22 will change in the future has been widely discussed in scienti? c literature. There are two competing main theses: the medicalisation thesis and the compression thesis. 2.3.1. Medicalisation Thesis The medicalisation thesis is based on the so-called “calendar-effect” (Ulrich 2000, pp. 165 - 167). The calendar-effect represents the ordinary relationship between morbidity and age and thus draws on the assumption that on average health care costs increase with age. From this point of view, future health costs only depend on the status quo expenditure pro? le (? gure 2.2) and on the prospective age structure of the population. However, Verbrugge (1984b) supposes that the increasing life expectancy will cause higher usages of health care services due to technological progress, which constitutes, for example, new drugs, surgical procedures and diagnostics which enable the treatment of deadly diseases. Two consequences arise: ? rstly, unhealthy people who would have died with the absence of new techniques survive and thus the average state of health of the population declines. Secondly, if the new techniques only prolong lifespan but are not able to de? nitely cure chronic diseases, multimorbidity of people occurs.4 If Verbrugge’s medicalisation thesis is correct, the proportion of per-head expenditure for older to younger people will increase and the SHI expenditure pro? le will become steeper in the future (? gure 2.2). 2.3.2. Compression Thesis In contrast, Fries’ compression thesis claims that health care expenditure does not depend mainly on age but on distance to death (Fries 1980). This supposition is based on the observation that a high proportion of lifetime health care expenditure accrues in the last months of life. This is called the “residual life-time effect” (Ulrich 2000, pp. 166 - 167). Associated with the fact that more people die at higher ages, on average older people demand more health care costs than younger people do. Thus increasing expenditure for older people is not due to the calendar effect, but to the residual lifetime effect. The impact of the residual life-time effect on the expenditure pro? le depends on the development of the mortality rates. In the last century the probability of dying has signi? cantly shifted to the highest age groups. Fries (1980, p. 131) calls this observation “rectangularization” of the survival curves (see ? gure 2.3). He attributes this development to a further elimination of premature death by assuming that more and more people achieve the “natural limit” of human life. 4 See also Krämer (1997). 23 Figure 2.3: Rectangularization: Survival Curve for Men in Germany and Hypothetical Accessible Physiological Lifetime. 0 20 40 60 80 100 0 10 20 30 40 50 60 70 80 90 100Proportion of Survivors Accessible Age Accessible Physiological Lifetime 1982/84 West Germany 1949/51 West Germany 1871/80 German Reich Source: Schramm (1996), p. 25. Moreover, in contrast to the medicalisation thesis, Fries presumes a “compression of morbidity” (Fries 1980, p. 133) which leads not only to rectangularization of the mortality curve, but also of the morbidity curve. This means that medical technological progress and a healthier way of living would result in postponement of chronic diseases and improvement of people’s health status when they are younger. If the occurrence of chronic diseases is more protracted than lifespan increases, then the time of disability and senescence will become shorter in absolute terms. This is called the “absolute compression thesis”. A more moderate version is the “relative compression thesis”, which assumes that only the proportion of lifetime which is spent in chronic illness declines because of the increasing life expectancy. Graphically, with the compression thesis the expenditure pro? le would become smoother in lower ages and steeper in the highest ages (? gure 2.2). 2.3.3. Empirical Evidence The impacts of the medicalisation and the compression theses on the development of total health care expenditure are completely different. Compared to the medicalisation thesis, a status-quo outlook on the basis of present expenditure pro? les would underestimate the true growth development. The compression thesis would exactly predict the opposite and even decreasing per capita health expenditure could be possible (Breyer and Felder 2004, p. 4). As yet, there does not exist any evidence for either one of the theses: the empirical studies which have been carried out have deliver controversial results. Many surveys support the compression thesis: Getzen (1992) accomplished cross-sectional as well as time series analyses based on OECD health data from 20 countries from 1960 to 1988. In an econometric regression he tested real per capita health expenditure on age