Age, morbidity, or something else? A residual approach using microdata to measure the impact of technological progress on health care expenditure

This study measures the increment of health care expenditure (HCE) that can be attributed to technological progress and change in medical practice by using a residual approach and microdata. We examine repeated cross-sections of individuals experiencing an initial health shock at different point in time over a 10-year window and capture the impact of unobservable technology and medical practice to which they are exposed after allowing for differences in health and socioeconomic characteristics. We decompose the residual increment in the part that is due to the effect of delaying time to death, that is, individuals surviving longer after a health shock and thus contributing longer to the dem…