Do red herrings swim in circles? Controlling for the endogeneity of time to death

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Studies on the effect of ageing on health care expenditures (HCE) have revealed the importance of controlling for time-to-death (TTD). These studies, however, are subject to possible endogeneity if HCE influences remaining life expectancy. This paper introduces a ten year observational period on monthly HCE, socioeconomic characteristics, and survivor status to first predict TTD and then uses predicted values of TTD as an instrument in the regression for HCE. While exogeneity of TTD has to be rejected, core results concerning the role of TTD rather than age as a determinant of HCE (the "red herring" hypothesis) are confirmed. Terms of use: Documents inJEL Classification: I10, D12

Time to death and the forecasting of macro-level health care expenditures: Some further considerations

“…The inclusion of TTD in models has led to strong debates about endogeneity (Felder et al, 2009). Felder et al (2009 have shown that while endogeneity is present, it is a small issue: TTD influences costs more than vice versa.…”

Determinants of long-term care spending: Age, time to death or disability?

“…11 Concerning potential endogeneity of TTD, many previous studies have attempted to deal with it (e.g. Weaver et al, 2009;Felder et al, 2010;Stearns and Norton, 2004;Zweifel et al, 2004). The majority of studies, however, focused on the possibility of TTD being endogenous to acute or total HCE as the amount of care consumed is found to increase longevity (Hall and Jones, 2007;Becker et al, 2005).…”

“…None of these studies were able to appropriately solve the endogeneity of TTD because valid instruments were lacking. Studies that partly corrected for endogeneity bias concluded that the effect of TTD on the level of HCE is underestimated in the presence of endogeneity (Weaver et al, 2009;Stearns and Norton, 2004;Felder et al, 2010). In the specific case of LTCE, however, the endogeneity problem is probably more limited.…”

“…Third, many studies have failed to correct for the endogeneity of TTD which is partly caused by omitting disability (e.g. Felder et al, 2010;Zweifel et al, 2004). Accounting for disability therefore mitigates this endogeneity bias.…”

Fostering of health economics in Germany

“…Im Folgenden werden zwei dieser Kontroversen exemplarisch dargestellt. Eine Kontroverse setzt sich mit dem Einfluss des demografischen Wandels und des medizinisch-technischen Fortschritts auf die Gesundheitsausgaben auseinander [64,65,66,67]. In der Tendenz zeigen diese Arbeiten, trotz aller methodischen Unterschiede, dass der reine demografische Effekt auf die Gesundheitsausgaben überschätzt wird.…”