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- An Analysis of Determinants of Elderly Medical Costs Inflation Using Deterministic Model.
- Seung Hum Yu, Myong Sei Sohn, Eun Cheol Park
- Korean J Prev Med. 1994;27(1):135-144.
- 1,964 View
- 19 Download
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Abstract
PDF - The purpose of this study compares determinants of eldery medical cost inflation with those of other age groups by analysing aggregated data with a deterministic model. The deterministic model of per capita medical cost inflation consists of increases in price, intensity of services, and medical utilization. We used a time series data (1985-1991) from National Medical Insurance and analyzed by age groups. In total population, the average increase rates of inpatient and outpatient medical costs were respectively 9.5% and 8.8% during 6 years and the major cause of inflation was the increase in service intensity in both of inpatient and outpatient cases. But in the population of 65 years old and over, the average increase rates of inpatient and outpatient medical costs were respectively 13.8% and 14.8% and the major cause of inflation was the increase in per-capita medical utilization in both of inpatient and outpatient cases. Also, the increase in service intensity of 65 years old and over was the highest of other age groups. This pattern was similar during study periods. we concluded that the level of medical cost inflation and the determinants in elderly was the highest-especially in per capita medical utilization, therefore, the inflation of medical costs in elderly will be higher than other age groups for the further in Korea.
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Summary
- An Analysis of Determinants of Medical Cost Inflation using both Deterministic and Stochastic Models.
- Han Joong Kim, Ki Hong Chun
- Korean J Prev Med. 1989;22(4):542-554.
- 2,105 View
- 33 Download
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Abstract
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- The skyrocketing inflation of medical costs has become a major health problem among most developed countries. Korea, which recently covered the entire population with National Health Insurance, is facing the same problem. The proportion of health expenditure to GNP has increased from 3% to 4.8% during the last decade. This was remarkable, if we consider the rapid economic growth during that time. A few policy analysts began to raise cost containment as an agenda, after recognizing the importance of medical cost inflation. In order to prepare an appropriate alternative for the agenda, it is necessary to find out reasons for the cost inflation. Then, we should focus on the reasons which are controllable, and those whose control are socially desirable. This study is designed to articulate the theory of medical cost inflation through literature reviews, to find out reasons for cost inflation, by analyzing aggregated data with a deterministic model. Finally to identify determinants of changes in both medical demand and service intensity which are major reasons for cost inflation. The reasons for cost inflation are classified into cost push inflation and demand pull inflation. The former consists of increases in price and intensity of services, while the latter is made of consumer derived demand and supplier induced demand. We used a time series (1983-1987), and cross sectional (over regions) data of health insurance. The deterministic model reveals, that an increase in service intensity is a major cause of inflation in the case of inpatient care, while, more utilization, is a primary attribute in the case of physician visits. Multiple regression analysis shows that an increase in hospital beds is a leading explanatory variable for the increase in hospital care. It also reveals, that an introduction of a deductible clause, an increase in hospital beds and degree of urbanization, are statistically significant variables explaining physician visits. The results are consistent with the existing theory. The magnitude of service intensity is influenced by the level of co-payment, the proportion of old age and an increase in co-payment. In short, an increase in co-payment the utilization, but it induced more intensities or services. We can conclude that the strict fee regulation or increase in the level of co-payment can not be an effective measure for cost containment under the fee for service system. Because the provider can react against the regulation by inducing more services.
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