№ 7/2018

Fìnansi Ukr. 2018 (7): 64–80

FINANCIAL AND ECONOMIC REGULATION

STEPANOVA Olena ¹

¹Institute for Economics and Forecasting, Ukrainian National Academy of Sciences

Health care financing and fiscal sustainability

The article investigates the interconnection between health care financing and fiscal sustainability. It is noted that over the past two decades there has been an increase in rapid growth of the health care expenditure in most countries, caused by: changes in the demographic structure of the population, namely longevity growth and aging population; the development of the medical technological progress; transformation of the structure of diseases; changing priorities and needs of the population in medical services as a response to rising household incomes. Approaches to determining fiscal sustainability by government agencies and the impact of public health financing are outlined. The principles of calculating the indicators of fiscal sustainability in accordance with the methodology of the European Commission are given. The main challenges of the growth of age-related public health care expenditures on the indicators of fiscal sustainability in the European Union and the US are investigated. The analysis of international experience shows that the growth of the federal budget expenditures on Medicare and Medicaid will be one of the important reasons for US federal debt growths as a result of the ageing population pressures. In part of the EU, age-related expenditures will increase the risk of medium-term fiscal sustainability, and in the longer term, age-related healthcare expenditures in all countries will increase the risk of fiscal sustainability. On the basis of the European Commission\'s methodology, the impact of increased public expenditure on health care in Ukraine and fiscal sustainability is analyzed under different scenarios. Medium-term (S1) and long-term (S2) fiscal sustainability indices are calculated taking into account changes in age-related public health expenditures. It was substantiated that the increase in such costs, caused by the aging of Ukraine’s population, will have a significant impact on fiscal sustainability in the medium and long term. It is proposed to introduce on a permanent basis the diagnostics and monitoring of fiscal sustainability and the identification of potential challenges for public finance sustainability in terms of health care financing in Ukraine.

Keywords:public finances, fiscal sustainability, health care system, increase of health care expenditures, demographic structure, longevity, aging of population

JEL: H51, H68, E62

Stepanova O. . Health care financing and fiscal sustainability / O. . Stepanova // Фінанси України. - 2018. - № 7. - C. 64-80.

Article original in Ukrainian (pp. 64 - 80)

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