Informing policy makers about future health spending: a comparative analysis of forecasting methods in OECD countries

Objective: Concerns about health care expenditure growth and its long-term sustainability have risen to the top of the policy agenda in many OECD countries. As continued growth in spending places pressure on government budgets, health services provision and patients' personal finances, policy makers have launched forecasting projects to support policy planning. This comparative analysis reviewed 25 models that were developed for policy analysis in OECD countries by governments, research agencies, academics and international organisations.

Results: We observed that the policy questions that need to be addressed drive the choice of forecasting model and the model's specification. By considering both the level of aggregation of the units analysed and the level of detail of health expenditure to be projected, we identified three classes of models: micro, component-based, and macro. Virtually all models account for demographic shifts in the population, while two important influences on health expenditure growth that are the least understood include technological innovation and health-seeking behaviour.

Discussion: The landscape for health forecasting models is dynamic and evolving. Advances in computing technology and increases in data granularity are opening up new possibilities for the generation of system of models which become an on-going decision support tool capable of adapting to new questions as they arise.