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Hospital expenditures and the red herring hypothesis: Evidence from a complete national registry

Author

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  • Gregersen, Fredrik Alexander

    () (Campus Akershus University Hospital, Institute of Clinical Medicine, University of Oslo)

  • Godager, Geir

    () (Department of Health Management and Health Economics)

Abstract

The aim of this paper is to contribute to the debate on population aging and growth in health expenditures. The Red Herring hypothesis, i.e., that hospital expenditures are driven by the occurrence of mortal illnesses, and not patients’ age, forms the basis of the study. The data applied in the analysis are from a complete registry of in-patient hospital expenditures in Norway from the years 1998-2009. Since data registration is compulsory and all hospital admissions are recorded, there is no self-selection into the data. Mortality related hospital expenditures were identified by creating gender-cohort specific panels for each of the 430 Norwegian municipalities. We separated the impact of mortality on current hospital expenditures from the impact of patients’ age and gender. This approach contributes to the literature by applying sensible aggregation methods on a complete registry of inpatient hospital admissions. We apply model estimates to quantify the mortality related hospital expenditures for twenty age groups. The results show that mortality related hospital expenditures are a decreasing function of age. Further the results clearly support that, both age and mortalities should be included when predicting future health care expenditure. The estimation results suggest that 9.2 % of all hospital expenditure is associated with treating individuals in their last year of life.

Suggested Citation

  • Gregersen, Fredrik Alexander & Godager, Geir, 2013. "Hospital expenditures and the red herring hypothesis: Evidence from a complete national registry," HERO On line Working Paper Series 2013:3, Oslo University, Health Economics Research Programme.
  • Handle: RePEc:hhs:oslohe:2013_003
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    File URL: http://www.med.uio.no/helsam/forskning/nettverk/hero/publikasjoner/skriftserie/2013/hero2013-3.pdf
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    References listed on IDEAS

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    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.
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    4. 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 - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(4), pages 652-666, October.
    5. Häkkinen, Unto & Martikainen, Pekka & Noro, Anja & Nihtilä, Elina & Peltola, Mikko, 2008. "Aging, health expenditure, proximity to death, and income in Finland," Health Economics, Policy and Law, Cambridge University Press, vol. 3(02), pages 165-195, April.
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    8. Polder, Johan J. & Barendregt, Jan J. & van Oers, Hans, 2006. "Health care costs in the last year of life--The Dutch experience," Social Science & Medicine, Elsevier, vol. 63(7), pages 1720-1731, October.
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    Cited by:

    1. Fredrik Gregersen, 2014. "The impact of ageing on health care expenditures: a study of steepening," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(9), pages 979-989, December.
    2. Breyer Friedrich, 2015. "Demographischer Wandel und Gesundheitsausgaben: Theorie, Empirie und Politikimplikationen," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 16(3), pages 215-230, October.

    More about this item

    Keywords

    mortality related expenditures; hospital expenditures; red herring hypothesis; ageing;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I19 - Health, Education, and Welfare - - Health - - - Other

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