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The determinants of health care expenditure: a macroeconomic approach

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  • R. MAHIEU

    (Insee)

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    Abstract

    This paper first presents a time-series analysis of factors influencing aggregate health care expenditure in some OECD countries. We focus on supply-side factors (especially the diffusion of medical technologies) and first estimate a single model on six countries. The results suggest that financial incentives may explain a part of the discrepancies observed between these countries. We then test this hypothesis on panel data for 20 OECD countries, following Gerdtham (1992, 1995), and thus introduce a linear trend for each type of health care system : integrated (like the British NHS), based on Fee-For-Service reimbursement (like France), or based on contracts between providers and insurers (like Germany). We compute an income elasticity around 0.7 (this is Gerdtham's estimation when introducing institutional specificities), and find that the growth of health care expenditure per capita is 0.6 point higher in countries with Fee-For-Service reimbursement than in other countries.

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    File URL: http://www.insee.fr/fr/publications-et-services/docs_doc_travail/G2000-01.pdf
    File Function: Document de travail de la DESE numéro G2000-01
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    Bibliographic Info

    Paper provided by Institut National de la Statistique et des Etudes Economiques, DESE in its series Documents de Travail de la DESE - Working Papers of the DESE with number g2000-01.

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    Date of creation: 2000
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    Handle: RePEc:crs:wpdeee:g2000-01

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    Related research

    Keywords: health care expenditure; health care system; financial incentives; time series;

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    1. Dionne, Georges & Contandriopoulos, Andre-Pierre, 1985. "Doctors and their workshops : A review article," Journal of Health Economics, Elsevier, vol. 4(1), pages 21-33, March.
    2. Parkin, David & McGuire, Alistair & Yule, Brian, 1987. "Aggregate health care expenditures and national income : Is health care a luxury good?," Journal of Health Economics, Elsevier, vol. 6(2), pages 109-127, June.
    3. Frédéric Rupprecht & Alain Quinet & Yannick L'Horty, 1997. "Expliquer la croissance des dépenses de santé : le rôle du niveau de vie et du progrès technique," Économie et Prévision, Programme National Persée, vol. 129(3), pages 257-268.
    4. David M. Cutler & Louise Sheiner, 1997. "Managed Care and the Growth of Medical Expenditures," NBER Working Papers 6140, National Bureau of Economic Research, Inc.
    5. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1996. "Are Medical Prices Declining?," NBER Working Papers 5750, National Bureau of Economic Research, Inc.
    6. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
    7. Dranove, David, 1988. "Demand Inducement and the Physician/Patient Relationship," Economic Inquiry, Western Economic Association International, vol. 26(2), pages 281-98, April.
    8. Peter C.B. Phillips & Mico Loretan, 1989. "Estimating Long Run Economic Equilibria," Cowles Foundation Discussion Papers 928, Cowles Foundation for Research in Economics, Yale University.
    9. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    10. Lise Rochaix, 1997. "Asymétries d'information et incertitude en santé : les apports de la théorie des contrats," Économie et Prévision, Programme National Persée, vol. 129(3), pages 11-24.
    11. Stéphane Jacobzone & Lise Rochaix, 1997. "L'hypothèse de demande induite : un bilan économique," Économie et Prévision, Programme National Persée, vol. 129(3), pages 25-36.
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