Does morbidity matter? Perceived health status in explaining the share of healthcare expenditures

Date
2012
Authors
Solakoğlu, E. G.
Civan, A.
Advisor
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Co-Advisor
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Instructor
Source Title
Applied Economics
Print ISSN
0003–6846
Electronic ISSN
1466-4283
Publisher
Routledge
Volume
44
Issue
16
Pages
2027 - 2034
Language
English
Type
Article
Journal Title
Journal ISSN
Volume Title
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Abstract

We argue that the demand for healthcare services can be better explained by individual need based variables rather than by macro variables such as the Gross Domestic Product (GDP) per capita and the share of public healthcare expenditures. This study introduces a self-rated health variable called morbidity that describes individual needs for health care – healthy individuals need less health care than sick ones – and that is measured through personal interviews conducted by the Organization for Economic Co-operation and Development (OECD). In addition, stationary properties of the series are considered in order to understand the effect of shocks to expenditure behaviour on health care. Stationary test results show that we should not only use differenced values for the model variables but also incorporate time-specific effects into the model. Using the appropriate specification and accounting for the time effect, we find evidence supporting the hypothesis that the share of healthcare expenditure in GDP rises with the increased need for health care. The need for health care is also found to be more important than per capita GDP when explaining the change in the share of healthcare expenditures for the examined countries.

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Keywords
Healthcare expenditures, Morbidity, Two-way model
Citation
Published Version (Please cite this version)