The of health expenditure profiles Dr. Florian Buchner, Munich Re - PowerPoint PPT Presentation

The of health expenditure profiles Dr. Florian Buchner, Munich Re IAAHS Colloquium, 27-29 April 2004

The steeping of health expenditure profiles Munich Re Contents • Introduction • Data • Methods • Results • Prognosis • Discussion 2

The steeping of health expenditure profiles Munich Re Introduction Health care expenditure per capita for elderly people are a lot higher than per capita expenditures for younger people. We call this correlation of average per capita expenditure and age “expenditure profiles”: Expenditure profiles of total expenditure 1996 (including pharmaceuticals, inpatient, outpatient and dental care) 25000 Per capita expenditure in DM 20000 Men 15000 Women 10000 5000 0 0 0-4 5-9 15-19 20-24 35-39 80-84 90-94 95- 10-14 25-29 30-34 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 85-89 Age group 3

The steeping of health expenditure profiles Munich Re Introduction Research Question: Does per capita health expenditure of the elderly grow faster than per capita health expenditure of young people? Steeping-Hypothesis: Health care expenditure for the elderly grows faster than for younger people, so the expenditure profiles become “steeper”, we created the term “steeping” for this phenomenon Consequences: Steeping has high impact on future health care costs, prognosis has to include this trend 4

The steeping of health expenditure profiles Munich Re Data and study design Claims data of the largest German private health insurer DKV – covering a period of 18 years 1979-1996 – Various insurance plans for inpatient, outpatient services, and supplementary insurance plans – 5-year age-groups from 30 – 79 years Retrospective study design Expenditure profiles built by a year-approach In the charts of this presentation the data of the inpatient plan for men are used 5

The steeping of health expenditure profiles Munich Re Expenditure profiles from 1979 to 1996 (Plan: INPATIENT, Gender: Male) 8000 7000 Annual 6000 per capita ex- 5000 penditure 4000 (DM) 3000 2000 1000 1994 1991 1988 0 1985 1982 Year of 1979 Age observation 6

The steeping of health expenditure profiles Munich Re Methods Three instruments for measuring the phenomenon of “steeping” were developed • Age cut method • Age group specific expenditure increase • Exponential profile modelling The results of the three methods are illustrated for the data of the inpatient plan for men. 7

The steeping of health expenditure profiles Munich Re Method 1: Age cut method Time trend of the simple relation between per capita expenditure of the old to the young (cut-point at the age of 65 years) = AR PCE / PCE + < 65 65 65 AR Age-ratio PCE Per capita expenditure 8

The steeping of health expenditure profiles Munich Re Results: Age cut method Plan: INPATIENT G: Male 7,0 6,5 6,0 AR 65 5,5 5,0 4,5 4,0 1979 1981 1983 1985 1987 1989 1991 1993 1995 1980 1982 1984 1986 1988 1990 1992 1994 1996 Year 9

The steeping of health expenditure profiles Munich Re Method 2: Age group specific expenditure increase Comparison of the linear slope of per capita expenditure in the different age groups* For each age group = + − Y Y PCE / PCE a b * (Y 1979) 7 PCE Y Per capita expenditure in Year Y Y Year of observation * To exclude the influence of inflation on the results of these methods the expenditure profiles were standardised on the base of the youngest age group used (AG 7: 30-34 years) 10

The steeping of health expenditure profiles Munich Re Results: Age group specific expenditure increase Plan: INPATIENT G: Male 0,5 0,4 0,3 Annual growth 0,2 rate b 0,1 0,0 -0,1 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 years years years years years years years years years years Age group 7 8 9 10 11 12 13 14 15 16 7 8 9 10 11 12 13 14 15 16 11

The steeping of health expenditure profiles Munich Re Method 3: Exponential profile modelling Time trend in parameters of nonlinear exponential modelling of expenditure profiles* For each year Y ( ) = + PCE /PCE a exp b * AG AG 7 PCE Per capita expenditure AG Age-group (7 to 16) * For excluding the influence of inflation on the results of these methods the expenditure profiles were standardised on the base of the youngest age group used (AG 7: 30-34 years) 12

The steeping of health expenditure profiles Munich Re Method 3: Exponential profile modelling Approximation of expenditure profiles (inpatient plan, men) 1979 1996 12 20 approximation approximation capita expenditure standardised per 10 capita expenditure standardised per original data original data 15 8 6 10 4 5 2 0 0 7 8 9 10 11 12 13 14 15 16 7 8 9 10 11 12 13 14 15 16 age group age group 13

The steeping of health expenditure profiles Munich Re Results: Exponential profile modelling PLAN: INPATIENT G: M ,19 ,18 ,17 ,16 Value b ,15 1979 1981 1983 1985 1987 1989 1991 1993 1995 1980 1982 1984 1986 1988 1990 1992 1994 1996 year 14

The steeping of health expenditure profiles Munich Re Results General: Steeping in most of the examined plans in the period of observation with all three methods Steeping can be observed in all types of health plans analysed • for voluntarily insured • for civil servants • for the insured of the public system (supplementary health plans) 15

The steeping of health expenditure profiles Munich Re Additional results Additional results Health plans of men seem to show stronger "steeping" than those of women, inpatient plans show stronger “steeping” than outpatient plans – but comparison of the steeping in different health plans is methodologically very difficult Consequences What does this mean for future development of health care costs? 16

The steeping of health expenditure profiles Munich Re Prognosis Forecasted standardised profiles men 25 profile 1996 20 prognosed profile 2010 15 prognosed profile 2040 10 5 0 7 8 9 10 11 12 13 14 15 16 age groups 17

The steeping of health expenditure profiles Munich Re Prognosis increase in increase in increase in total expenditure per capita exp. contribution rate in % in % in % of income 2010 whole effect 30% 31% 2,9% pure steeping effect 15% 15% 2,0% Pure demographic 13% 14% 0,9% effect 2040 whole effect 92% 128% 12,9% pure steeping effect 57% 57% 7,6% pure demographic 23% 46% 3,4% effect 18

The steeping of health expenditure profiles Munich Re Discussion: Generalization of the results Applying the three described methods for data of the association of private health insurance results are similar to the results of DKV data presented Similar trend of the “age-ratio” ("pensioners" to "non- pensioners") in the public health insurance system 2,00 1,80 1,60 1,40 1,20 age-ratio 1,00 0,80 0,60 0,40 0,20 0,00 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 year 19

The steeping of health expenditure profiles Munich Re Discussion: Reasons and consequences Because of the given structure of data, detailed research of causes of “steeping” is not possible. Potential effects which may have caused steeping: • Change in the patterns of morbidity • Increasing share of elderly living in single-person households • Financial effect of medical innovations stronger among the elderly Paradox of steeping in a pay as you go system • each generation will be winning • contract of generations is undermined 20

Thank you for your attention! Dr. Florian Buchner Münchener Rück Munich Re Group

Back up

The steeping of health expenditure profiles Munich Re Sample size in the main health plans health plan men women sum OUTPATIENT1 31.561 15.097 46.658 OUTPATIENT2 17.778 9.306 27.084 INPATIENT 131.251 56.582 187.833 SUPPLEMENTARY 265.496 364.044 629.540 23

The steeping of health expenditure profiles Munich Re Steeping in HCFA-Medicare-data (without Medicaid) 24

The steeping of health expenditure profiles Munich Re Division of expenditure profile for insured in last year of life and not in last year of life Division of expenditure profile (male) 15000 dying insured 12000 living insured 2000 total 9000 6000 3000 0 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90- 25