A multilevel analysis on the determinants of regional health care expenditure. A note
AbstractWe 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.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 572.
Date of creation: Oct 2001
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Web page: http://www.econ.upf.edu/
OECD health expenditure; fiscal federalism; multilevel hierarchical models;
Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-10-22 (All new papers)
- NEP-HEA-2001-10-22 (Health Economics)
- NEP-IFN-2001-10-22 (International Finance)
- NEP-PBE-2001-10-22 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gerdtham, Ulf-G. & Jonsson, Bengt, 2000. "International comparisons of health expenditure: Theory, data and econometric analysis," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 1, pages 11-53 Elsevier.
- Jorgen Lauridsen & Mariluz Sánchez & Mickael Bech, 2010. "Public pharmaceutical expenditure: identification of spatial effects," Journal of Geographical Systems, Springer, vol. 12(2), pages 175-188, June.
- Jorgen Lauridsen & Mickael Bech & Fernando López & Mariluz Sánchez, 2010. "A spatiotemporal analysis of public pharmaceutical expenditure," The Annals of Regional Science, Springer, vol. 44(2), pages 299-314, April.
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