Exploring the Effects of Population Change on the Costs of Physician Services

The effects of population aging on future health care costs are an important public policy concern in many countries. We focus in this paper on physician services and investigate how changes in the size and age distribution of a population can affect the aggregate and per capita costs of such services. The principal data set (unpublished, for Ontario) provides information about payments to physicians, by age and sex of patients. Using it, we derive age/cost profiles for 19 categories of physicians. Adopting an index-theoretic framework, we then use the profiles to analyse the "pure" effects of population change (historical or projected) on physician costs, and to decompose the effects into population growth effects and population aging effects. We present calculations for Ontario, for the populations of 15 industrialized countries, and for four theoretical populations.