Abstract
The difficulties in financing healthcare in Sweden will increase in the future. Based on simulations with a dynamic micro-simulation model (SESIM), where individual healthcare expenditure is a function of inter alia health status, we expect a 30% increase between 2000 and 2040 in the total number of bed days for the whole population, due mainly to an increasing population of the oldest old. Hence, the ageing of the population is not just an issue of shifting the cost of dying to older ages. At the same time, the development of new technologies and the way these are disseminated across patient groups will continue to raise the cost of high-quality care. While there is likely to be some scope for greater efficiency on the supply side, changes in the institutional structure are unlikely to be drastic and even drastic policies may have relatively little to offer in practice. Explicitly giving low priority to elderly patients in the way implied by straightforward QALY calculations or the “fair innings” argument will hardly be accepted by Swedes in general. Hence, in the absence of politicians with the impact of someone like Alexander the Great, the future seems to have in store longer queues, greater reliance on private insurance, and political equivocation.
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Notes
- 1.
There is some literature showing that health status, i.e. ill health – maybe not totally surprisingly – is the most important factor determining the demand for inpatient care; see, for instance, Cameron et al. (1988), Nolan (1993), Gerdtham (1997), Holly et al. (1998), Harmon and Nolan (2001), Gravelle et al. (2003), Iversen and Kopperud (2003), Höfter (2006), and Bolin et al. (2008b). There is a corresponding literature focusing on physician visits. Bolin et al. (2009), using individual data from ten European countries, show, for instance that individual health status explains 50% of the difference in the number of physician visits.
- 2.
As a matter of fact, most public services in Sweden, excluding defense, law and order, fall under the responsibility of either the county councils or the municipalities, whereas the central-government budget (including social insurance) includes most of the transfer payments. Healthcare accounts for ∼85% of county council expenditures on average, the remaining 15% mainly being financial support to local theatres, concert halls, museums, and local public transport. Healthcare (for elderly suffering from long-standing illness) accounts for roughly 5 percent of municipality expenditures; main responsibilities are primary and secondary education and social services for all ages.
- 3.
The objective of the Swedish healthcare system is to “provide good health and healthcare on equal terms for the entire population regardless of where a person lives, and regardless of his or her income” (Swedish Healthcare Act 1982, SFS 1982, p. 763).
- 4.
Capitation payment denotes a reimbursement system where a provider of healthcare (often a GP) is paid a fixed amount per person (often listed patients) for a given period (often one year), the important aspect being that the payment does not vary with the amount of services provided (e.g., patient visits).
- 5.
There is one exception, however. The municipality of Gotland is responsible for all healthcare services within the municipality and serves in this capacity as a county council of its own.
- 6.
These figures relate to country definitions of healthcare expenditures, though, and are not strictly comparable. A System of Health Accounts with common definitions has been proposed by the OECD, and Sweden produced its first estimates in 2008, covering the years 2001–2006. According to these estimates, healthcare expenditures accounted for 9.2% of GDP in 2005.
- 7.
The Healthcare Act has been amended several times since 1982, sometimes back and forth, depending on changing political majorities in the Swedish Parliament.
- 8.
Between 1 January 2006 and 30 June 2007, however, an amendment to the Healthcare Act, passed by Parliament during a social democratic minority cabinet, introduced some exceptions to this paragraph. They were all abolished when the present (at the time of writing) right-centre majority coalition took over central government.
- 9.
In general, predictions of rapid growth in expenditures based on such projections have not been reflected in observed data; see, for instance, the overview by Payne et al. (2007). Based on retrospective studies that count individual healthcare expenditures backwards from time of death, it has been strongly argued that age is not an important determinant of expenditures and projections should be based on time-to-death rather than age (Zweifel et al. 1999). The empirical evidence seems to be mixed, however, and there is still no consensus in the literature (Payne et al. 2007). Moreover, while retrospective studies can be used to “explain” the impact of actual time to death, they have more limited value in predictions at the individual level, since actual time to death cannot be observed before death. One exception is a recent study, which does not study actual time to death retrospectively but rather predicts life expectancy (Shang and Goldman 2008). The authors found that age had little additional predictive power on healthcare expenditures after controlling for life expectancy. They also found that the predictive power of life expectancy itself diminished after the introduction of individual health variables. This should not come as much of a surprise, since there is firm evidence that health status, in particular self-assessed health, strongly predicts mortality; see, for instance, Mossey and Shapiro (1982), Idler and Benyamini (1997), Benyamini and Idler (1999), van Doorslaer and Gerdtham (2003), Helweg-Larsen et al. (2003), Baron-Epel et al. (2004) and Benjamins et al. (2004).
- 10.
It should be observed that an individual may also choose an unhealthy lifestyle that adds to the negative impact of depreciation and reduces the positive effects of healthcare and other inputs in the (gross) health investment production function of the individual.
- 11.
It does not follow from the Grossman model that the demand for healthcare as an input in the health investment production function for a given health status would be the same, irrespective of age. This seems to be a somewhat common misunderstanding in the literature; see, for instance, Payne et al. (2007, p. 245), and Shang and Goldman (2008).
- 12.
For a presentation of the model, see Flood (2008).
- 13.
The indicator for health status is the health index, suggested by Statistics Sweden (1992). It has four levels, representing combinations of self-assessed health, etc as reported in the ULF data.
- 14.
The econometric estimations of the empirical version of the Grossman model on which the simulation module for health is based are reported in Bolin et al. (2008a).
- 15.
The econometric estimations on which the simulation module for inpatient care is based are reported in Bolin et al. (2008b).
- 16.
Actually, the most recent ULF study reported that the health status of the Swedish population was higher in 2005 than in 2004. This is just one single observation, though, so it seems too early to conclude that the observed negative trend has been broken.
- 17.
See footnote 9.
- 18.
Further developments of the model, including this association, is ongoing at the time of writing in a project led by one of the authors (Lindgren) and financed by the Swedish Ministry of Health and Social Affairs. The development work also includes modules for primary healthcare, outpatient specialist care at hospitals, and pharmaceuticals.
- 19.
Cf. Seshamani and Gray (2004) and Werblow et al. (2007), and footnote 9. A central question is whether, as mortality falls, there is a compression or expansion of the period of morbidity towards the end of life. Even if there is a compression of morbidity, it does not necessarily translate into reduced expenditure in the future, as the compression may in fact be the result of increasing healthcare expenditure (Payne et al. 2007, p. 245). We only deal with healthcare. Obviously, we expect that with increasing life-expectancy, there will be more years when the individual requires social assistance (see Edebalk, Chap. 5 in this volume).
- 20.
A Health Maintenance Organization provides the entire healthcare needed in lieu of a yearly advance payment. This is also in principle a capitation system. DRG payments (Diagnostic Related Groups) represent a prospective reimbursement scheme in the sense that the amount a provider will be paid for a patient with a particular diagnosis is predetermined. However, the payment has come to vary with the intensity of treatment (McClellan 1997), making it less different from a fee-for-service system.
- 21.
In the important US market there is also a legal aspect. The provider is likely to be the object of liability suits unless the patient receives the best available technology (which again would mean the one that maximises health outcome, not the most cost-efficient one).
- 22.
Private financing would “solve” the problem with rising expenditures in the sense that private expenditures for healthcare can increase in a way that distortionary taxation cannot. The level of expenditure in, e.g., the US could still be seen as problematic, however, in the sense of representing considerable over-consumption at the margin (sometimes to the extent of being positively unhealthy). Cf. below on the distributional consequences.
- 23.
Data from OECD in figures in 2007.
- 24.
Among economists, this – though undoubtedly well-meant – is often viewed as a reflection of the fact that a politician, faced with dissatisfaction with queues etc, has to be seen to be doing something.
- 25.
This is a conjecture, as we know very little about the incremental cost-effectiveness of current medical practices and its relationship with the current but mainly implicit priority-setting process.
- 26.
A per capita tax is less problematic the less people move to other countries (jurisdictions for tax purposes). Hence it will probably become more problematic over time in Sweden, in which case we may have to think in terms of a healthcare policy for the EU.
- 27.
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Acknowledgments
Helpful comments from the co-authors of this volume are gratefully acknowledged. Lyttkens acknowledges funding from the Health Economics Program (HEP) at Lund University, financed by the Swedish Council for Working Life and Social Research (FAS). Lindgren expresses his gratitude to all colleagues in the Baby-boom project, partially financed by the Swedish Council for Working Life and Social Research (FAS); to Emerald Group Publishing for permission to reproduce two figures from Anders Klevmarken & Björn Lindgren (Eds.) Simulating an Ageing Population. A Micro-simulation Approach Applied to Sweden; and to Pontus Johansson at the Swedish Ministry for Health and Social Affairs for allowing me to reproduce numbers used in an ongoing project on the long-term financing of the Swedish welfare system.
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Lindgren, B., Lyttkens, C.H. (2010). Financing Healthcare: A Gordian Knot Waiting to Be Cut. In: Bengtsson, T. (eds) Population Ageing - A Threat to the Welfare State?. Demographic Research Monographs. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-12612-3_6
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