International Differences in Longevity and Health and Their Economic Consequences

Published In: NBER Working Papers / (Cambridge, MA : National Bureau of Economic Research, Aug. 2009), p. 1, 2-35

Posted on RAND.org on December 31, 2008

by Pierre-Carl Michaud, Dana P. Goldman, Darius N. Lakdawalla, Adam Gailey, Yuhui Zheng

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In 1975, 50 year-old Americans could expect to live slightly longer than their European counterparts. By 2005, American life expectancy at that age has diverged substantially compared to Europe. The authors find that this growing longevity gap is primarily the symptom of real declines in the health of near-elderly Americans, relative to their European peers. In particular, the authors use a microsimulation approach to project what US longevity would look like, if US health trends approximated those in Europe. The authors find that differences in health can explain most of the growing gap in remaining life expectancy. In addition, we quantify the public finance consequences of this deterioration in health. The model predicts that gradually moving American cohorts to the health status enjoyed by Europeans could save up to $1.1 trillion in discounted total health expenditures from 2004 to 2050.

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