Any individual’s life and health spending can be charted and all the individuals in a group, geographic or other, summed to get a picture of spending versus age. As would be expected, health spending rises rather regularly with age, staying low through most of childhood and adulthood and increasing more rapidly in the later decades of life, with the last year or two before death tending to account for a very large percent of total lifetime health spending. A paper from the National Bureau of Economics Research looks at whether there have been changes in these trends over recent decades and if so, what those trends may tell us about expected health care spending in the next few decades. (NBER Paper) If longer lives mean more years of relatively poor health and more spending, the consequences for Medicare, for example, are not good. On the other hand, if the extra years of life on average are lived in good health, there is actually some deferral of total spending, which may continue as life expectancy grows. The authors used about two decades of data from the Medicare Current Beneficiary Survey, linked with other data to try to identify trends. Since 1991, the data suggest that the number of people reporting limitations in activities of daily living has declined. Health status in the year or two before death appears relatively unchanged, but health status in the years before that has improved. The result is that disability free life expectancy is increasing, while disabled life expectancy is falling. The general conclusion is that morbidity is being compressed into the year or two just before death. Why do people live longer, and the extra years are generally in good health? It may be better health management–people eat more sensibly and exercise, smoke and drink less–or it may be better health care, new drugs and other treatments, more access to care. Whatever the cause, it is encouraging that the longer live expectancy should not by itself lead to substantially greater health spending.
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About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
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