An Analysis of Determinants of Elderly Medical Costs Inflation Using Deterministic Model

Yu, Seung Hum; Sohn, Myong Sei; Park, Eun Cheol

Abstract

The purpose of this study compares determinants of eldery medical cost inflation with those of other age groups by analysing aggregated data with a deterministic model. The deterministic model of per capita medical cost inflation consists of increases in price, intensity of services, and medical utilization. We used a time series data (1985-1991) from National Medical Insurance and analyzed by age groups. In total population, the average increase rates of inpatient and outpatient medical costs were respectively 9.5% and 8.8% during 6 years and the major cause of inflation was the increase in service intensity in both of inpatient and outpatient cases. But in the population of 65 years old and over, the average increase rates of inpatient and outpatient medical costs were respectively 13.8% and 14.8% and the major cause of inflation was the increase in per-capita medical utilization in both of inpatient and outpatient cases. Also, the increase in service intensity of 65 years old and over was the highest of other age groups. This pattern was similar during study periods. we concluded that the level of medical cost inflation and the determinants in elderly was the highest-especially in per capita medical utilization, therefore, the inflation of medical costs in elderly will be higher than other age groups for the further in Korea.