Friday, October 30, 2009

Longevity and the cost of health

It is well known that life expectancy in the US is lower that what it could be, especially when comparing it to Europe and the Far East, and that it has even been declining recently. One can emit a series of hypotheses for the reasons of this phenomenon: lack of preventive care, lack of universal health coverage, strong iniquities in health provision, too strong reliance on Medicare, and bad eating habits.

Pierre-Carl Michaud, Dana Goldman, Darius Lakdawalla, Adam Gailey and Yuhui Zheng report that the difference between the US and Europe is mostly due to the declining health of Americans approaching retirement age, that is just before they become eligible for Medicare. In other words, seeing that they will soon get free health care, almost retirees either drop their guards and indulge in unhealthy behavior or postpone necessary health procedures for a few years. If Americans were in the same shape as Europeans come retirement, Medicare could save about $1.1 trillion over the next five decades, and there would be no difference in terms of life expectancy.

And how would get Americans to be more healthy when they retire? Making sure they do not postpone required care is certainly necessary, and the various options debated in Washington currently will help in this regard. This also means that these options may turn out to be less expensive than initially thought, given the cost reduction for Medicare.

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