01 Feb 2006

The Impact of Death-Related Costs on Health Care Expenditure

A Survey

Michele Raitano

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In the economic policy debate it is often stated that population ageing will lead to huge increases in the age-related components of public expenditure – primarily pensions and health care. This paper analyses a factor that may, at least partly, alleviate the fear that increased life expectancy will accelerate the rise in health-care spending: namely the fact that independent of decedent age, the bulk of per capita health-care costs are concentrated in the last years of life (the so-called ‘mortality-related’ costs). It surveys the empirical literature on health economics, presenting the main results obtained by studies on the interaction among age, proximity to mortality and health-care expenditure. Based on this analysis, it concludes with certainty that age alone is not a good predictor of rises in health-care spending, and that proximity to mortality must also be used as a predictor of health-care expenditure.