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

The

• f health

expenditure profiles

• Dr. Florian Buchner, Munich Re

IAAHS Colloquium, 27-29 April 2004

2 The steeping of health expenditure profiles Munich Re

Contents

• Introduction
• Data
• Methods
• Results
• Prognosis
• Discussion

3 The steeping of health expenditure profiles Munich Re

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”:

Introduction

Expenditure profiles of total expenditure 1996

(including pharmaceuticals, inpatient, outpatient and dental care)

Age group Per capita expenditure in DM

4 The steeping of health expenditure profiles Munich Re

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

Introduction

5 The steeping of health expenditure profiles Munich Re

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

Data and study design

6 The steeping of health expenditure profiles Munich Re

1979 1982 1985 1988 1991 1994 1000 2000 3000 4000 5000 6000 7000 8000

Expenditure profiles from 1979 to 1996 (Plan: INPATIENT, Gender: Male)

Annual per capita ex- penditure (DM) Age Year of

• bservation

7 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.

8 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 Age-ratio PCE Per capita expenditure

65 65 65

PCE / PCE AR

< +

=

9 The steeping of health expenditure profiles Munich Re

Results: Age cut method

Plan: INPATIENT G: Male

Year

1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979

AR65

7,0 6,5 6,0 5,5 5,0 4,5 4,0

10 The steeping of health expenditure profiles Munich Re

Comparison of the linear slope of per capita expenditure in the different age groups* For each age group PCEY 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)

1979) (Y * b a PCE / PCE

Y 7 Y

− + =

Method 2: Age group specific expenditure increase

11 The steeping of health expenditure profiles Munich Re

Results: Age group specific expenditure increase

7 8 9 10 11 12 13 14 15 16

Plan: INPATIENT G: Male

Age group 7 8 9 10 11 12 13 14 15 16 Annual growth rate b

0,5 0,4 0,3 0,2 0,1 0,0

• 0,1

35-39 years 40-44 years 50-54 years 45-49 years 55-59 years 30-34 years 60-64 years 65-69 years 70-74 years 75-79 years

12 The steeping of health expenditure profiles Munich Re

Time trend in parameters of nonlinear exponential modelling

• f expenditure profiles*

For each year Y 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)

( )

AG * b exp a /PCE PCE

7 AG

+ =

Method 3: Exponential profile modelling

13 The steeping of health expenditure profiles Munich Re

1979

2 4 6 8 10 12 7 8 9 10 11 12 13 14 15 16 age group standardised per capita expenditure approximation

• riginal data

1996

5 10 15 20 7 8 9 10 11 12 13 14 15 16 age group standardised per capita expenditure approximation

• riginal data

Approximation of expenditure profiles

(inpatient plan, men)

Method 3: Exponential profile modelling

14 The steeping of health expenditure profiles Munich Re

Results: Exponential profile modelling

PLAN: INPATIENT G: M

year

1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979

Value b

,19 ,18 ,17 ,16 ,15

15 The steeping of health expenditure profiles Munich Re

Results

General: Steeping in most of the examined plans in the period of

• bservation 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)

16 The steeping of health expenditure profiles Munich Re

Additional results

Health plans of men seem to show stronger "steeping" than those

• f women, inpatient plans show stronger “steeping” than
• utpatient plans – but comparison of the steeping in different

health plans is methodologically very difficult

Additional results Consequences

What does this mean for future development of health care costs?

17 The steeping of health expenditure profiles Munich Re men

5 10 15 20 25

7 8 9 10 11 12 13 14 15 16

age groups

profile 1996 prognosed profile 2010 prognosed profile 2040 Forecasted standardised profiles

Prognosis

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

Prognosis

19 The steeping of health expenditure profiles Munich Re

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

Discussion: Generalization of the results

20 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

Thank you for your attention!

• Dr. Florian Buchner

Münchener Rück Munich Re Group

Back up

23 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

24 The steeping of health expenditure profiles Munich Re

Steeping in HCFA-Medicare-data (without Medicaid)

25 The steeping of health expenditure profiles Munich Re

Division of expenditure profile for insured in last year

• f life and not in last year of life

Division of expenditure profile (male)

3000 6000 9000 12000 15000 90- 80-89 70-79 60-69 50-59 40-49 30-39 20-29 10-19 0-9 dying insured living insured 2000 total