IDEAS home Printed from https://ideas.repec.org/a/spr/eujhec/v15y2014i9p979-989.html
   My bibliography  Save this article

The impact of ageing on health care expenditures: a study of steepening

Author

Listed:
  • Fredrik Gregersen

Abstract

Some researchers claim that health care expenditures for older people are growing faster than for the rest of the population. This process is referred to as steepening. The aim of this paper is to test steepening, applying new data and revised methods. Furthermore, we explain the connection between the terms red herring hypothesis, i.e., that time to death and not age per se drives the health care expenditures, and steepening. We also present the mechanisms that may induce steepening, as presented in the literature. When testing steepening, we apply data from all inpatient stays in somatic hospitals in Norway in the period 1998–2009, i.e., the data has no self-selection and covers the entire population of Norway (5 million). Our analysis does not reject steepening, with the exception of the 0-year-olds. The results also hold when controlling for mortality-related expenditures. Furthermore, we observe an increase in expenditures for the 0-year-olds. Finally, we find increasing mortality-related expenditures over time. We find the link between steepening and the red herring hypothesis to be vague, and we find steepening and the red herring hypothesis to be independent. Copyright The Author(s) 2014

Suggested Citation

  • 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.
    • Handle: RePEc:spr:eujhec:v:15:y:2014:i:9:p:979-989
    DOI: 10.1007/s10198-013-0541-9
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10198-013-0541-9
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10198-013-0541-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
    2. Gregersen, Fredrik Alexander & Godager, Geir, 2013. "Hospital expenditures and the red herring hypothesis: Evidence from a complete national registry," HERO Online Working Paper Series 2013:3, University of Oslo, Health Economics Research Programme.
    3. 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, April.
    4. Colombier, Carsten & Weber, Werner, 2009. "Projecting health-care expenditure for Switzerland: further evidence against the 'red-herring' hypothesis," MPRA Paper 26747, University Library of Munich, Germany, revised Nov 2009.
    5. 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.
    6. Victor R. Fuchs, 2018. "“Though Much Is Taken”: Reflections on Aging, Health, and Medical Care," World Scientific Book Chapters, in: Health Economics and Policy Selected Writings by Victor Fuchs, chapter 33, pages 403-424, World Scientific Publishing Co. Pte. Ltd..
    7. David M. Cutler & Ellen Meara, 1998. "The Medical Costs of the Young and Old: A Forty-Year Perspective," NBER Chapters, in: Frontiers in the Economics of Aging, pages 215-246, National Bureau of Economic Research, Inc.
    8. 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, September.
    9. Barer, Morris L. & Evans, Robert G. & Hertzman, Clyde & Lomas, Jonathan, 1987. "Aging and health care utilization: New evidence on old fallacies," Social Science & Medicine, Elsevier, vol. 24(10), pages 851-862, January.
    10. Felder, Stefan & Werblow, Andreas, 2008. "Do the age profiles of health care expenditure really steepen over time? New evidence from Swiss cantons," Dresden Discussion Paper Series in Economics 05/08, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    11. Florian Buchner & Jürgen Wasem, 2006. "“Steeping” of Health Expenditure Profiles," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(4), pages 581-599, October.
    12. Christian Salas & James P. Raftery, 2001. "Econometric issues in testing the age neutrality of health care expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 669-671, October.
    13. Seshamani, Meena & Gray, Alastair M., 2004. "A longitudinal study of the effects of age and time to death on hospital costs," Journal of Health Economics, Elsevier, vol. 23(2), pages 217-235, March.
    14. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    15. 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.
    16. Stefan Felder & Andreas Werblow, 2008. "Does the Age Profile of Health Care Expenditure Really Steepen over Time? New Evidence from Swiss Cantons," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 33(4), pages 710-727, October.
    17. Peter Zweifel & Stefan Felder & Markus Meier, 2001. "Reply to: econometric issues in testing the age neutrality of health care expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 673-674, October.
    18. 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(2), pages 165-195, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guohua Liu & Mohammed Arshad Khan & Ahsanuddin Haider & Moin Uddin, 2022. "Financial Development and Environmental Degradation: Promoting Low-Carbon Competitiveness in E7 Economies’ Industries," IJERPH, MDPI, vol. 19(23), pages 1-16, December.
    2. Chandoevwit, Worawan & Phatchana, Phasith, 2018. "Inpatient care expenditure of the elderly with chronic diseases who use public health insurance: Disparity in their last year of life," Social Science & Medicine, Elsevier, vol. 207(C), pages 64-70.
    3. Calciolari, Stefano & Luini, Cecilia, 2023. "Effects of the bio-psycho-social frailty dimensions on healthcare utilisation among elderly in Europe: A cross-country longitudinal analysis," Social Science & Medicine, Elsevier, vol. 339(C).
    4. Anna Kollerup & Jakob Kjellberg & Rikke Ibsen, 2022. "Ageing and health care expenditures: the importance of age per se, steepening of the individual-level expenditure curve, and the role of morbidity," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(7), pages 1121-1149, September.
    5. Colombier, Carsten & Braendle, Thomas, 2022. "Healthcare expenditure projections up to 2050: ageing and the COVID-19 crisis," MPRA Paper 120659, University Library of Munich, Germany.
    6. Maciej Lis, 2016. "Age or time-to-death – what drives health care expenditures? Panel data evidence from the OECD countries," IBS Working Papers 04/2016, Instytut Badan Strukturalnych.
    7. SeungHoon Han & Hosung Sohn, 2023. "The short-term effects of fixed copayment policy on elderly health spending and service utilization: evidence from South Korea’s age-based policy using exact date of birth," International Journal of Health Economics and Management, Springer, vol. 23(2), pages 255-279, June.
    8. Moore, Patrick V. & Bennett, Kathleen & Normand, Charles, 2017. "Counting the time lived, the time left or illness? Age, proximity to death, morbidity and prescribing expenditures," Social Science & Medicine, Elsevier, vol. 184(C), pages 1-14.
    9. Friedrich Breyer & Normann Lorenz, 2021. "The “red herring” after 20 years: ageing and health care expenditures," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(5), pages 661-667, July.
    10. Breyer Friedrich, 2015. "Demographischer Wandel und Gesundheitsausgaben: Theorie, Empirie und Politikimplikationen," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 16(3), pages 215-230, October.
    11. Isabel Correia Dias & Priscila Ferreira & Lígia Costa Pinto & Marieta Valente & Paula Veiga, 2017. "Growing old, unhealthy and unequal: an exploratory study on the health of Portuguese individuals aged 50+," NIMA Working Papers 67, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho, revised Jun 2018.
    12. Carsten Colombier & Thomas Braendle, 2018. "Healthcare expenditure and fiscal sustainability: evidence from Switzerland," Public Sector Economics, Institute of Public Finance, vol. 42(3), pages 279-301.
    13. Usman Shakoor & Mudassar Rashid & Ashfaque Ali Baloch & Muhammad Iftikhar ul Husnain & Abdul Saboor, 2021. "How Aging Population Affects Health Care Expenditures in Pakistan? A Bayesian VAR Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(2), pages 585-607, January.
    14. Anne Mason & Idaira Rodriguez Santana & María José Aragón & Nigel Rice & Martin Chalkley & Raphael Wittenberg & Jose-Luis Fernandez, 2019. "Drivers of health care expenditure: Final report," Working Papers 169cherp, Centre for Health Economics, University of York.
    15. Nico Keilman & Dinh Q. Pham & Astri Syse, 2018. "Mortality shifts and mortality compression. The case of Norway, 1900-2060," Discussion Papers 884, Statistics Norway, Research Department.
    16. Braendle, Thomas & Colombier, Carsten, 2017. "Healthcare expenditure projections up to 2045," MPRA Paper 104737, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Friedrich Breyer & Normann Lorenz, 2021. "The “red herring” after 20 years: ageing and health care expenditures," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(5), pages 661-667, July.
    2. Melberg, Hans Olav & Sørensen, Jan, 2013. "How does end of life costs and increases in life expectancy affect projections of future hospital spending?," HERO Online Working Paper Series 2013:9, University of Oslo, Health Economics Research Programme.
    3. Breyer Friedrich, 2015. "Demographischer Wandel und Gesundheitsausgaben: Theorie, Empirie und Politikimplikationen," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 16(3), pages 215-230, October.
    4. Ried, Walter, 2007. "On the relationship between aging, edical progress and age-specific health care expenditures," Wirtschaftswissenschaftliche Diskussionspapiere 08/2007, University of Greifswald, Faculty of Law and Economics.
    5. Gregersen, Fredrik Alexander & Godager, Geir, 2013. "Hospital expenditures and the red herring hypothesis: Evidence from a complete national registry," HERO Online Working Paper Series 2013:3, University of Oslo, Health Economics Research Programme.
    6. Vincenzo Atella & Valentina Conti, 2013. "The effect of age and time to death on health care expenditures: the Italian experience," CEIS Research Paper 267, Tor Vergata University, CEIS, revised 12 Nov 2013.
    7. Maciej Lis, 2015. "Red Herring in the Vistula River: Time-to-Death and Health Care Expenditure," IBS Working Papers 13/2015, Instytut Badan Strukturalnych.
    8. 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.
    9. repec:ces:ifodic:v:11:y:2013:i:1:p:19078503 is not listed on IDEAS
    10. Wong, Albert & Wouterse, Bram & Slobbe, Laurentius C.J. & Boshuizen, Hendriek C. & Polder, Johan J., 2012. "Medical innovation and age-specific trends in health care utilization: Findings and implications," Social Science & Medicine, Elsevier, vol. 74(2), pages 263-272.
    11. Anna Kollerup & Jakob Kjellberg & Rikke Ibsen, 2022. "Ageing and health care expenditures: the importance of age per se, steepening of the individual-level expenditure curve, and the role of morbidity," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(7), pages 1121-1149, September.
    12. Stefan Felder, 2013. "The Impact of Demographic Change on Healthcare Expenditure," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(1), pages 03-06, 04.
    13. Atella, Vincenzo & Conti, Valentina, 2014. "The effect of age and time to death on primary care costs: The Italian experience," Social Science & Medicine, Elsevier, vol. 114(C), pages 10-17.
    14. Colombier, Carsten & Weber, Werner, 2009. "Projecting health-care expenditure for Switzerland: further evidence against the 'red-herring' hypothesis," MPRA Paper 26747, University Library of Munich, Germany, revised Nov 2009.
    15. Laurence J. Kotlikoff, 2005. "Who’s Going Broke? Comparing Growth in Healthcare Costs in Ten OECD Countries," Working Papers id:286, eSocialSciences.
    16. Breyer, Friedrich & Felder, Stefan, 2006. "Life expectancy and health care expenditures: A new calculation for Germany using the costs of dying," Health Policy, Elsevier, vol. 75(2), pages 178-186, January.
    17. 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, April.
    18. Norton, E.C., 2016. "Health and Long-Term Care," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 951-989, Elsevier.
    19. repec:dau:papers:123456789/7972 is not listed on IDEAS
    20. Yu, Tiffany Hui-Kuang & Wang, David Han-Min & Wu, Kuo-Lun, 2015. "Reexamining the red herring effect on healthcare expenditures," Journal of Business Research, Elsevier, vol. 68(4), pages 783-787.
    21. Byongho Tchoe & Sang-Ho Nam, 2010. "Aging Risk and Health Care Expenditure in Korea," IJERPH, MDPI, vol. 7(8), pages 1-20, August.
    22. Brigitte Dormont & Michel Grignon & Hélène Huber, 2006. "Health expenditure growth: reassessing the threat of ageing," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 947-963, September.

    More about this item

    Keywords

    Red herring hypothesis ; Hospital expenditure; Trends in health care expenditures; Steepening ; Ageing; A19; I15; I19;
    All these keywords.

    JEL classification:

    • A19 - General Economics and Teaching - - General Economics - - - Other
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I19 - Health, Education, and Welfare - - Health - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eujhec:v:15:y:2014:i:9:p:979-989. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.