Does the U.S. health care sector suffer from Baumol's cost disease? Evidence from the 50 states

Bates, Laurie J.; Santerre, Rexford E.

doi:10.1016/j.jhealeco.2012.12.003

Cited by 64 publications

(72 citation statements)

References 9 publications

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Section: Theory Hypothesis and Previous Worksupporting

confidence: 57%

“…They also argue that Massachusetts health reform and Medicare Part D contributed to an increased spending share on physician and clinical services and on prescription drugs, respectively, and the Great Recession (2007-2009) resulted in a slower healthcare spending growth across all regions than did the 2001 recession. Similar to Hartwig (2008) for OECD countries, Bates and Santerre (2013) find evidence favoring Baumol's theory for a panel of U.S. states over the period 1980-2009. These reviews suggest that research to date has focused almost entirely on economic determinants and thus neglected any political determinants of HCE. However, Potrafke (2010) and Herwartz and Theilen (2014) are exceptions.…”

Section: Previous Empirical Worksupporting

confidence: 51%

“…Moscone and Tosetti () allow for cross‐section dependence and unobserved heterogeneity but not structural breaks and find HCE and income to be cointegrated. In contrast to these three studies, Bates and Santerre (), for U.S. states, follow Gerdtham and Jönsson (), Hartwig (, ), and Colombier () and models growth of HCE.…”

Section: Methodsmentioning

confidence: 99%

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Party Politics, Governors, and Healthcare Expenditures

Joshi

2014

Economics & Politics

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This study examines the impact of gubernatorial partisanship on the growth of healthcare expenditures (HCE) for a panel dataset of 50 U.S. states over the 1991–2009 period. Using the parametric regression discontinuity design, I find no partisan effect on the growth of state's per capita real total personal HCE. However, an analysis of the growth rates of the components of HCE suggests that there is a causal effect of party affiliation on the “prescription drugs” component. These findings are robust to the inclusion of additional covariates in the parametric approach as well to the use of the non‐parametric regression discontinuity approach. The results further suggest that the impact of gubernatorial partisanship does not depend on the length of the governor's term in office.

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Section: Theory Hypothesis and Previous Worksupporting

confidence: 57%

Section: Previous Empirical Worksupporting

confidence: 51%

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Party Politics, Governors, and Healthcare Expenditures

Joshi

2014

Economics & Politics

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“…Breyer et al () also included mortality rate, a set of dummy variables for each cohort, and a set of dummy variables for each year as explanatory variables. Bates and Santerre () also included growth of the unemployment rate, growth of the union membership rate, and growth of the poverty rate in their models. Hartwig and Sturm () examined 38 explanatory variables suggested in the literature and found up to eight robust drivers in the linear model analysis.…”

Section: Literature Reviewmentioning

confidence: 99%

A quantile regression approach to panel data analysis of health‐care expenditure in Organisation for Economic Co‐operation and Development countries

2018

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This paper investigates the variation in the effects of various determinants on the per capita health-care expenditure. A total of 28 Organisation for Economic Co-operation and Development countries are studied over the period 1990-2012, employing an instrumental variable quantile regression method for a dynamic panel model with fixed effects. The results show that the determinants of per capita health-care expenditure growth, involving the growth of lagged health spending, of per capita gross domestic product (GDP), of physician density, of elderly population, of life expectancy, of urbanization, and of female labor force participation, do vary with the conditional distribution of the health-care expenditure growth, while the changing patterns are dissimilar. Moreover, we show that Baumol's model of "unbalanced growth" has a significantly positive effect on per capita health spending growth, and its effect is quite stable over the entire distribution. However, the correlation between the components (wage growth and labor productivity growth) of the "Baumol variable" and health expenditure growth is more varied. As a comparison, only the growth of lagged health spending, per capita GDP, and the Baumol variable (or its components) are found related to health spending growth in conditional mean regressions. The prediction results were also quite different between the quantile regression dynamic panel instrumental variable models and linear panel data models. More attention needs to be paid to the varying influence of determinants in health expenditure study.

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“…Structural changes leading to a declining employment share in manufacturing sectors (in a broad sense including both primary and secondary sectors) and increasing employment shares in private and public services are observed for all OECD countries. It is also noteworthy that assessments of fiscal sustainability commonly point to Baumol's cost disease as an important expenditure driver; see, for example, IMF (2012) and European Commission (2013), as well as a long list of specific country studies including Bates and Santerre (2013) on the USA, Office for Budget Responsibility (2013) on the UK, New Zealand Treasury (2012) on New Zealand, DREAM (2014) on Denmark, and Regeringen (2013) on Sweden.…”

Section: Introductionmentioning

confidence: 99%

Baumol's Cost Disease and the Sustainability of the Welfare State

Andersen

Kreiner

2016

Economica

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIf productivity increases more slowly for services than for manufactured goods then services suffer from Baumol's cost disease and tend to become relatively more costly over time. Since the welfare state in all countries is an important supplier of tax financed services, this translates into a financial pressure which seems to leave policymakers with a trilemma; increase taxes (and hence tax distortions), cut spending or redistribute less. Under the assumptions underlying Baumol's cost disease, we show that these dismal implications are not warranted. The welfare state is sustainable and Baumol growth leaves scope for Pareto improvements. * We are grateful to Peter Birch Sørensen for comments on an earlier draft. Contact info: ctk@econ.ku.dk (Claus T. Kreiner) and tandersen@econ.au.dk (Torben M. Andersen).

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Does the U.S. health care sector suffer from Baumol's cost disease? Evidence from the 50 states

Cited by 64 publications

References 9 publications

Party Politics, Governors, and Healthcare Expenditures

Party Politics, Governors, and Healthcare Expenditures

A quantile regression approach to panel data analysis of health‐care expenditure in Organisation for Economic Co‐operation and Development countries

Baumol's Cost Disease and the Sustainability of the Welfare State

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