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Insurance Coverage and the Heterogeneity of Health and Drug Spending in the United States

Author

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  • Marin Gemmill

    (LSE Health, London School of Economics, Cowdray House, Houghton Street, WC2A 2AE, London, U.K E-mails: M.C.Gemmill@lse.ac.uk)

  • Joan Costa-Font

    () ([1] LSE Health, London School of Economics, Cowdray House, Houghton Street, WC2A 2AE, London, U.K [2] Departament de Teoria Economica, Universitat de Barcelona, Catalonia, Spain)

  • Panos Kanavos

    () (LSE Health, London School of Economics, Cowdray House, Houghton Street, WC2A 2AE, London, U.K)

Abstract

The rise in health expenditure in the U.S. has generated interest in the determinants of health expenditure at the micro-level; however, individuals may exhibit differential behaviour across different types of health care. In addition, public and private insurance may have an heterogeneous effect on expenditure. In this paper, we examine the determinants of health expenditure with a multivariate regression model along with controls for insurance choice and unobserved health care utilization. We find age-related effects and evidence of moral hazard related to private insurance, while the primary effect of income on expenditure appears to be through the purchase of insurance. The implications of the study are that: (i) policymakers should be less concerned about the effect of ageing on health expenditure; (ii) drug spending may not be related to the expansion of public insurance coverage; and (iii) income may have a negative impact on most elements of health spending. The Geneva Papers (2006) 31, 669–691. doi:10.1057/palgrave.gpp.2510098

Suggested Citation

  • Marin Gemmill & Joan Costa-Font & Panos Kanavos, 2006. "Insurance Coverage and the Heterogeneity of Health and Drug Spending in the United States," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(4), pages 669-691, October.
  • Handle: RePEc:pal:gpprii:v:31:y:2006:i:4:p:669-691
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    Cited by:

    1. Yang, Jinqiu & Hong, Yongmiao & Ma, Shuangge, 2016. "Impact of the new health care reform on hospital expenditure in China: A case study from a pilot city," China Economic Review, Elsevier, vol. 39(C), pages 1-14.
    2. Costa-Font, Joan & McGuire, Alistair & Stanley, Tom, 2013. "Publication selection in health policy research: The winner's curse hypothesis," Health Policy, Elsevier, vol. 109(1), pages 78-87.

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