A multilevel analysis on the determinants of regional health care expenditure. A note

Guillem López Casasnovas and Marc Sáez

Working Papers, Research Center on Health and Economics from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We apply a multilevel hierarchical model to explore whether an aggregation fallacy exists in estimating the income elasticity of health expenditure by ignoring the regional composition of national health expenditure figures. We use data for 110 regions in eight OECD countries in 1997: Australia, Canada, France, Germany, Italy, Spain, Sweden and United Kingdom. In doing this we have tried to identify two sources of random variation: within countries and between-countries. Our results show that: 1- Variability between countries amounts to (SD) 0.5433, and just 13% of that can be attributed to income elasticity and the remaining 87% to autonomous health expenditure; 2- Within countries, variability amounts to (SD) 1.0249; and 3- The intra-class correlation is 0.5300. We conclude that we have to take into account the degree of fiscal decentralisation within countries in estimating income elasticity of health expenditure. Two reasons lie behind this: a) where there is decentralisation to the regions, policies aimed at emulating diversity tend to increase national health care expenditure; and b) without fiscal decentralisation, central monitoring of finance tends to reduce regional diversity and therefore decrease national health expenditure.

Keywords: OECD health expenditure; fiscal federalism; multilevel hierarchical models (search for similar items in EconPapers)
JEL-codes: C51 E62 H51 I18 (search for similar items in EconPapers)
Date: 2001-10
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: A multilevel analysis on the determinants of regional health care expenditure: a note (2007)
Working Paper: A multilevel analysis on the determinants of regional health care expenditure. A note (2001)
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