In this paper we evaluate the respective effects of demographic change, changes in morbidity and changes in practices on growth in health care expenditures. We use microdata, i.e. representative samples of 3441 and 5003 French individuals observed in 1992 and 2000. Our data provide detailed information about morbidity and allow us to observe three components of expenditures: ambulatory care, pharmaceutical and hospital expenditures. We propose an original microsimulation method to identify the components of the drift observed between 1992 and 2000 in the health expenditure age profile. On the one hand, we find empirical evidence of health improvement at a given age: changes in morbidity induce a downward drift of the profile. On the other hand, the drift due to changes in practices is upward and sizeable. Detailed analysis attributes most of this drift to technological innovation. After applying our results at the macroeconomic level, we find that the rise in health care expenditures due to ageing is relatively small. The impact of changes in practices is 3.8 times larger. Furthermore, changes in morbidity induce savings which more than offset the increase in spending due to population ageing. Copyright © 2006 John Wiley & Sons, Ltd.

We propose an innovative method for the decomposition of factors associated with inequalities in the use of health care. We analyze individual data and make use of micro-simulations to evaluate the effect of heterogeneity of individual behaviors on inequality in access to care. Our study employs methods that, unlike earlier work, permits evaluation of heterogeneity of individual behaviors. We provide an application of this method by decomposing inequality of health care use in France in 1998. We show that half of the inequity in access to care is due to the heterogeneity of behaviors relative to the rank of individuals in the income distribution. This approach reconciles Oaxaca-like decompositions of inequality, focused on outcome gaps, with analyses involving decompositions of inequality by factors, focused on inequity indices.