Testing the red herring hypothesis on an aggregated level: ageing, time-to-death and care costs for older people in Sweden

Abstract

In this paper we test the 'red herring' hypothesis for expenditures on long-term care (LTC). The main contribution of this paper is to assess the 'red herring' hypothesis by using the probability of dying as a measure for time-to-death (TTD). In addition, we implement models that allow for age-specific TTD effects on LTC utilization as well as sex-specific effects. We also focus on total, institutional and domiciliary LTC separately. For our analysis we use high quality administrative data from Sweden. Our analysis is based on fixed effects estimates. We use our findings to project future LTC expenditures and show that, although TTD is a relevant predictor, age itself remains the main driver of LTC expenditures.

Health Care Expenditures and Longevity: Is There a Eubie Blake Effect?

“…Thus, we see that the decline in HCE due to lower mortality rates is more than compensated by considering the concomitant increase in the 5-year survival rates of older population groups. 22 The results from step 3 show that with the 2060 age composition (along with the 2060 mortality and survival rates), health care expenditures in 2009 would have been higher by 55 % for men and by 53 % for women, an effect that is considerably larger than the impact of mortality and survival rates alone. The second line from the bottom in Table 9 contains the results of converting the respective increases into annual growth rates, which can be interpreted as ''growth in real HCE due to demographic change''.…”

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