Age, morbidity, or something else? A residual approach using microdata to measure the impact of technological progress on health care expenditure
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The ESRI organises a public seminar series, inviting researchers from both the ESRI and other institutions to present new research on a variety of public policy issues. The seminar series provides access to specialised knowledge and new research methodologies, with the objective of promoting research excellence and facilitating productive dialogue across the policy and research fields.
Mauro Laudicella, University of Southern Denmark.
'Age, morbidity, or something else? A residual approach using microdata to measure the impact of technological progress on health care expenditure' by Mauro Laudicella, Paolo Li Donni, Kim Rose Olsen, Dorte Gyrd-Hansen
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.