Socio-economic inequality and healthcare costs over the life course - A dynamic microsimulation approach

Although there is well-established evidence for the existence of socio-economic inequalities in virtually all dimensions of health, little is known about the implications of these socio-economic disparities for healthcare costs from a cumulative life course perspective. Accounting for differentials in healthcare use patterns and mortality, we assess how lifetime costs differ between socio-economic groups.

This study used dynamic microsimulation modelling.

Combining price weights for healthcare services with information on healthcare consumption from the 2014 Austrian Health Interview Survey (n = 15,771), we calculated average cost profiles by gender, age and education consistent with aggregate System of Health Accounts. A dynamic microsimulation model was used to project cumulative healthcare costs over the entire lifecycle for the 2019 birth cohort in four different scenarios to illustrate the influence of the different cost determinants on lifetime costs.

Before considering social inequalities in mortality, men with compulsory education have close to 66% higher lifetime costs than men with tertiary education; for women, the difference is close to 20%. Accounting for longevity differentials reduces this gap to approximately 40% for men and 10% for women. Closing the gap in healthcare use and in longevity between socio-economic groups would reduce lifetime healthcare expenditure by 4.1% in the 2019 birth cohort and by 19% in the whole population.

Accounting for mortality differentials between socio-economic groups has a large impact on estimated lifetime healthcare costs. Reducing social inequalities in health can contribute to containing healthcare expenditures against the backdrop of rising life expectancy.