NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Risk of Out-of-Pocket Health Care Expenditure at End of Life

Samuel Marshall, Kathleen M. McGarry, Jonathan S. Skinner

NBER Working Paper No. 16170
Issued in July 2010
NBER Program(s):   AG   HC

There is conflicting evidence on the importance of out-of-pocket medical expenditures as a risk to financial security, particularly at older ages. We revisit this question, focusing on health care spending near the end of life using data from the Health and Retirement Study for the years 1998-2006. We address difficulties with missing values for various categories of expenditures, outliers, and variations across individuals in the length of the reporting period. Spending in the last year of life is estimated to be $11,618 on average, with the 90th percentile equal to $29,335, the 95th percentile $49,907, and the 99th equal to $94,310. These spending measures represent a substantial fraction of liquid wealth for decedents. Total out-of-pocket expenditures are strongly positively related to wealth and weakly related to income. We find evidence for a mechanism by which wealth could plausibly buy health: large expenditures on home modifications, helpers, home health care, and higher-quality nursing homes, which have been shown elsewhere to improve longevity.

download in pdf format
   (332 K)

email paper

A non-technical summary of this paper is available in the 2010 number 2 issue of the NBER Bulletin on Aging and Health. You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (332 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16170

Published:

Users who downloaded this paper also downloaded these:
Philipson, Becker, Goldman, and Murphy w15649 Terminal Care and The Value of Life Near Its End
Poterba, Venti, and Wise w16389 The Asset Cost of Poor health
Qian, Reinhart, and Rogoff w16168 On Graduation from Default, Inflation and Banking Crisis: Elusive or Illusion?
Gaynor, Moreno-Serra, and Propper w16164 Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service
Chor and Manova w16174 Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us