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A Cross-Country Analysis of Health Care Expenditures

Author

Listed:
  • Alex R. Horenstein

    (School of Business, ITAM)

  • Manuel S. Santos

    (Department of Economics, University of Miami)

Abstract

This paper is concerned with growth patterns of US health care expenditures. Within a representative sample of OECD countries, we lay out a growth accounting exercise for health care expenditures to assess the influence of several explanatory variables. Our analysis demonstrates that the relative price of medical care and some health care laws can trace down fairly well the differential increase in US medical expenditures over the period 1970-2007. We then explore some major factors driving US medical care prices - including prescription drugs, the degree of competition, malpractice, and out-of-pocket expenditures. Some other explanatory variables - income growth, technological change, life expectancy, physicians' compensation, trends in aging population, and defensive medicine - would seem unable to account for the differential increase in US medical expenditures over various time periods.

Suggested Citation

  • Alex R. Horenstein & Manuel S. Santos, 2012. "A Cross-Country Analysis of Health Care Expenditures," Working Papers 2013-05, University of Miami, Department of Economics.
  • Handle: RePEc:mia:wpaper:2013-05
    as

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    File URL: http://bus.miami.edu/_assets/files/repec/WP2013-05.pdf
    File Function: First version, 2012
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    References listed on IDEAS

    as
    1. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, pages 645-680.
    2. repec:aph:ajpbhl:2003:93:1:31-37_3 is not listed on IDEAS
    3. 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.
    4. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    5. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    6. Patricia M. Danzon, 1991. "Liability for Medical Malpractice," Journal of Economic Perspectives, American Economic Association, pages 51-69.
    7. Danzon, Patricia M., 2000. "Liability for medical malpractice," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 26, pages 1339-1404 Elsevier.
    8. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, pages 645-680.
    9. Abe Dunn & Adam Hale Shapiro, 2011. "Physician Market Power and Medical-Care Expenditures," BEA Working Papers 0078, Bureau of Economic Analysis.
    10. Harrington, Scott E. & Danzon, Patricia M. & Epstein, Andrew J., 2008. ""Crises" in medical malpractice insurance: Evidence of excessive price-cutting in the preceding soft market," Journal of Banking & Finance, Elsevier, vol. 32(1), pages 157-169, January.
    11. Di Matteo, Livio, 2005. "The macro determinants of health expenditure in the United States and Canada: assessing the impact of income, age distribution and time," Health Policy, Elsevier, vol. 71(1), pages 23-42, January.
    12. Carhart, Mark M, 1997. " On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    13. McClellan, Mark & Cutler, David & Newhous, Joseph P., 2000. "How Does Managed Care Do It?," Scholarly Articles 2643884, Harvard University Department of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Health care expenditures; relative price of medical care; growth accounting; price elasticity; technological change; malpractice;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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