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Some notes on how to catch a red herring - Ageing, time-to-death and care costs for older people in Sweden

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  • Karlsson, Martin

    ()
    (Department of Law and Economics, Technische Universität Darmstadt)

  • Klohn, Florian

    ()
    (Department of Law and Economics, Technische Universität Darmstadt)

Abstract

In this paper we test the 'red herring' hypothesis for expenditures on long-term care. The main contribution of this paper is that we assess the 'red herring' hypothesis using an aggregated measure that allows us to control for entering the final period of life on the individual level. In addition we implement a model that allows for age specific time-to-death (TTD) effects on Long Term Care. We also account for the problem that mortality, and therefore TTD, are themselves influenced by care expenditure. For our analysis we use administrative data from the Swedish statistical office. In contrast to many previous empirical studies, we are able to use the entire population for estimation instead of a sample. Our identification strategy is based on fixed effects estimation and the instrumental variable approach to achieve exogenous variation in TTD. Our results indicate that although time-to-death is a relevant indicator for long term care, age itself seems to be much more important for the projection of long-term care expenditure.

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Bibliographic Info

Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2011:6.

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Length: 26 pages
Date of creation: 08 Nov 2011
Date of revision:
Handle: RePEc:hhs:oslohe:2011_006

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Web page: http://www.hero.uio.no/eng.html
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Keywords: ageing; mortality; long term care expenditures;

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References

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  1. Andreas Werblow & Stefan Felder & Peter Zweifel, 2007. "Population ageing and health care expenditure: a school of 'red herrings'?," Health Economics, John Wiley & Sons, Ltd., vol. 16(10), pages 1109-1126.
  2. Stefan Felder & Andreas Werblow & Peter Zweifel, 2008. "Do Red Herrings Swim in Circles? – Controlling for the Endogeneity of Time to Death," Ruhr Economic Papers 0073, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  3. 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.
  4. Norton, Edward C., 2000. "Long-term care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 17, pages 955-994 Elsevier.
  5. Mickael Bech & Terkel Christiansen & Ehsan Khoman & Jørgen Lauridsen & Martin Weale, 2011. "Ageing and health care expenditure in EU-15," The European Journal of Health Economics, Springer, vol. 12(5), pages 469-478, October.
  6. Ulf-G. Gerdtham & Douglas Lundin & Maria Sáez-Martí, 2005. "The ageing of society, health services provision and taxes," Journal of Population Economics, Springer, vol. 18(3), pages 519-537, 09.
  7. Baoping Shang & Dana Goldman, 2008. "Does age or life expectancy better predict health care expenditures?," Health Economics, John Wiley & Sons, Ltd., vol. 17(4), pages 487-501.
  8. de Meijer C & Koopmanschap M & Bago d & Uva T & van Doorslaer E, 2009. "Time To Drop Time-To-Death? –Unravelling The Determinants of LTC Spending In The Netherlands," Health, Econometrics and Data Group (HEDG) Working Papers 09/33, HEDG, c/o Department of Economics, University of York.
  9. Denis Gerstorf & Nilam Ram & Guy Mayraz & Mira Hidajat & Ulman Lindenberger & Gert G. Wagner & Jürgen Schupp, 2010. "Late-Life Decline in Well-Being across Adulthood in Germany, the UK, and the US: Something Is Seriously Wrong at the End of Life," SOEPpapers on Multidisciplinary Panel Data Research 286, DIW Berlin, The German Socio-Economic Panel (SOEP).
  10. France Weaver & Sally C. Stearns & Edward C. Norton & William Spector, 2009. "Proximity to death and participation in the long-term care market," Health Economics, John Wiley & Sons, Ltd., vol. 18(8), pages 867-883.
  11. 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.
  12. Gardner, Jonathan & Oswald, Andrew, 2004. "How is mortality affected by money, marriage, and stress?," Journal of Health Economics, Elsevier, vol. 23(6), pages 1181-1207, November.
  13. 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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Cited by:
  1. Friedrich Breyer & Normann Lorenz & Thomas Niebel, 2012. "Health Care Expenditures and Longevity: Is there a Eubie Blake Effect?," Research Papers in Economics 2012-01, University of Trier, Department of Economics.

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