Abstract:

In OECD countries, a considerable share of health care expenditure (HCE) is spent for the care of the terminally ill. This paper derives the demand for HCE in the last 2 years of life from a model that accounts for age, mortality risk and wealth. The empirical tests are based on data of deceased members of a major Swiss sick fund. The empirical evidence confirms most of the hypotheses derived from the model, i.e.; HCE increases with closeness to death, (ii) for retired individuals. HCE decreases with age, and (iii) low-income individuals, as compared to high-income individuals, incur lower HCE in the last months of life.