Projections are based on the split of the expenditure increasing factors (demography, increase in income, technology, etc.) Alternative scenarios are simulated, notably a ‘cost pressures’ scenario — when policies are not effective in controlling expenditure growth — and a cost-containment scenario. Results referring to the most important European countries for the period between 2005 and 2050 show the same increase in spending (thus confirming the results obtained by AWG).
To conclude, although differing, the projections on health care spending represent an important contribution to the development of a health care policy by the National Governments. In a scenario characterized by ongoing improvements in medical technology, population ageing and by the increase of citizens’ expectations vis-à-vis health, health care spending as a share of produced wealth. Governments will try to cope with such an increase by adopting policies focusing on prevention, efficient provision of health services and monitoring of the demand.

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