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Aging, health expenditure, proximity to death, and income in Finland

Published online by Cambridge University Press:  01 April 2008

UNTO HÄKKINEN ,
PEKKA MARTIKAINEN ,
ANJA NORO ,
ELINA NIHTILÄ  and
MIKKO PELTOLA
UNTO HÄKKINEN*
Affiliation:
Centre for Health Economics at STAKES, Helsinki, Finland
PEKKA MARTIKAINEN
Affiliation:
Helsinki Collegium for Advanced Studies, and Population Research Unit, Department of Sociology, University of Helsinki, Finland
ANJA NORO
Affiliation:
Centre for Health Economics at STAKES, Helsinki, Finland
ELINA NIHTILÄ
Affiliation:
Population Research Unit, Department of Sociology University of Helsinki, Finland
MIKKO PELTOLA
Affiliation:
Centre for Health Economics at STAKES, Helsinki, Finland
*
*Corresponding author: Professor Unto Häkkinen, Centre for Health Economics at STAKES (CHESS) P.O.Box 220, Lintulahdenkuja 4,00530, Helsinki, Finland. Email: unto.hakkinen@stakes.fi
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Abstract

This study revisits the debate on the ‘red herring’, i.e. the claim that population aging will not have a significant impact on health care expenditure (HCE), using a Finnish data set. We decompose HCE into several components and include both survivors and deceased individuals into the analyses. We also compare the predictions of health expenditure based on a model that takes into account the proximity to death with the predictions of a naïve model, which includes only age and gender and their interactions. We extend our analysis to include income as an explanatory variable. According to our results, total expenditure on health care and care of elderly people increases with age but the relationship is not as clear as is usually assumed when a naïve model is used in health expenditure projections. Among individuals not in long-term care, we found a clear positive relationship between expenditure and age only for health centre and psychiatric inpatient care. In somatic care and prescribed drugs, the expenditure clearly decreased with age among deceased individuals. Our results emphasize that even in the future, health care expenditure might be driven more by changes in the propensity to move into long-term care and medical technology than age and gender alone, as often claimed in public discussion. We do not find any strong positive associations between income and expenditure for most non-LTC categories of health care utilization. Income was positively related to expenditure on prescribed medicines, in which cost-sharing between the state and the individual is relatively high. Overall, our results indicate that the future expenditure is more likely to be determined by health policy actions than inevitable trends in the demographic composition of the population.

Type
Articles
Information
Health Economics, Policy and Law , Volume 3 , Issue 2 , April 2008 , pp. 165 - 195
Copyright
Copyright © Cambridge University Press 2008

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