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New insights on predicting future health care expenditures

Datum:28 november 2017
Dan Howdon
Dan Howdon

How can we predict future health care expenditures? The research of dr. Dan Howdon, a Postdoc in Health Economics at the Faculty of Economics and Business of the University of Groningen, sheds a new light on this complex matter. The paper that he wrote about his findings, together with prof. dr. Nigel Rice from the University of York, recently got accepted at the Journal of Health Economics (JHE). Their work will hopefully going to be a useful pointer to budget-setting in health services, and to the projection of future healthcare costs. Read more about their new insights in this article.

Explaining health care expenditures
Working out how much we will need to spend in future on our health system, and working out how much to allocate to health budgets across the country, are not simple matters and require that we are able to correctly explain existing patterns of health care expenditures. In order to so, the research of Howdon and Rice uses English administrative data about people who have spent time in hospital to incorporate individual-level morbidity as well as age and time-to-death, to explain why health care expenditure varies from one person to another.

Howdon and Rice find that time-to-death indeed better explains health care expenditures than does age. However, time-to-death is less useful for forward planning or forecasting health care expenditures, because a person’s future time-to-death is unknown. Therefore it is important that their findings also show that the role played by time-to-death can be explained by available measures of morbidity.

Including morbity in models of health care expenditures
The results of Howdon and Rice strengthen the need to include detailed measures of morbidity in models of health care expenditures. Just including time-to-death is insufficient in models explaining health care expenditures. If we are to forecast accurately how much money the health system needs, we need to take account of the health problems that people suffer. This is important to allow the planning of future resource requirements and in developing appropriate models for budgets to be allocated fairly.

Publication in Journal of Health Economics
The paper of Howdon and Rice on health care expenditures will be published in the Journal of Health Economics (JHE) in January 2018. JHE publishes articles related to the economics of health and medical care. Articles need to make a significant contribution to the theoretical and/or methodological literature on the subject and contain a strong economics component. Howdon and Rice are very pleased to have their paper published in JHE, which is generally regarded as the leading journal in Health Economics, and it’s a culmination of nearly five years of work.

> Read the summary of Howdon and Rice’s research paper
> Read the full paper Health care expenditures, age, proximity to death and morbidity: Implications for an ageing population in the Journal of Health Economics

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