Review of the literature on the determinants of healthcare expenditure

• Published in: Applied economics 2011-01, Vol.43 (1), p.19-46
• Main Authors: Dolores Cano Garcia, M, Puerto Lopez del Amo Gonzalez, M, Martin, Jose J. Martin
• Format: Article
• Language: English
• Subjects: Aging; Elasticity of demand; Expenditures; Health care expenditures; Health economics; Health expenditure; Health inequality; Health management; Income; Industrialized nations; Review articles; Studies; Technological change
• ISSN: 0003-6846; 1466-4283
• DOI: 10.1080/00036841003689754

This study reviews the literature on determinants of healthcare expenditure for the period 1998 to 2007. The methodology combines searches in the MesH database of PubMed with the search in the principal journals of Health Economics. 20 primary studies were found that met the criteria for inclusion. No single pattern of results is clearly identified. Among the 20 articles, four consider income to be the principal determinant of healthcare expenditure, two of them jointly with population ageing. Six highlight population ageing, as against six others that emphasize the proximity to death. The remaining six do not focus on a specific variable, or focus on another variable, e.g. technological progress or territorial decentralization. 11 of the 20 articles calculate the income elasticity of demand, only two of them obtaining a value greater than 1, thus cataloguing healthcare expenditure as a luxury good. There is, therefore, no unanimity in the variables and econometric regressions of healthcare expenditure in Organization for Economic Cooperation and Development (OECD) countries. No solid empirical evidence exists that population ageing is one of the principal determinants of healthcare expenditure, and factors such as technological progress, closeness to death and territorial decentralization of healthcare are increasingly seen as important in the development of explanatory models of healthcare expenditure.