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Email Event
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Economic progress and advances of medical technology have helped increase life expectancy. Nevertheless, a marked aging of the population has raised concerns that this progress may increase health care spending beyond sustainable levels. In previous research, Swiss economist Peter Zweifel found however that the share of the population approaching death--that
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is, "time to death"--was a more important predictor of health status and future health spending than population aging per se, which amounts, he argues, to a "red herring."
At this event, Zweifel will present his most recent findings on aging and future health care spending. His body of work accounts for the separate effects of long-term care services on health care spending. Zweifel's analysis also examines how changes in death rates (mortality) and disease rates (morbidity) contribute differently to health spending trends. His research continues to show that aging will not contribute much to the future growth of per-capita health care expenditures. In addition, Zweifel suggests that one could also slow this projected rate of growth by increasing contractual choices in health insurance to persuade at least a portion of even the oldest age groups to self-ration while improving their overall well-being. Responding to Zweifel will be three distinguished analysts of demographics and health spending: Phil Ellis of the Congressional Budget Office; James Lubitz, formerly of the National Center for Health Statistics; and Louise Sheiner of the Board of Governors of the Federal Reserve System.
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1:45 p.m.
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Registration
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2:00
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Presenter:
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Peter Zweifel, University of Zurich
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Discussants:
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Phil Ellis, Congressional Budget Office
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James Lubitz
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Louise Sheiner, Board of Governors of the Federal Reserve System
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Moderator:
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Thomas P. Miller, AEI
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4:00
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Adjournment
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Time until Death a Better Indicator of Health Care Spending than Aging
WASHINGTON, JUNE 30, 2008--There is growing concern that the aging of the U.S. population will result in health expenditure spiraling out of control. Economist Peter Zweifel of the University of Zurich has found that it is not aging that leads to increased health expenditure, but rather the shrinking of the time one has left to live. He discussed his 
findings at an AEI event on June 27.
Aging is traditionally thought of as a driver of health care expenditures. The historical assumption is that as a person gets older, their health expenditure increases. But Zweifel has discovered that aging is related to health care expenditure only because of its relation to time remaining before death. He found that when time to death and other determinants of health care expenditure are controlled, one sees little correlation between aging and health care expenditure.
Whether or not this has implications in the debate over the approaching fiscal crisis of federal health programs in the United States is questionable. Louise Sheiner, an economist at the Federal Reserve, pointed out that the difference between other countries and the United States is that in the latter, the big federal program--Medicare--pays out only to older citizens. Thus an aging population will lead to more enrollees. Phil Ellis of the Congressional Budget Office expanded on this point, stating that while he agreed with Zweifel that the effects of the aging of the population on total health care expenditure is small, the effects of aging on federal expenditure in the United States are quite large. This is compounded by the fact that the cost per enrollee has grown and continues to grow at a rate faster than the growth of GDP growth.
Among the other discussion topics at the conference:
- James Lubitz, formerly of the National Center for Health Statistics, questioned whether or not better health in all instances decreases total health expenditure over the course of one's life.
- Zweifel criticized Medicare for its one-size-fits-all approach to public health insurance. He stated that Switzerland's approach, in which the government gives all citizens a subsidy to use to purchase insurance from a number of private plans, does a much better job of ensuring that people get the care they want and feel comfortable paying for. Mark V. Pauly of the Wharton School proposes a similar voucher structure for Medicare in the recent AEI Press book Markets Without Magic: How Competition Might Save Medicare.
--WALTON DUMAS
For video, audio, and more information about this event, visit www.aei.org/event1738/. For more information about AEI's Health Policy Studies program, visit www.aei.org/health/.
For media inquiries, contact Véronique Rodman at 202.862.4870 or vrodman@aei.org.
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