On the Rise of Health Spending and Longevity

50 Pages Posted: 22 Dec 2009

See all articles by Raquel Fonseca

Raquel Fonseca

RAND Corporation

Pierre-Carl Michaud

RAND Corporation; IZA Institute of Labor Economics

Titus J. Galama

USC Center for Economic and Social Research

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: December 21, 2009

Abstract

The authors use a calibrated stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and life expectancy over the period 1965-2005. They estimate that technological change along with the increase in the generosity of health insurance may explain independently 53% of the rise in health spending (insurance 29% and technology 24%) while income less than 10%. By simultaneously occurring over this period, these changes may have lead to a “synergy” or interaction effect which helps explain an additional 37% increase in health spending. They estimate that technological change, taking the form of increased productivity at an annual rate of 1.8%, explains 59% of the rise in life expectancy at age 50 over this period while insurance and income explain less than 10%.

Keywords: demand for health, health spending, insurance, technological change, longevity

JEL Classification: I10, I38, J26

Suggested Citation

Fonseca, Raquel and Michaud, Pierre-Carl and Galama, Titus J. and Kapteyn, Arie, On the Rise of Health Spending and Longevity (December 21, 2009). RAND Working Paper Series WR- 722, Available at SSRN: https://ssrn.com/abstract=1526756 or http://dx.doi.org/10.2139/ssrn.1526756

Raquel Fonseca (Contact Author)

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Pierre-Carl Michaud

RAND Corporation ( email )

1776 Main Street
Santa Monica, CA 90407-2138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Titus J. Galama

USC Center for Economic and Social Research ( email )

Playa Vista, CA
United States
+310 430 6358 (Phone)

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States
310-448-5383 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
151
Abstract Views
2,247
Rank
214,004
PlumX Metrics