What Drives Health Care Spending? Can We Know Whether Population Aging Is A ‘Red Herring’?

Henry J. Aaron

WP#2009-18

Abstract

Several empirical studies have presented evidence that per-person health care spending does not rise with calendar age but with proximity to death.  Hence, it is alleged that increases in longevity will not, by themselves, boost health care spending.  Unfortunately, available data provide no basis for assuming that the curve relating average health care spending to age will, or will not, flatten with increases in longevity.  For this reason, budget projections based on the assumption that increases in longevity will not boost health care spending may understate projected growth of health care spending.