Modeling health and mortality dynamics, and their effects on public finance

The primary motivation of this dissertation is to provide insights into the future developments of mortality and population health, and the associated effects on public finance in the United States. The U.S. has experienced increases in life expectancy and the accompanying population ageing over the past century. Saving sufficiently for retirement, being able to face higher pension expenses, efficiently allocating healthcare resources are significant challenges for individuals, public and private pension funds, insurance companies, and the government. The complexity of changes in public finance associated with ageing is not only caused by people's longer lifetimes, but also by the future development of people's health. Therefore, the first essay in this dissertation models the future developments of population health and quantifies the degree of uncertainty in the future developments. The second essay further investigates the association between the developments of life expectancy and healthy life expectancy, taking into account dependence between developments of mortality and health. The third essay estimates the effects on (healthy) life expectancy of a policy that links the retirement age to life expectancy by considering the dependence between male and female mortality and health. The last essay studies another important issue of public finance, the growth of healthcare expenditure. The essay investigates the dynamic relationship between the growth of healthcare cost and a relatively large set of its determinants, with special attention to the effect of people's health on the growing healthcare cost.