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Health Spending as a Population Ages

By May 9, 2018Commentary

The gradient of health spending rises with age, particularly above age 60.  As our population ages, concern grows over ability to pay for the  health care needs of the elderly.  A study in the Journal of Health Economics examines spending trends as people age and near death.   (Health Economics Article)  The authors used data from the United Kingdom and traced the health spending and utilization patterns for two groups of around 40,000 people who died and who had used some inpatient care in the period from 2005/2006 to 2011/2012.  One group died in 2011/2012 and had some inpatient care in the time since 2005 and the second group had some inpatient care in 2005/2006 and had died by 2011/2012.  They attempted to elucidate the role of age, time-to-death, and morbidity on health care use and expenses.  The relationship between aging and health and health expenditures can be complex.  The population may be aging, but if the onset of significant diseases is deferred at the same rate, people’s overall health expenditures may not change.  If diseases occur at the same age, and people live longer, spending would obviously increase.  And there are a number of in-between cases.  One further factor that complicates our understanding of trends is that at least in the US, there has in recent years been much more comprehensive diagnosing of even minor chronic illness, due to certain reimbursement incentives.  This may give a false sense of increasing prevalence of disease.

The authors hypothesize that morbidity is the real driver of health care spending, not age or time-to-death.  At first blush, the data suggest an increasing health spend by age.  They also suggest that spending rises as people are closer to death.  Both may be true in aggregate, but the study analysis shows that the real driver is morbidity, or the health status of an individual.  At any age, those with greater morbidity have higher health spending.  The researchers used hospital spending as a proxy for overall health care costs, which may be problematic in some cases, since increasingly drugs and other care settings are used to treat even serious illnesses.  But it seems intuitively obvious that it is a person’s health, not their age, that will be the major factor in how much health spending they occur.  Even within quite aged cohorts, over age 80 for example, in the US there is quite a spread of spending, with many people in the cohort having almost no health costs.  So maintaining good health behaviors and good preventive health care at all ages is the most likely path to minimizing both individual lifetime health care spending and population health costs.

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