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Ageing, health, and health care

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  • Friedrich Breyer
  • Joan Costa-Font
  • Stefan Felder

Abstract

The population in the developed world has experienced a significant increase in life expectancy over the last 50 years. Simultaneously, while the onset of comorbidities has been deferred to older age groups, health-care expenditure has grown dramatically, primarily owing to the advancement of medical technology and the expansion of individual income levels, along with population ageing in the wake of increased longevity. However, the contribution of population ageing to health expenditure growth is subject to some theoretical and empirical scrutiny. This paper takes the question of ageing and health and health care to the data to evaluate the net impact of ageing. We focus on two main questions, namely the welfare valuation of longevity improvements for various OECD countries, along with the 'red herring' hypothesis which suggests that population ageing has a small and almost negligible impact on health-care expenditure. Our estimates lead us to suggest an average gain in longevity of 4.5 years since 1980, corresponding to about 13.5 per cent of lifetime income of a 20-year-old in 2000. Furthermore, we confirm a weak red-herring claim, that is, that population ageing accounts for only a 0.5 per cent annual growth rate of health-care expenditure. Finally, we find that the rise in longevity leads to a further demand for life-prolonging medical care. Copyright 2010, Oxford University Press.

Suggested Citation

  • Friedrich Breyer & Joan Costa-Font & Stefan Felder, 2010. "Ageing, health, and health care," Oxford Review of Economic Policy, Oxford University Press, vol. 26(4), pages 674-690, Winter.
  • Handle: RePEc:oup:oxford:v:26:y:2010:i:4:p:674-690
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    File URL: http://hdl.handle.net/10.1093/oxrep/grq032
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    Cited by:

    1. Kuhn, Michael & Frankovic, Ivan & Wrzaczek, Stefan, 2017. "Medical Progress, Demand for Health Care, and Economic Performance," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168249, Verein für Socialpolitik / German Economic Association.
    2. Joan Costa-Font & Sergi Jiménez-Martín & Cristina Villaplana, 2016. "Does Long-Term Care Subsidisation Reduce Unnecessary Hospitalisations?," Working Papers 2016-05, FEDEA.
    3. Murphy, Michael & Martikainen, Pekka, 2013. "Use of hospital and long-term institutional care services in relation to proximity to death among older people in Finland," Social Science & Medicine, Elsevier, vol. 88(C), pages 39-47.
    4. José Villaverde & Adolfo Maza & María Hierro, 2014. "Health care expenditure disparities in the European Union and underlying factors: a distribution dynamics approach," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 251-268, September.
    5. Ivan Frankovic & Michael Kuhn & Stefan Wrzaczek, 2016. "Medical Care within an OLG Economy with Realistic Demography," VID Working Papers 1603, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
    6. Carlo Chiatti, 2014. "Come cambiano gli equilibri nella società che invecchia. alcune riflessioni sul caso italiano in prospettiva comparata," PRISMA Economia - Società - Lavoro, FrancoAngeli Editore, vol. 2014(2), pages 44-57.
    7. Werding, Martin & McLennan, Stuart, 2011. "International portability of health-cost coverage : concepts and experience," Social Protection and Labor Policy and Technical Notes 63929, The World Bank.
    8. Emese Kreiszné Hudák & Péter Varga & Viktor Várpalotai, 2015. "The macroeconomic impacts of demographic changes in Hungary in the context of the European Union," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 14(2), pages 89-127.
    9. Joan Costa-i-Font & Sergi Jimenez-Martin & Cristina Vilaplana, 2016. "Does Long-Term Care Subsidisation Reduce Hospital Admissions?," CESifo Working Paper Series 6078, CESifo Group Munich.
    10. Wen-Yi Chen & Miin-Jye Wen & Yu-Hui Lin & Yia-Wun Liang, 2016. "On the relationship between healthcare expenditure and longevity: evidence from the continuous wavelet analyses," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(3), pages 1041-1057, May.
    11. Bartolucci, Francesco & Giorgio E., Montanari & Pandolfi, Silvia, 2012. "Item selection by an extended Latent Class model: An application to nursing homes evaluation," MPRA Paper 38757, University Library of Munich, Germany.
    12. repec:taf:pubmmg:v:36:y:2016:i:6:p:409-416 is not listed on IDEAS
    13. repec:cbh:journl:v:14:y:2015:i:2:p:89-127 is not listed on IDEAS
    14. Joan Costa-Font & Valentina Zigante, 2016. "The choice agenda in European health systems: the role of middle-class demands," Public Money & Management, Taylor & Francis Journals, vol. 36(6), pages 409-416, September.
    15. Hans Pitlik & Margit Schratzenstaller, 2011. "Growth Implications of Structure and Size of Public Sectors," WIFO Working Papers 404, WIFO.
    16. Cockx, Lara & Francken, Nathalie, 2014. "Extending the concept of the resource curse: Natural resources and public spending on health," Ecological Economics, Elsevier, vol. 108(C), pages 136-149.
    17. Viktor von Wyl & Konstantin Beck, 2014. "Risk adjustment in aging societies," Health Economics Review, Springer, vol. 4(1), pages 1-14, December.
    18. Maciej Lis, 2015. "Red Herring in the Vistula River: Time-to-Death and Health Care Expenditure," IBS Working Papers 13/2015, Instytut Badan Strukturalnych.

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