Determinants of health care spending using a cointegration approach

Increasing spending on health care continues to be a concern for policymakers and academicians, particularly in industrialized countries. During the last three decades significant research efforts were devoted to finding and understanding the determinants of health care expenditure on aggregate level through comparative cross-national research on levels and growth rates of health spending. The review of the literature on aggregate health spending (Chapter 2/Manuscript 1) suggests paying more attention to individual country analysis and describing dynamic relationships within short and long time frames. This could help the development and implementation of sustainable country-specific policy solutions.; One of the chapters (Chapter 4/Manuscript 2) estimates the effects of aggregate income, and socio-demographic and health system factors ( i.e., per capita gross domestic product, proportion of population over 65, physician supply, and technological advancement) on per capita health care spending in Australia, Canada, Japan, and the United States (US). This is a more complete specification of relationships compared to previous research, and could reduce the bias arising from omitted variables. The cointegration time series approach helps to explore dynamic relationships between the variables of interest in short and long time frames.; The other chapter (Chapter 5/Manuscript 3) focuses on one of the sectors (hospital sector) of the health care system in the US. It estimates the effects of labor cost, technology, teaching commitment, and economic development on per capita hospital expenses in 50 US states and District of Columbia. There is a lack of state-level time series studies of hospital spending using advanced econometric methodologies.; The findings of Chapter 4 indicate that in Australia, Japan, and the United States where the supply side forces (physician supply or technological advancement) are significant long-run drivers of health care spending, health spending grows at a faster rate than income, and therefore, health care is a luxury good in the long-run. The findings of this study suggest if "the march of science" continues this pattern in Australia, Canada, and the US, increasing investments in health research and development will not significantly affect the pace of growth of health spending in the long run.; The Chapter 5 provides evidence that labor cost and economic development are major long-run drivers behind accelerating hospital costs. It also suggests that in majority of the US states technology does not significantly affect the pace of growth of hospital expenses in the long run, and similarly teaching commitment does not raise the cost of hospital care in the short as well as long run. These findings remain robust when adjusted for the patient severity. (Abstract shortened by UMI.)...