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Int J Health Care Finance Econ (2012) 12:129143 DOI 10.1007/s10754-012-9106-1
Terminal costs, improved life expectancy and future public health expenditure
Thomas Bue Bjrner Sren Arnberg
Received: 17 May 2011 / Accepted: 21 February 2012 / Published online: 11 March 2012 Springer Science+Business Media New York 2012
Abstract This paper presents an empirical analysis of public health expenditure on individuals in Denmark. The analysis separates out the individual effects of age and proximity to death (reecting terminal costs of dying) and employs unique micro data from the period 2000 to 2009, covering a random sample of 10% of the Danish population. Health expenditure includes treatment in hospitals, subsidies to prescribed medication and health care provided by general practitioners and specialists and covers about 80% of public health care expenditure on individuals. The results conrm ndings from previous studies showing that proximity to death has a significant impact on health care expenditure. However, it is also found that cohort effects (the baby boom generation) as well as improvements in life expectancy have a substantial effect on future health care expenditure even when proximity to death is controlled for. These results are obtained by combining the empirical estimates with a long term population forecast. When life expectancy increases, terminal costs are postponed but the increases in health expenditure that follow from longer life expectancy are not as large as the increase in the number of elderly persons would suggest (due to healthy ageing). Based on the empirical estimates, healthy ageing is expected to reduce the impact of increased life expectancy on real health expenditure by 50% compared to a situation without healthy ageing.
Keywords Public health expenditure forecast Healthy ageing Cost of dying
Two-part model
The authors are grateful for comments and suggestions from Lars Haagen Petersen, Niels Henning Bjrn, Jes Sgaard, the chairmen of the Danish Economic Councils and the anonymous referee. Mette Mller Jrgensen has given excellent research assistance. Finally, thanks to Marianne Frank Hansen from the DREAM research group for access to the Danish population forecast data. However, any errors and omissions are solely the responsibility of the authors.
T. B. Bjrner (B) S. Arnberg
Danish Economic Councils, Amaliegade 44, 1256 Copenhagen K, Denmark e-mail: [email protected]
S. Arnberge-mail: [email protected]
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