Hospital Expenditure at the End-of-Life: A Time-to-Death Approach

In recent years the use of time to death (TTD) variables in the modeling of individual health expenditures has been of interest to health economics researchers. The aim of this study was to investigate the effect of age and TTD on hospital inpatient expenditure (HIE).

We used a claims database from Iran Health Insurance Organization of Tehran city that includes considerable proportion of Tehran residents and contains information on insured individuals’ HIE. We included HIE of all insured decedents (30 to 90 years old) who died during March 2013 and March 2014 (n = 1018). No sampling was required. According to the decedents’ date of death, we extracted their last 24 months HIE. The period of time March 30, 2011 until March 30, 2014 (3 years) was used to guarantee a full 24 months of observations for decedents. A two-part econometric model was employed to investigate the effect of age, TTD, and some demographic variables on probability and conditional amount of individuals’ hospital expenditure. Stata software (version 16.0) was used for data processing and analysis.

Our results demonstrated that the month-based TTDs especially near months before death of decedents (TTD1 to TTD10) significantly affected both probability and conditional amount of HIE. One month before death incurred more HIE than the rest of the months. A further interesting finding is that after including TTD, age variable as a conditional driver of HIE loses its direct effect on decedents’ HIE, but age TTD interaction effect on HIE is still positive and statistically significant.

The results confirm that TTD as a proxy of mortality indicator has a considerable effect on decedents’ HIE. The age variable has not directly affected decedents’ HIE but indirectly and through its interaction with TTD has a statistically significant effect on HIE. In addition to age, policy-makers should consider TTD to make better predictions of future HIE.