Economy Wide-GDP Deflator: – Refers to All Goods and Services Produced Within Country – Includes Exports (E.G

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Economy Wide-GDP Deflator: – Refers to All Goods and Services Produced Within Country – Includes Exports (E.G

DEFLATION OF HEALTH SPENDING By SHA TEAM 16th OECD Meeting of Heath Accounts Experts 22-23 October 2014 Why do we need to deflate? • JHAQ is submitted in nominal NCU • Compare data over time – Absorb changes in prices – Compare change in volume (quantities) “real” growth rates (at constant prices) • Compare data across countries – Absorb differences in price levels – Compare differences in volumes Health spending in USD PPP Huge difference in inflation CPI (2005=100) Turkey 180 Iceland 160 140 OECD 120 Switzerland 100 Japan 80 2005 2006 2007 2008 2009 2010 2011 2012 2013 Need for deflation Current practice to report health spending in constant prices • OECD. Stat/ H@G Publications – Economy-wide GDP deflator Not health- – Consumer price index specific OECD averages with GDP deflator • In National Publications – 12 countries publish health spending in constant prices – Different national approaches used – Different extent of health-specificity of deflators Not directly comparable Approaches to country specific deflator • Use CPI for private spending and create other indices for public spending • Create volume indices for a number of providers • Include additional price indices – Wholesale price index – Producer price index • Use existing deflators created by third parties (statistical offices) Suggestions in chapter 13 of SHA 2011 sophisticated method used in Norway Available Alternative Indices • Economy wide-GDP deflator: – Refers to all goods and services produced within country – Includes exports (e.g. raw commodities) • Consumer Price Index – CPI does not capture most health price changes • Actual Individual Consumption – refers to all the goods and services in the economy consumed by households – not capturing services of health administration AIC seems to be a valid alternative Australia: AIC deflator closer to national deflator Real health spending growth (AIC deflator) Real health spending growth (GDP deflator) Real Health spending growth (AIHW deflator) 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 Chile: AIC deflator less volatile Real health spending growth (AIC deflator) Real health spending growth (GDP deflator) Nominal health spending growth 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 -2.0% -4.0% Norway: AIC not better than GDP deflator Real health spending growth (AIC deflator) Real health spending growth (GDP deflator) Real health spending growth (Statistics Norway) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -1.0% Some differences on OECD average Health Exp deflated by GDP-deflator Health Exp deflated using AIC deflator 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 AIC also for PPP? USD PPP AIC GDP 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 • Little change in ranking when moving towards AIC • Gap to US would widen Conclusion • Deflating nominal health spending is necessary • Development of country specific health deflators is encouraged will not be used for international comparison • No additional burden for countries planned • AIC appears to be preferable to GDP-deflator • In medium-term – Health-specific PPP – Health-specific deflators Questions for discussion • What would you suggest for international health spending comparison: – continue to use the GDP-deflator or – move to AIC-deflator • Have you any plans to create/rework your country-specific health spending deflator? .

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