Health care expenditures and longevity: is there a Eubie Blake effect?

Area of Science:

• Health Economics
• Gerontology
• Public Health Policy

Background:

• The relationship between rising life expectancy and health care expenditures (HCE) remains debated.
• The "red herring" hypothesis suggests HCE increases are linked to mortality proximity, not longevity itself.
• Previous studies often rely on cross-sectional data, limiting insights into long-term trends.

Purpose of the Study:

• To analyze the impact of increasing life expectancy on the trend of HCE over time.
• To investigate the influence of age, mortality rates, and survival rates on per-capita HCE.
• To project the future effect of demographic aging on HCE using simulation.

Main Methods:

• Utilized a pseudo-panel dataset of German sickness fund members from 1997-2009.
• Employed dynamic panel data models to analyze the time-series relationship.
• Conducted simulations based on official population forecasts for Germany.

Main Results:

• Age, mortality rates, and 5-year survival rates all positively correlate with per-capita HCE.
• The "Eubie Blake effect" describes increased treatment intensity for longer-term patient benefit.
• Simulations indicate demographic aging will lead to a net increase in HCE, outweighing cost reductions from falling mortality.

Conclusions:

• Increasing life expectancy, driven by falling mortality and longer remaining life spans, contributes to rising HCE.
• The "red herring" hypothesis is challenged; longevity itself appears to drive HCE increases.
• Policy implications suggest proactive planning for future healthcare demands due to demographic shifts.