Aging and Smoothing Healthcare Spending Over Time

Presenter: Dov Chernichovsky , Ben-Gurion University of the Negev

Abstract

Presenting Author's bio:Dov Chernichovsky (Ph.D. Economics) is a professor of health economics and policy at Ben-Gurion University of the Negev, Israel. He is a Research Associate with the National Bureau of Economic Research in the USA, and a consultant to the World Bank. He heads the Economic and Interdisciplinary teams at the Taub Center for the Study of Social Policy in Israel, and manages the Negev Health Forum for health promotion in the southern region in Israel. He serves on the board of the Israeli Cancer Society, the Baxter Prize advisory board, and on the editorial boards of several journals. Amongst his memberships in numerous commissions, Dov was a member of the Israeli State (Blue Ribbon/Royal) Netanyahu Commission of Inquiry into the Israeli Health Care System between 1998 and 1990. This commission outlined the reform proposal that led to the national health insurance legislation that was enacted in Israel in 1995. More recently, 2000–2002, he served on a similar commission that set further reform proposals for the Israeli system. Dov was the health system adviser to the Israeli parliament, 2005-2007. On behalf of the World Bank, he played key roles in health system reform formulations in Rumania, Russia, and more recently in Mexico. In Russia he helped formulate the health insurance legislation underlying the current Russian health system.
Dov`s research in Botswana, Brazil, India, Indonesia, and the USA studying household behavior yielded pioneering economic studies in household investment in human resources, notably nutrition. Dov has become known for articulating "the favored son hypothesis" for investment in children`s schooling. Eventually, Dov turned to macro-economic and policy work in health systems that has led to a formulation of Emerging Paradigms in health systems, a framework for studying and reforming these systems.There is no compelling theory or evidence that aging and its socio-economic correlates increase the cost of medical care. Although, the aged are the most costly in society at any moment in time.

Abstract: The paper examines the implications of the non- age neutral changes in cost of medical care over time, on healthcare finance. The challenge is to transfer dynamically cost savings from young and middle aged groups, who become relatively less expensive, to the aged, who become relatively more expensive. As intergenerational intra household transfers become less viable socially and economically, it is suggested that public 'pay as you go' systems are the most effective and equitable mechanism for smoothing healthcare spending over time.