Working Party on National Accounts, OECD – 4-6 November 2009

1. Working Party on National Accounts, OECD – 4-6 November 2009 Update on PPP programme and new data set for health expenditure Paul Schreyer OECD

2. Introduction The Eurostat-OECD PPP Programme is an on-going programme Purpose of this presentation: • Give an update on the Eurostat-OECD PPP programme • To present the latest methodological changes in the domains of education (implemented) and health (forthcoming)

3. Update on the Eurostat-OECD PPP programme (1) • PPPs for OECD countries are calculated every three years • Preliminary results for the Round 2008 will be calculated end 2009. Countries which have not yet sent the detailed PPP national accounts questionnaire are invited to do it in the coming weeks. • Publication of detailed results foreseen end of 2010.

4. Update on the Eurostat-OECD PPP Programme (2) • Country coverage goes beyond OECD with 46 countries participating in the Programme: • 37 countries (27 EU Member States, 3 Candidate Countries, 3 EFTA countries, 4 Western-Balkan countries) coordinated by Eurostat • 9 countries (7 OECD Member States, plus Russia and Israel) coordinated by OECD • Chile will join the Programme in 2011

5. Main methodological changes for non market services • The major methodological changes have been presented already last year. • Final draft of handbook: TOWARDS MEASURING THE VOLUME OF HEALTH AND EDUCATION SERVICES • Handbook will be published by the end of the year and we would like to thank all countries for their constructive comments.

6. Education – output based approach to measure volumes of education (1) Approach: • Direct estimation of volumes • Stratification by level of education • Unit of output: pupil-hour (teachingreceived) • Primary and secondaryeducation: explicit qualityadjustmentwith PISA scores, corrected for socio-economic variables.

7. Education –output based approach to measure volumes of education (2) • Substantial improvement over input cost approach • Better theoretical justification • More plausible results • The method will be implemented for all OECD countries for the Round 2008 (for Eurostat countries method already implemented for two years)

8. Education –output based approach to measure volumes of education (3)

9. Education –output based approach to measure volumes of education (4))

10. Health – Toward specific PPPs for health based on output based approach Progress on the work of the PPP health task force – presentation last year of the first results. 4th TF Meeting was held in October 2009. Approach • Focus on hospital services • Disease-based approach • Use of secondary datasets Study design Current status of the project Challenge ahead – New expenditure classification

11. PPPs for hospital services – Study design • Product identification: products are defined in terms of the types of services that hospitals produce (called “case types”. Use of Diagnosis Related Groups ) • Product measurement: case types quantities are measured through electronic coded information available at hospitalization level • Place a value on products: a unit cost/quasi price by case type is estimated using available results from cost finding studies/price lists

12. PPPs for hospital services – Study design Case types identification -examples

13. Current status of the project • Second round of pilot studies conducted this year with 14 countries • Feasibility confirmed: first set of results reasonable • Still need to investigate measurement issues and to refine methodology (revise the list of case types, with a focus on inpatient services; identification of length of stay outliers; cost finding methodology)

14. Proposal for a new PPP expenditure classification for health (1) From prices to volume…. • Health PPPs need to be accompanied by consistent expenditure data • Current expenditure information from NA not appropriate to deflate « new »health PPPs

15. Proposal for a new PPP expenditure classification for health (2) • Expenditure classifications by purpose do not match disease-based approach for new health PPPs • Hospital services in COICOP and COFOG also comprise residential care and nursing homes • NPISH classification provides no breakdown for health • Health services directly provided by government are classified according to inputs

16. Proposal for a new PPP expenditure classification for health (3) • New classification needed • Build the new classification from information in System of health accounts (SHA) • SHA provides expenditure breakdown by health provider • Provider-based classification HP1 – HP4 • Hospitals (HP1) • Nursing and residential care facilities (HP2) • Providers of ambulatory health care (HP3) • Retail sale and other suppliers of medical goods (HP4)

17. Proposal for a new PPP expenditure classification for health (4) • Close correspondence of provider classification with ISIC but provider classficationcutsacross national accountssectors • Proposal: • Use total healthexpenditurefrom NA • Apply structure of HP1 – HP4 from SHA to allocateexpenditure • Computation of HealthPPPs for health as a whole • Strongassumption : same structure for eachsector but less of a problemwhenactualindividualconsumptionismeasured

18. Conclusions • PPP 2008 Round wellunderway • New methods for education and healthPPPscoming up • Thanks for providingexpenditure data and liaisingwithpricestatisticians