Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/36271 
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers No. 4622
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We 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. We 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. We 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%.
Subjects: 
Demand for health
health spending
insurance
technological change
longevity
JEL: 
I10
I38
J26
Document Type: 
Working Paper

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