In view of population aging, better understanding of what drives long-term care expenditure (LTCE) is warranted. Time-to-death (TTD) has commonly been used to project LTCE because it was a better predictor than age. We reconsider the roles of age and TTD by controlling for disability and co-residence and illustrate their relevance for projecting LTCE. We analyze spending on institutional and homecare for the entire Dutch 55+ population, conditioning on age, sex, TTD, cause-of-death and co-residence. We further examined homecare expenditures for a sample of non-institutionalized conditioning additionally on disability. Those living alone or deceased from diabetes, mental illness, stroke, respiratory or digestive disease have higher LTCE, while a cancer death is associated with lower expenditures. TTD no longer determines homecare expenditures when disability is controlled for. This suggests that TTD largely approximates disability. Nonetheless, further standardization of disability measurement is required before disability could replace TTD in LTCE projections models.

aging, expenditures, home care, institutional care, long-term care, time-to-death
Consumer Economics: Empirical Analysis (jel D12), Health: General (jel I10),
Journal of Health Economics
Erasmus School of Economics

de Meijer, C.A.M, Koopmanschap, M.A, Bago d'Uva, T.M, & van Doorslaer, E.K.A. (2011). Determinants of long-term care spending: Age, time to death or disability?. Journal of Health Economics, 30(2), 425–438. doi:10.1016/j.jhealeco.2010.12.010