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Factor Decomposition of Inter-prefectural Health Care Expenditure Disparities in Japan

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  • Masayoshi Hayashi

    (Faculty of Economics, The University of Tokyo)

  • Akiko Oyama

    (International Operations Division, Dai-ichi Life Insurance Company)

Abstract

Despite frequent discussions on regional variations in health care expenditure (HCE), few studies account for the sources of such regional disparities. This study bridges this gap in the literature by taking the following two steps. First, we explore the determinants of regional HCE in Japan, covering a data period that expands the scope of previous studies (i.e., the 2000s). Second, we decompose the variations in regional HCE into contributions explained by the HCE determinants examined in the first step, utilizing a regression-based decomposition method. In the regression analysis, we find that the effect of the number of hospital beds on per capita HCE is larger than that of the other determinants, except the proportion of the elderly population. In particular, a 1% increase in the number of hospital beds induces a .22−.43% increase in HCE, in line with Roemer’s Law. The decomposition analysis also finds the salient effect of the number of hospital beds. In particular, this variable accounts for a large proportion of inequality (between 37.6% and 83.9%). This finding also corroborates Roemer’s Law. Our results strongly suggest that the national policy in Japan of reducing hospital beds regionally has been an effective instrument for containing rapidly increasing HCE.

Suggested Citation

  • Masayoshi Hayashi & Akiko Oyama, 2014. "Factor Decomposition of Inter-prefectural Health Care Expenditure Disparities in Japan," CIRJE F-Series CIRJE-F-948, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2014cf948
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    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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