What Drives the Increase in Health Care Costs with Age?

The aim of the article is to show the role of the drivers of health care costs increases with age. An innovative decomposition strategy has been proposed and applied to the population-wide data on health care expenditure in Poland. We have found that the health care costs dynamics with age are driven by the rise in prevalence and the frequency of the use of the health care system. The cost of procedures and the share of decedents play minor roles here. If the pattern of morbidity remains constant, mortality constitutes an important restraint that prevents the costs of care exploding.