International evidence on medical spending
*Robert D. Lieberthal, Jefferson School of Population Health 

Keywords: medical spending growth, international health policy

The objective of this paper is to assess the growth in medical spending, also known as the cost curve, in developed countries over the past 50 years. The aims of this study were to quantify the rate and volatility of medical spending growth, evaluate time series models that might fit the data, and improve forecasts of the U.S. cost curve under the PPACA. The study was a time series analysis of medical spending growth, utilizing both summary statistics and autoregressive time series models to fit the data. The data came from eleven countries that tracked medical spending since 1960: Austria, Canada, Finland, Iceland, Ireland, Japan, Norway, Spain, Switzerland, the United Kingdom, and the United States. The main finding of this paper is that it is difficult to improve on summary statistics, or low order autoregressive models, to fit spending growth. It is difficult to evaluate the macroeconomic effect of insurance expansions because the levels of uninsurance have not varied in most developed countries over the past 50 years. Demographic variables often change too slowly to factor into predictions of future spending growth. The forecasts of medical spending are no better than models of GDP. The U.S. has done a good job of minimizing the volatility in medical spending growth over the past 50 years compared to other countries. Despite the low volatility, it is difficult to forecast medical spending growth over a medium to long term horizon. The healthcare "cost curve" is not a regular, deterministic process--this concept does not capture the variation in spending growth across countries. Health policymakers and insurers should acknowledge how different groups in the population are harmed, or helped, by the macroeconomic properties of medical spending.