Modelling health care expenditures; overview of the literature and evidence from a panel time series model

Roel van Elk (), Esther Mot () and Philip Hans Franses
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Roel van Elk: CPB Netherlands Bureau for Economic Policy Analysis
Esther Mot: CPB Netherlands Bureau for Economic Policy Analysis

No 121, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: The first purpose of this paper is to give an up to date overview of the literature on health care expenditures. Secondly, this paper contributes to the existing literature by investigating the impact of several factors on health care expenditures in an empirical analysis using an error-correction model. Health care expenditures in industrial countries have been growing rapidly over the past forty years. This rapid growth jeopardizes the sustainability of public budgets and causes an increasing interest in the determinants of health care expenditures. Additional to the 'usual suspects' for rising health care expenditures, we pay attention to a somewhat neglected driving factor, which is the increase in the relative price of health care compared to other goods and services. We find that the increasing price of health care helps to explain the increase in real health care expenditures. However, the use of health care in volume terms is negatively affected by the increasing price. This effect seems to be stronger in periods of cost containment policy. Consistent with most recent findings in the literature, we find that income and ageing are important drivers of health care expenditures.

JEL-codes: H51 I10 (search for similar items in EconPapers)
Date: 2009-02
New Economics Papers: this item is included in nep-hea
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:121

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