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Growth and Containment of Health Care Expenditure in Industrial Countries

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  • Theo Hitiris
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    Abstract

    Health Expenditure has been rising faster than the growth of income in most industrial countries. The objective of this paper is to discover what factors determined Health Expenditure per head of population in the G7 Countries and whether governments could control them. The analysis has identified three factors that affect Health Expenditure positively: income per head, the ageing population and the share of public expenditure on GDP. None of these variables can be controlled by the government for the sole purpose of containing the growth of Health Care Expenditure. Therefore, only reform of national Health Service Systems could effectively contain the growth of Health Spending. The reforms introduced by some countries in the early 1990s had no significant effect on cost containment with the result that health care expenditure continued to rise in some faster than before. The exception is Japan which managed to achieve a significant downturn in the growth of health expenditure.

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    Bibliographic Info

    Paper provided by Department of Economics, University of York in its series Discussion Papers with number 99/15.

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    Handle: RePEc:yor:yorken:99/15

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    Keywords: Health care expenditure; cost containment;

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    1. Frank T. Denton & Byron G. Spencer, 1975. "Health-Care Costs When the Population Changes," Canadian Journal of Economics, Canadian Economics Association, vol. 8(1), pages 34-48, February.
    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. David M. Cutler & Ellen Meara, 1997. "The Medical Costs of The Young and Old: A Forty Year Perspective," NBER Working Papers 6114, National Bureau of Economic Research, Inc.
    4. Pauly, Mark V, 1986. "Taxation, Health Insurance, and Market Failure in the Medical Economy," Journal of Economic Literature, American Economic Association, vol. 24(2), pages 629-75, June.
    5. Anderton, Bob & Pesaran, Bahram & Wren-Lewis, Simon, 1992. "Imports, Output and the Demand for Manufactures," Oxford Economic Papers, Oxford University Press, vol. 44(2), pages 175-86, April.
    6. Blomqvist, A. G. & Carter, R. A. L., 1997. "Is health care really a luxury?," Journal of Health Economics, Elsevier, vol. 16(2), pages 207-229, April.
    7. Gerdtham, Ulf-G. & Sogaard, Jes & Andersson, Fredrik & Jonsson, Bengt, 1992. "An econometric analysis of health care expenditure: A cross-section study of the OECD countries," Journal of Health Economics, Elsevier, vol. 11(1), pages 63-84, May.
    8. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    9. Cutler, David M, 1995. "The Cost and Financing of Health Care," American Economic Review, American Economic Association, vol. 85(2), pages 32-37, May.
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    Cited by:
    1. Ismael Sanz & Francisco Javier Velázquez, 2002. "Determinants of the Composition of Government Expenditure by Functions," European Economy Group Working Papers 13, European Economy Group.
    2. repec:ebl:ecbull:v:8:y:2007:i:4:p:1-7 is not listed on IDEAS
    3. Julian Ramajo & Javier Salinas & Francisco Pedraja & Miguel Márquez, 2007. "Competition in the allocation of public spending: a new model to analyse the interaction between expenditure categories," Economics Bulletin, AccessEcon, vol. 8(4), pages 1-7.

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