Health care costs in the last year of life--The Dutch experience

Health expenditure depends heavily on age. Common wisdom is that the age pattern is dominated by costs in the last year of life. Knowledge about these costs is important for the debate on the future development of health expenditure. According to the 'red herring' argument traditional projection methods overestimate the influence of ageing because improvements in life expectancy will postpone rather than raise health expenditure. This paper has four objectives: (1) to estimate health care costs in the last year of life in the Netherlands; (2) to describe age patterns and differences between causes of death for men and women; (3) to compare cost profiles of decedents and survivors; and (4) to use these figures in projections of future health expenditure. We used health insurance data of 2.1 million persons (13% of the Dutch population), linked at the individual level with data on the use of home care and nursing homes and causes of death in 1999. On average, health care costs amounted to 1100 Euro per person. Costs per decedent were 13.5 times higher and approximated 14,906 Euro in the last year of life. Most costs related to hospital care (54%) and nursing home care (19%). Among the major causes of death, costs were highest for cancer (19,000 Euro) and lowest for myocardial infarctions (8068 Euro). Between the other causes of death, however, cost differences were rather limited. On average costs for the younger decedents were higher than for people who died at higher ages. Ten per cent of total health expenditure was associated with the health care use of people in their last year of life. Increasing longevity will result in higher costs because people live longer. The decline of costs in the last year of life with increasing age will have a moderate lowering effect. Our projection demonstrated a 10% decline in the growth rate of future health expenditure compared to conventional projection methods.