4.5 Simpler versions of the model
As discussed in Section 3.2, different models of health expenditures classify the population in different ways, some more detailed than others. In addition to the full version described already, we have constructed three versions that use simpler classifications. These are summarized in Table 6. All four versions are run on the same underlying data, though the simpler versions fail to exploit some of this data, such as the proportion of the population in the last year of life.
| Version of model | Age and sex | Disability | Distance to death |
|---|---|---|---|
| Age-sex | Yes | ||
| Disability | Yes | Yes | |
| Distance-to-death | Yes | Yes | |
| Full | Yes | Yes | Yes |
Comparing results from the “age-sex” and the “disability” versions, for instance, provides a measure of potential biases in expenditure projections that leave out disability decline. It also gives some sense of the potential importance of disability decline.
4.6 Incorporating for the effect of health expenditure on health status
This study examines the effect of health status on government health expenditure. Obviously, government health expenditure also affects health status: that is the motivation for making the expenditures.
It would, in principle, be possible to construct a model that explicitly allowed for two-way interactions between government health expenditures and health status. Such a model would, however, require estimates of the effectiveness of current and future medical technologies, and of the contribution of other influences on population health, such as lifestyle and environmental change. These matters are intensely debated in the medical literature.
We have chosen a more modest approach. We project future health status by simply extrapolating historical trends, and remain agnostic on the relative contributions of government health expenditure and other determinants to these trends. This is the approach taken by studies similar to ours, as described in Section 3.
