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Costly Ageing Or Costly Deaths? Understanding Health Care Expenditure Using Australian Medicare Payments Data

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  • DAVID JOHNSON
  • JONGSAY YONG

Abstract

In health economics and health care planning, the observation that age cohorts are generally positively correlated with per capita health expenditures is often cited as evidence that population ageing is the main driver of health care costs. Several recent studies, however, challenge this view. Zweifel et al. (1999) and Felder et al. (2000), for example, find that individuals incur the highest health care costs around the time before their death. Thus, they argue, it is proximity to death rather than ageing that is driving health care costs. This paper examines the issue by estimating a two‐equation exact aggregation demand model using Australian Medicare payments data over an eight‐year period (1994–2001). The results suggest that once proximity to death is accounted for, population ageing has either a negligible or even negative effect on health care demand.

Suggested Citation

  • David Johnson & Jongsay Yong, 2006. "Costly Ageing Or Costly Deaths? Understanding Health Care Expenditure Using Australian Medicare Payments Data," Australian Economic Papers, Wiley Blackwell, vol. 45(1), pages 57-74, March.
    • Handle: RePEc:bla:ausecp:v:45:y:2006:i:1:p:57-74
    DOI: 10.1111/j.1467-8454.2006.00277.x
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    References listed on IDEAS

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    1. Victor R. Fuchs, 1998. "Health Care for the Elderly: How Much? Who Will Pay for It?," NBER Working Papers 6755, National Bureau of Economic Research, Inc.
    2. Alan M. Garber & Thomas E. MaCurdy & Mark C. McClellan, 1998. "Medical Care at the End of Life: Diseases, Treatment Patterns, and Costs," NBER Working Papers 6748, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Pierre-Yves Crémieux & Pierre Ouellette & Patrick Petit, 2007. "Do Drugs Reduce Utilisation of Other Healthcare Resources?," PharmacoEconomics, Springer, vol. 25(3), pages 209-221, March.

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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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