Using morbidity and income data to forecast the variation of growth and employment in the oral healthcare sector

Dennis A. Ostwald, David Klingenberger

The perception of the health sector from an economic policy point of view is changing. In the past, health expenditure was mostly seen as a "cost" item, probably because many medical treatments are covered by public health insurance. However, policymakers are increasingly realizing that a growing health sector may be quite beneficial for an economy. It creates employment opportunities and it is relatively resistant to the fluctuations of the business cycle. Input-output analysis could be a useful tool to study the structural change resulting from the growth of the health sector. This paper quantifies for the first time the economic significance of the oral healthcare sector as a component of the German healthcare sector as a whole. The current data for the healthcare sector comes from Health Satellite Accounts, which while comprehensive do fail to answer important questions due to not incorporating certain sectors such as the oral healthcare sector. Therefore on the basis of the Health Satellite Account a specific Satellite Account for the oral healthcare sector is created by using billing data as well as epidemiological data, provided by several dental associations and the Institute of German Dentists. Based on this added information, gross value added data and the number of employees in the oral healthcare sector are computed. Gross value added in 2010 amounted to €13.4 billion, with around €4 billion being attributable to the secondary oral healthcare market; the market for solely out-of-pocket payments. In a second step the paper develops a model to forecast oral healthcare sector growth based on various explanatory variables such as demographic change, take-up behaviour, medical-technical progress, oral morbidity, aggregated supply (collective dental treatment times) as well as income levels and distribution, where the latter two are considered to be of particular importance. According to this model, by 2030 gross value added in the oral healthcare sector will amount to €15.9 million, which corresponds to a 19.2 % increase. The secondary oral healthcare market will be the key to this increase since the model predicts a disproportionately high growth of 60.3 % bringing the total to €6.3 million gross value added in 2030.