Population Aging and Healthcare Expenditure in Korea

Korea's rapid population aging has been considered as a major factor in increase of healthcare expenditure (HCE). However, there were no clear empirical evidences in Korea that show if population aging has a significant impact on HCE. To examine the 'red herring' argument, this study used Heckman, two-part, and augmented model with Korean National Health Insurance claim data for the deceased and survivors of aged 20 years and over verified by Korean National Health Insurance Service between January 1 and December 31, 2010. Our results suggest that when time to death is controlled for as explanatory variable, HCE decreases as a function of age, and HCE during the terminal year increases as a function of time to death, and HCE in the last quarter of life decreases with age. Therefore, this study affirms that there is no age effect in Korea experiencing the most rapid population aging among Asian countries. An increase in the number of elderly, due to the aging of baby boomers, may not increase a share of HCE out of gross domestic product (GDP) in Korea. Copyright © 2015 John Wiley & Sons, Ltd.