Forecasting health expenditures: short, medium, and long (long) term.

Abstract

As the forecasting perspective changes from short to medium to long run, the appropriate measure of health spending and the choice of which variables to hold constant and which to include changes. In the short run, current dollar spending is the best unit and the primary factors affecting spending are contracts (insurance, labor) and inflation. In the medium run, real per capita health expenditures are a better measure and prior growth of income is the primary factor. In the long run, the percentage of gross domestic product is the best measure and the structure of the health system and operation of budget constraints become the most important determinants. Accuracy of +/- 1-2 percent per year is obtainable. A major issue is whether the recent moderation in the rate of growth of spending is a pause or a turning point.