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Life expectancy and health care expenditures: A new calculation for Germany using the costs of dying

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  • Breyer, Friedrich
  • Felder, Stefan

Abstract

Some people believe that the impact of population ageing on future health care ex-penditures will be quite moderate due to the high costs of dying. If not age per se but proximity to death determines the bulk of expenditures, a shift in the mortality risk to higher ages will not affect lifetime health care expenditures as death occurs only once in every life. We attempt to take this effect into account when we calculate the demographic impact on health care expenditures in Germany. From a Swiss data set we derive age-expenditure profiles for both genders, separately for persons in their last four years of life and for survivors, which we apply to the projections of the age structure and mortality rates for the German population between 2002 and 2050 as published by the Statistische Bundesamt. We calculate that at constant prices per-capita health expenditures of Social Health Insurance would rise from € 2,596 in 2002 to between € 2,959 and € 3,102 in 2050 when only the age structure of the population changes and everything else remains constant at the present level, and to € 5,485 with a technology-driven exogenous cost increase of one per cent per annum. A “naïve” projection based only on the age distribution of health care expenditures, but not distinguishing between survivors and decedents, yields values of € 3,217 and € 5,688 for 2050, respectively. Thus, the error of excluding the “costs of dying” effect is small compared with the error of under-estimating the financial consequences of expanding medical technology.

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Bibliographic Info

Article provided by Elsevier in its journal Health Policy.

Volume (Year): 75 (2006)
Issue (Month): 2 (January)
Pages: 178-186

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Handle: RePEc:eee:hepoli:v:75:y:2006:i:2:p:178-186

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Web page: http://www.elsevier.com/locate/healthpol

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References

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  1. Seshamani, Meena & Gray, Alastair M., 2004. "A longitudinal study of the effects of age and time to death on hospital costs," Journal of Health Economics, Elsevier, vol. 23(2), pages 217-235, March.
  2. Peter Zweifel & Stefan Felder & Markus Meiers, 1999. "Ageing of population and health care expenditure: a red herring?," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 485-496.
  3. Breyer, Friedrich & Franz, Wolfgang & Homburg, Stefan & Schnabel, Reinhold & Wille, Eberhard, 2004. "Reform der sozialen Sicherung," EconStor Books, ZBW - German National Library of Economics, number 92399, March.
  4. Sally C. Stearns & Edward C. Norton, 2004. "Time to include time to death? The future of health care expenditure predictions," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 315-327.
  5. Felder, Stefan & Meier, Markus & Schmitt, Horst, 2000. "Health care expenditure in the last months of life," Journal of Health Economics, Elsevier, vol. 19(5), pages 679-695, September.
  6. Friedrich Breyer & Volker Ulrich, 2000. "Gesundheitsausgaben, Alter und medizinischer Fortschritt: Eine Regressionsanalyse," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 220(1), pages 1-17.
  7. Peter Zweifel & Stefan Felder & Andreas Werblow, 2004. "Population Ageing and Health Care Expenditure: New Evidence on the "Red Herring"," The Geneva Papers on Risk and Insurance, The International Association for the Study of Insurance Economics, vol. 29(4), pages 652-666, October.
  8. Meena Seshamani & Alastair Gray, 2004. "Ageing and health-care expenditure: the red herring argument revisited," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 303-314.
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Citations

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Cited by:
  1. Colombier, Carsten & Weber, Werner, 2009. "Projecting health-care expenditure for Switzerland: further evidence against the 'red-herring' hypothesis," MPRA Paper 26712, University Library of Munich, Germany, revised Jun 2010.
  2. Laurence J. Kotlikoff & Christian Hagist, 2005. "Who’s Going Broke? Comparing Growth in Healthcare Costs in Ten OECD Countries," Working Papers id:286, eSocialSciences.
  3. Tomblin Murphy, Gail & Kephart, George & Lethbridge, Lynn & O'Brien-Pallas, Linda & Birch, Stephen, 2009. "Planning for what? Challenging the assumptions of health human resources planning," Health Policy, Elsevier, vol. 92(2-3), pages 225-233, October.
  4. Stefan Felder & Stefan Fetzer, 2007. "Kapitaldeckung in der Gesetzlichen Krankenversicherung: Wer bezahlt den Uebergang?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(5+6), pages 603-620, December.
  5. Rossana Merola & Douglas Sutherland, 2013. "Fiscal Consolidation and the Implications of Social Spending for Long-Term Fiscal Sustainability," Review of Economics and Institutions, Università di Perugia, vol. 4(3).
  6. Emi Sato & Kiyohide Fushimi, 2009. "What has influenced patient health-care expenditures in Japan?: variables of age, death, length of stay, and medical care," Health Economics, John Wiley & Sons, Ltd., vol. 18(7), pages 843-853.
  7. Ried, Walter, 2006. "Gesundheitsausgaben für Überlebende und Verstorbene im demographischen Wandel: der Einfluss des medizinischen Fortschritts," Wirtschaftswissenschaftliche Diskussionspapiere 10/2006, Ernst Moritz Arndt University of Greifswald, Faculty of Law and Economics.
  8. Stefan Felder, 2013. "The Impact of Demographic Change on Healthcare Expenditure," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 11(1), pages 03-06, 04.
  9. van Baal, Pieter H. & Wong, Albert, 2012. "Time to death and the forecasting of macro-level health care expenditures: Some further considerations," Journal of Health Economics, Elsevier, vol. 31(6), pages 876-887.
  10. Christian Hagist & Laurence J. Kotlikoff, 2009. "Who’s going broke? Comparing growth in Public healthcare expenditure in Ten OECD Countries," Hacienda Pública Española, IEF, vol. 188(1), pages 55-72, March.
  11. Claudine de Meijer & Marc Koopmanschap & Owen O'Donnell & Eddy van Doorslaer, 2012. "Health Expenditure Growth: Looking beyond the Average through Decomposition of the Full Distribution," Tinbergen Institute Discussion Papers 12-051/3, Tinbergen Institute.
  12. Claudine de Meijer & Marc Koopmanschap & Owen O'Donnell & Eddy van Doorslaer, 2012. "Health Expenditure Growth: Looking beyond the Average through Decomposition of the Full Distribution," Tinbergen Institute Discussion Papers 12-051/3, Tinbergen Institute.
  13. Fanny A. Kluge & Emilio Zagheni & Elke Loichinger & Tobias Vogt, 2014. "The advantages of demographic change after the wave: fewer and older, but healthier, greener, and more productive?," MPIDR Working Papers WP-2014-003, Max Planck Institute for Demographic Research, Rostock, Germany.
  14. Hackmann, Tobias & Moog, Stefan, 2008. "Älter gleich kränker? Auswirkungen des Zugewinns an Lebenserwartung auf die Pflegewahrscheinlichkeit," FZG Discussion Papers 26, Research Center for Generational Contracts (FZG), University of Freiburg.
  15. Walter Ried, 2007. "Medizinisch-technischer Fortschritt und altersspezifische Gesundheitsausgaben," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(5+6), pages 636-659, December.
  16. Dieter Tscheulin & Florian Drevs, 2010. "The relevance of unrelated costs internal and external to the healthcare sector to the outcome of a cost-comparison analysis of secondary prevention: the case of general colorectal cancer screening in," The European Journal of Health Economics, Springer, vol. 11(2), pages 141-150, April.
  17. de Meijer, Claudine & Koopmanschap, Marc & d' Uva, Teresa Bago & van Doorslaer, Eddy, 2011. "Determinants of long-term care spending: Age, time to death or disability?," Journal of Health Economics, Elsevier, vol. 30(2), pages 425-438, March.
  18. Ried, Walter, 2006. "Demographischer Wandel, medizinischer Fortschritt und Ausgaben für Gesundheitsleistungen: eine theoretische Analyse," Wirtschaftswissenschaftliche Diskussionspapiere 09/2006, Ernst Moritz Arndt University of Greifswald, Faculty of Law and Economics.
  19. Schneider, Udo & Zerth, Jürgen, 2008. "Improving prevention compliance through appropriate incentives," MPRA Paper 8280, University Library of Munich, Germany.
  20. Melberg, Hans Olav & Sørensen, Jan, 2013. "How does end of life costs and increases in life expectancy affect projections of future hospital spending?," HERO On line Working Paper Series 2013:9, Oslo University, Health Economics Research Programme.
  21. Dieter Cassel & Andreas Postler, 2007. "Alternde Bevoelkerung und Gesundheitsausgaben, Eine theoretische Analyse demographischer Ausgabeneffekte auf den Beitragssatz der GKV," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(5+6), pages 578-602, December.
  22. Ried, Walter, 2007. "On the relationship between aging, edical progress and age-specific health care expenditures," Wirtschaftswissenschaftliche Diskussionspapiere 08/2007, Ernst Moritz Arndt University of Greifswald, Faculty of Law and Economics.

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