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The determinants of health‐care expenditure: new results from semiparametric estimation

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  • Helmut Herwartz
  • Bernd Theilen

Abstract

Recent cross-country studies have questioned the existence of a systematic relationship between per capita health‐care expenditure (HCE) and explanatory variables such as income, population ageing and total public expenditure. We reexamine this issue mainly focussing at a flexible semiparametric estimation method that allows the parameters of the model to depend on a state variable. Using the age structure of the population as the state variable, we find that the income elasticity increases with population ageing, while other explanatory variables are not significantly influenced by it. Additionally we find that the HCE relationship becomes more and more unstable in ageing economies. These results explain the difficulty to identify both the influence of population ageing and income on HCE in previous studies. Furthermore they indicate that international convergence of HCE across countries crucially depends on the convergence of the population age structure. We also discuss the policy implications of our results regarding the design of a fair health‐care financing system and the evolution of HCE to avoid budgetary problems. Copyright (C) 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Helmut Herwartz & Bernd Theilen, 2010. "The determinants of health‐care expenditure: new results from semiparametric estimation," Health Economics, John Wiley & Sons, Ltd., vol. 19(8), pages 964-978, August.
  • Handle: RePEc:wly:hlthec:v:19:y:2010:i:8:p:964-978
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    File URL: http://hdl.handle.net/10.1002/hec.1540
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    Cited by:

    1. Özlem Yorulmaz, 2016. "Can healthcare ever be less than a necessity in MENA countries? A semiparametric estimation of the relationship between healthcare expenditure and GDP," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(3), pages 1233-1244, May.
    2. Herwartz, Helmut & Theilen, Bernd, 2014. "Partisan influence on social spending under market integration, fiscal pressure and institutional change," European Journal of Political Economy, Elsevier, vol. 34(C), pages 409-424.
    3. Helmut Herwartz & Bernd Theilen, 2014. "Health Care And Ideology: A Reconsideration Of Political Determinants Of Public Healthcare Funding In The Oecd," Health Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 225-240, February.

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