What Drives the Increase of Health Care Expenditures for the Elderly?
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This paper examines the driving forces behind the recent increase in health care expenditures (HCE) for elders, using the Korea mandatory health insurance data over 2004-2018 together with the Korean Health Panel (6-12th waves). Our findings are two-fold. First, decomposing the total HCE into three factors, a demographic factor (the number of the elderly) and two non-demographic ones (the frequency of health care utilization and the price of medical treatments), we find that their relative contribution to the annual HCE increase accounts for 38.5%, 22.0%, and 39.5%, respectively. Second, from our two-part regression of time-to-death and age on the HCE growth, we find that proximity to death is a key force even after controlling for aging, morbidity, and income. These two results jointly imply that the HCE growth for the elderly has been accelerated by rising health care price and intensifying treatment particularly near to one’s end-of-life as well as the population aging.
Abstract
This paper examines the driving forces behind the recent increase in health care expenditures (HCE) for elders, using the Korea mandatory health insurance data over 2004-2018 together with the Korean Health Panel (6-12th waves). Our findings are two-fold. First, decomposing the total HCE into three factors, a demographic factor (the number of the elderly) and two non-demographic ones (the frequency of health care utilization and the price of medical treatments), we find that their relative contribution to the annual HCE increase accounts for 38.5%, 22.0%, and 39.5%, respectively. Second, from our two-part regression of time-to-death and age on the HCE growth, we find that proximity to death is a key force even after controlling for aging, morbidity, and income. These two results jointly imply that the HCE growth for the elderly has been accelerated by rising health care price and intensifying treatment particularly near to one’s end-of-life as well as the population aging.
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