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

TitleThe Risk of Out-of-Pocket Health Care Expenditure at End of Life
Publication TypeReport
Year of Publication2010
AuthorsMarshall, SM, McGarry, K, Skinner, JS
Series TitleNBER Working Paper
Document Number16170
InstitutionNational Bureau of Economic Research
CityCambridge, MA
KeywordsDemographics, Health Conditions and Status, Healthcare, Net Worth and Assets

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.

Endnote Keywords

health care costs/demographics/education/wealth/Longevity

Endnote ID


Citation Key5793