Determinants of Health Care Expenditure in the United States

Abstract

The rapid increase in health expenditure has become a major concern for both households and governments in the United States. This paper investigates the long-run dynamics of health care expenditure in the United States over the period 1991-2014 using the National Health Expenditure Data from the Centers for Medicare & Medicaid Services. We use an Auto Regressive Distributed Lag (ARDL) technique to estimate the long-run dynamics and short-run adjustment of health care expenditure to changes in government insurance enrollment, controlling for income, health, uninsured, and trend to account for technological changes. The results indicate that the instance and type of insurance affect per capita expenditure; in particular, increases in Medicaid enrollment lead to higher per capita expenditure levels relative to other insurance groups and uninsured, while increases in Medicare enrollment lead to lower per capita expenditure levels.