The health financing transition: A conceptual framework and empirical evidence
Almost every country exhibits two important health financing trends: health spending per person rises and the share of out-of-pocket spending on health services declines. We describe these trends as a “health financing transition” to provide a conceptual framework for understanding health markets and public policy. Using data over 1995–2009 from 126 countries, we examine the various explanations for changes in health spending and its composition with regressions in levels and first differences. We estimate that the income elasticity of health spending is about 0.7, consistent with recent comparable studies. Our analysis also shows a significant trend in health spending – rising about 1 per cent annually – which is associated with a combination of changing technology and medical practices, cost pressures and institutions that finance and manage healthcare. The out-of-pocket share of total health spending is not related to income, but is influenced by a country's capacity to raise general revenues. These results support the existence of a health financing transition and characterize how public policy influences these trends.
Volume (Year): 105 (2014)
Issue (Month): C ()
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional|
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.:
- Brigitte Dormont & Michel Grignon & Hélène Huber, 2006.
"Health expenditure growth: reassessing the threat of ageing,"
John Wiley & Sons, Ltd., vol. 15(9), pages 947-963.
- Brigitte Dormont & Michel Grignon & Hélène Huber, 2006. "Health expenditure growth : reassessing the threat of ageing," Post-Print halshs-00181605, HAL.
- Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
- Jochen Hartwig, 2006. "What Drives Health Care Expenditure? Baumol's Model of "Unbalanced Growth" Revisited," KOF Working papers 06-133, KOF Swiss Economic Institute, ETH Zurich.
- Oecd, 2006. "Projecting OECD Health and Long-Term Care Expenditures: What Are the Main Drivers?," OECD Economics Department Working Papers 477, OECD Publishing.
- Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
- repec:dau:papers:123456789/7972 is not listed on IDEAS
- Ilaria Mosca, 2007. "Decentralization as a determinant of health care expenditure: empirical analysis for OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 14(7), pages 511-515.
- Wagstaff, Adam, 2009. "Social health insurance vs. tax-financed health systems - evidence from the OECD," Policy Research Working Paper Series 4821, The World Bank.
- Clemente, Jesus & Marcuello, Carmen & Montanes, Antonio & Pueyo, Fernando, 2004. "On the international stability of health care expenditure functions: are government and private functions similar?," Journal of Health Economics, Elsevier, vol. 23(3), pages 589-613, May.
- Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
- Robert E. Hall & Charles I. Jones, 2005. "The value of life and the rise in health spending," Proceedings, Federal Reserve Bank of San Francisco.
- Robert E. Hall & Charles I. Jones, 2004. "The Value of Life and the Rise in Health Spending," NBER Working Papers 10737, National Bureau of Economic Research, Inc.
- Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
- Baltagi, Badi H. & Moscone, Francesco, 2010. "Health care expenditure and income in the OECD reconsidered: Evidence from panel data," Economic Modelling, Elsevier, vol. 27(4), pages 804-811, July.
- Badi H. Baltagi & Francesco Moscone, 2009. "Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data," Discussion Papers in Economics 09/5, Department of Economics, University of Leicester.
- Baltagi, Badi H. & Moscone, Francesco, 2010. "Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data," IZA Discussion Papers 4851, Institute for the Study of Labor (IZA).
- Badi H. Baltagi & Francesco Moscone, 2010. "Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data," Center for Policy Research Working Papers 120, Center for Policy Research, Maxwell School, Syracuse University.
- Getzen, Thomas E., 2000. "Health care is an individual necessity and a national luxury: applying multilevel decision models to the analysis of health care expenditures," Journal of Health Economics, Elsevier, vol. 19(2), pages 259-270, March.
- Farasat A. S. Bokhari & Yunwei Gai & Pablo Gottret, 2007. "Government health expenditures and health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 16(3), pages 257-273.
- Farasat A.S. Bokhari & Yunwei Gai & Pablo Gottret, 2005. "Government Health Expenditures and Health Outcomes," Working Papers wp2005_02_01, Department of Economics, Florida State University, revised May 2006.
- Marwa Farag & A. NandaKumar & Stanley Wallack & Dominic Hodgkin & Gary Gaumer & Can Erbil, 2012. "The income elasticity of health care spending in developing and developed countries," International Journal of Health Economics and Management, Springer, vol. 12(2), pages 145-162, June.
- Wagner, Anita K. & Graves, Amy Johnson & Reiss, Sheila K. & LeCates, Robert & Zhang, Fang & Ross-Degnan, Dennis, 2011. "Access to care and medicines, burden of health care expenditures, and risk protection: Results from the World Health Survey," Health Policy, Elsevier, vol. 100(2-3), pages 151-158, May.
- repec:dau:papers:123456789/7971 is not listed on IDEAS
- Gbesemete, Kwame P. & Gerdtham, Ulf-G., 1992. "Determinants of health care expenditure in Africa: A cross-sectional study," World Development, Elsevier, vol. 20(2), pages 303-308, February.
- Wagner, Anita K. & Graves, Amy Johnson & Reiss, Sheila K. & LeCates, Robert & Zhang, Fang & Ross-Degnan, Dennis, 2011. "Access to care and medicines, burden of health care expenditures, and risk protection: Results from the World Health Survey," Health Policy, Elsevier, vol. 100(2), pages 151-158.
- Elizabeth Docteur & Howard Oxley, 2003. "Health-Care Systems: Lessons from the Reform Experience," OECD Health Working Papers 9, OECD Publishing.
- Elizabeth Docteur & Howard Oxley, 2003. "Health-Care Systems: Lessons from the Reform Experience," OECD Economics Department Working Papers 374, OECD Publishing.
- 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.
- Peter Zweifel & Lukas Steinmann & Patrick Eugster, 2005. "The Sisyphus Syndrome in Health Revisited," International Journal of Health Economics and Management, Springer, vol. 5(2), pages 127-145, June.
- repec:dau:papers:123456789/3881 is not listed on IDEAS
- Götze, Ralf & Schmid, Achim, 2012. "Healthcare financing in OECD countries beyond the public-private split," TranState Working Papers 160, University of Bremen, Collaborative Research Center 597: Transformations of the State.
- Christine de la Maisonneuve & Joaquim Oliveira Martins, 2013. "A Projection Method for Public Health and Long-Term Care Expenditures," OECD Economics Department Working Papers 1048, OECD Publishing.
- Joan Costa‐Font & Marin Gemmill & Gloria Rubert, 2011. "Biases in the healthcare luxury good hypothesis?: a meta‐regression analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(1), pages 95-107, January. Full references (including those not matched with items on IDEAS)