@TechReport{iza:izadps:dp7622,
            	author={Fonseca, Raquel and Michaud, Pierre-Carl and Kapteyn, Arie and Galama, Titus},
            	title={Accounting for the Rise of Health Spending and Longevity},
            	year={2013},
	month={Sep},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={7622},
            	url={https://www.iza.org/publications/dp7622},
	abstract={We estimate a stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and longevity in the U.S. over the period 1965-2005. We estimate that technological change and the increase in the generosity of health insurance on their own may explain 36% of the rise in health spending (technology 30% and insurance 6%), while income explains only 4% and other health trends 0.5%. By simultaneously occurring over this period, these changes may have led to complementarity effects which we find to explain an additional 57% increase in health spending.
The estimates suggest that the elasticity of health spending with respect to changes in both income and insurance is larger with co-occurring improvements in technology. Technological change, taking the form of increased health care productivity at an annual rate of 1.3%, explains almost all of the rise in life expectancy at age 25 over this period, while changes in insurance and income together explain less than 10%. Welfare gains are substantial and most of the gain appears to be due to technological change.},
	keywords={life-cycle models;longevity;health spending;technological change},
            }