Health Expenditures in Latin America 1995-2010

Health Expenditures in Latin America 1995-2010

Jesus Salgado-Vega (Universidad Autónoma del Estado de México, Toluca, Mexico State, Mexico) and Fatima Y. Salgado-Naime (Comision de Derechos Humanos del Estado de Mexico, Toluca, Mexico State, Mexico & Instituto Universitario de Investigación Ortega y Gasset, Madrid, Spain)
DOI: 10.4018/ijpphme.2013040104
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The authors examine the trajectory of health expenditures in Latin American countries. The authors apply standard fixed effects and dynamic models to explore the factors associated with the growth of total health expenditures as well as its main components namely, government health expenditures and out-of-pocket payments. Their results suggest that, after taking other factors into consideration, health expenditures in general do not grow faster than the Gross National Product (GNP). The authors confirm the existence of fungibility, where external aid for health reduces government health spending and out-of-pocket expenses from domestic sources. The study also finds that government health expenditure and out-of-pocket payments follow the same paths in time but vary for countries at different levels of economic development; the same is true for health expenditure growth.
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Several approaches for modeling health care expenditures are presented in the literature. Income per capita GDP has been identified as a very important factor for explaining differences across countries in the level and growth of total health care expenditures. Several researchers (Kleiman, 1974; Newhouse, 1977; Leu, 1986; Getzen, 2000; and Musgrove, Zeramdini, & Carrin, 2002) used cross section data and found that income elasticity of total health expenditure was between 1.133 and 1.275. Income elasticity for out-of pocket payments ranged from 0.884 to 1.033, while it was between 1.069 and 1.194 for government health expenditure, (Van der Gaag & Stimac, 2008) found that income elasticity for total health expenditure was 1.09; income elasticity was less than one in the Middle East and greater than one in countries belonging to the Organization for Economic Cooperation and Development (OECD). Murthy and Okunade (2009) used cross-sectional data and found an income elasticity between 1.089 and 1.121, and Schieber and Maeda (1999) found income elasticity at 1.13. Income elasticity for public spending was higher than for private spending.

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