On The Rise of Health Spending and Longevity

Raquel Fonseca (), Pierre-Carl Michaud, Titus Galama and Arie Kapteyn

No 4622, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We use a calibrated stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and life expectancy over the period 1965-2005. We estimate that technological change along with the increase in the generosity of health insurance may explain independently 53% of the rise in health spending (insurance 29% and technology 24%) while income less than 10%. By simultaneously occurring over this period, these changes may have lead to a "synergy" or interaction effect which helps explain an additional 37% increase in health spending. We estimate that technological change, taking the form of increased productivity at an annual rate of 1.8%, explains 59% of the rise in life expectancy at age 50 over this period while insurance and income explain less than 10%.

Keywords: insurance; health spending; demand for health; technological change; longevity (search for similar items in EconPapers)
JEL-codes: I10 I38 J26 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2009-12
New Economics Papers: this item is included in nep-age, nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Published - published as 'Accounting for the Rise of Health Spending and Longevity' in: Journal of the European Economics Association, 2021, 19 (1), 536 - 579

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Working Paper: On the Rise of Health Spending and Longevity (2009)
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