Ageing, mortality and health care expenditures. The case of Norwegian hospitals and ambulances

In order to predict future health care expenditures and to understand the current financial situation, key variables that drive the expenditures have to be estimated. The aim of this thesis is to identify and estimate the impact of variables driving the health care expenditures within secondary care—in particular, the impact of age and mortality. Both the hospital expenditures and the emergency services are examined. In order to quantify the impact of mortality and age on the expenditures, data covering all inpatient hospital admissions in Norway from 1998 to 2010 and all ambulance transports for the South-Eastern Regional Health Authority (Helse Sør-Øst) for 2009 and 2010 were applied. For hospitals, both age and mortality are suggested to drive current hospital expenditures. For ambulances, distance to hospitals and age are central in explaining the variation in costs. For hospitals and ambulances, health care expenditures are found to be higher for newborns and the elderly as compared to the rest of the population. We estimate that approximately 10% of total hospital expenditures are allocated to decedents within a calendar year. With data from 2010, the share is estimated to be 10.6% (for inpatient and outpatient care), while with data from 1998–2009, the estimated share is 9.0% (for inpatient care). Furthermore, our analysis suggests that mortality-related hospital expenditures are a decreasing function of age. The connection between the concepts of steepening and the red herring hypothesis are also discussed. The red herring hypothesis states that it is time to death and not age per se that drives health care expenditures, while steepening states that health care expenditures grow faster for the elderly population than the rest of the population over time. The two concepts are found to be independent. The empirical analyses also suggest that steepening is present for the Norwegian hospital sector for the time period 1998–2009 if newborns are excluded. Furthermore, I put forth the hypothesis that steepening will be present for countries with high per capita health care expenditures in periods of increased per capita expenditures