Convergence and determinants of health expenditures in OECD countries

Son Hong Nghiem; Luke Brian Connelly

doi:10.1186/s13561-017-0164-4

Convergence and determinants of health expenditures in OECD countries

Health Econ Rev. 2017 Aug 17;7(1):29. doi: 10.1186/s13561-017-0164-4.

Authors

Son Hong Nghiem¹, Luke Brian Connelly²

Affiliations

¹ The Australian Research Centre for Health Services Innovation, Institute of Health and Biomedical Innovation, School of Public Health and Social Work, Queensland University of Technology, Brisbane, QLD 4059, Kelvin Grove, Australia. hongson.nghiem@gmail.com.
² Centre for the Business and Economics of Health, Faculty of Health and Behavioural Sciences, The University of Queensland, Brisbane, QLD 4072, Australia.

Abstract

This study examines the trend and determinants of health expenditures in OECD countries over the 1975-2004 period. Based on recent developments in the economic growth literature we propose and test the hypothesis that health care expenditures in countries of similar economic development level may converge. We hypothesise that the main drivers for growth in health care costs include: aging population, technological progress and health insurance. The results reveal no evidence that health expenditures among OECD countries converge. Nevertheless, there is evidence of convergence among three sub-groups of countries. We found that the main driver of health expenditure is technological progress. Our results also suggest that health care is a (national) necessity, not a luxury good as some other studies in this field have found.

Keywords: Convergence; Health expenditure; OECD countries.