Health care expenditures from living longer-how much do they matter

Health interventions have two major downstream cost effects, savings from reducing morbidity and expenditures from living longer. Anecdotal evidence suggests that many economic evaluations, particularly those that are trial-based, do not include health care costs from living longer. The purpose of this study was therefore to determine the bias from excluding life extension costs in economic evaluations. To this end, the impact of health changes on savings from preventing disease and costs of living longer was examined in the US Medicare population between 1998 and 2004. A state transition decision model with two health states (alive and dead) was built from an extended payer's perspective. It used Medicare expenditure data on survivors and decedents. Health changes were measured in terms of both morbidity and mortality reduction. The analysis shows that life extension costs cancel out savings from reducing morbidity. Users of economic evaluations may use this finding to estimate the bias when life extensions costs are not included in the analysis. Copyright (c) 2013 John Wiley & Sons, Ltd.