Determinants to Health Care Expenditures in 23 OECD Countries: A Preliminary Empirical Study

Abstract

This study explores the determinants of health care spending in OECD countries. This study shows several distinctive findings compared to the previous research. First, this study introduces lagged variables to capture the impact of past values. Few studies have dealt with relationships such as temporal stability or lags between income and health care spending. In this study, previous income and health care spending reveals a statistically significant impact on the annual change of health care expenditures. Second, this study examines the effect of the time trend variable on health care spending, the effect of which its effect appears to be related to technological change in medical care. Third, the study explores how non-income variables such as demographic variables and the number of physicians to reveal that there are no significant effects on health care spending from the proportion of the aged and the number of physicians. Finally, based on the fixed-effect model, the specific country differences in increasing costs are related to the different objectives of health policies (e.g., equal access or good quality), different health care management systems(market-oriented system), and other unique country factors.