Health Care Expenditures and Longevity: Is there a Eubie Blake Effect?

Arbeitspapier

It is still an open question whether increasing life expectancy as such is causing higher health care expenditures (HCE). According to the “red-herring”-hypothesis, the positive correlation between age and HCE is exclusively due to the fact that mortality rises with age and a large share of HCE is caused by proximity to death. As a consequence, rising longevity – through falling mortality rates – may even reduce HCE. However, a weakness of previous empirical studies is that they use cross-sectional evidence to make inferences on a development over time. In this paper we try to isolate the impact of rising longevity on the trend of HCE over time by using data for a pseudo-panel of German sickness fund members over the period 1997-2009. Using dynamic panel data models, we find that age, mortality rate and five-year survival rates have a positive impact on per-capita HCE. Our explanation for the last finding is that physicians treat patients more aggressively if they think the result will pay off for a longer time span, which we call “Eubie Blake effect”. A simulation on the basis of an official population forecast for Germany is used to isolate the effect of demographic ageing on real per-capita HCE over the next decades.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Research Papers in Economics ; No. 1/12

Classification and Topics

• Classification: Wirtschaft ; National Government Expenditures and Health ; Demographic Trends, Macroeconomic Effects, and Forecasts ; Health: Other
• Subject: health care expenditures ; ageing ; longevity ; 5-year survival rate

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Breyer, Friedrich ; Lorenz, Normann ; Niebel, Thomas
• Event: Veröffentlichung
• (who): Universität Trier, Fachbereich IV – Volkswirtschaftslehre
• (where): Trier
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/88639
• Last update: 10.03.2025, 11:43 AM CET