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A Cross-Country Analysis of Health Care Expenditures

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Author Info

  • Alex R. Horenstein

    (School of Business, ITAM)

  • Manuel S. Santos

    (Department of Economics, University of Miami)

Abstract

This paper is concerned with growth patterns of US health care expenditures. Within a representative sample of OECD countries, we lay out a growth accounting exercise for health care expenditures to assess the influence of several explanatory variables. Our analysis demonstrates that the relative price of medical care and some health care laws can trace down fairly well the differential increase in US medical expenditures over the period 1970-2007. We then explore some major factors driving US medical care prices - including prescription drugs, the degree of competition, malpractice, and out-of-pocket expenditures. Some other explanatory variables - income growth, technological change, life expectancy, physicians' compensation, trends in aging population, and defensive medicine - would seem unable to account for the differential increase in US medical expenditures over various time periods.

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File URL: http://bus.miami.edu/_assets/files/repec/WP2013-05.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2013-05.

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Length: 40 pages
Date of creation: 29 Dec 2012
Date of revision:
Handle: RePEc:mia:wpaper:2013-05

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Related research

Keywords: Health care expenditures; relative price of medical care; growth accounting; price elasticity; technological change; malpractice;

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References

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  1. Di Matteo, Livio, 2005. "The macro determinants of health expenditure in the United States and Canada: assessing the impact of income, age distribution and time," Health Policy, Elsevier, vol. 71(1), pages 23-42, January.
  2. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
  3. Carhart, Mark M, 1997. " On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
  4. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  5. Abe Dunn & Adam Hale Shapiro, 2012. "Physician Market Power and Medical-Care Expenditures," BEA Working Papers, Bureau of Economic Analysis 0084, Bureau of Economic Analysis.
  6. Robert E. Hall & Charles I. Jones, 2005. "The value of life and the rise in health spending," Proceedings, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco.
  7. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-80, September.
  8. Harrington, Scott E. & Danzon, Patricia M. & Epstein, Andrew J., 2008. ""Crises" in medical malpractice insurance: Evidence of excessive price-cutting in the preceding soft market," Journal of Banking & Finance, Elsevier, vol. 32(1), pages 157-169, January.
  9. Danzon, Patricia M., 2000. "Liability for medical malpractice," Handbook of Health Economics, Elsevier, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 26, pages 1339-1404 Elsevier.
  10. McClellan, Mark & Cutler, David & Newhous, Joseph P., 2000. "How Does Managed Care Do It?," Scholarly Articles 2643884, Harvard University Department of Economics.
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