Working Paper

The effects of technology on the age distribution of health spending: a cross-country perspective

Abstract: The conventional method used to project a country's future health care expenditures is to assume that relative health spending by age remains constant. This method has been criticized as being too pessimistic, on the one hand, because of continued improvements in the health status of older people, and as too optimistic, on the other, because of the effects of technological innovations on increasing health spending on the elderly relative to the nonelderly. This paper uses cross-country data to shed light on this question. I find that, contrary to conventional wisdom, the theoretical effects of technology on health spending are to decrease the concentration of health spending on the elderly. Empirically, I find that relative health spending by age has been quite stable over time. I also find that countries with the most technologically intensive health sectors spend relatively less on the oldest old compared to the younger old.

Keywords: Medical care, Cost of; Population;

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2004

Number: 2004-14