Determinants of Healthcare Expenditures Empirical Evidence on EU-27

Abstract

Worldwide healthcare expenditures’ dynamics have registered a continuously increasing trend. Curbing healthcare expenditures growth may be attained by identifying which factors determine them and their impact. The purpose of this study is to determine the main macro determinants of per capita health expenditures at a national level, for the European Union member states, estimating their size of impact. Unbalanced panel data for the EU-27 member states throughout 2005-2020 are modelled with the pooled OLS method for panel data, fixed effects modelling and random effects modelling. Estimations are performed on the entire sample of EU-27 member states, further split into 14 old and 13 new member states. Per capita gross domestic product as a proxy for economic prosperity, life expectancy as a proxy for health outcomes and doctors’ density as a proxy for the supply of healthcare systems positively impact the healthcare expenditures of EU-27 member states. Mixed results are obtained for assessing the impact of subjectively assessed corruption, upon healthcare expenditures, on the two subsamples of EU-27 member states. Due to the continuous growth of health care expenditures, policymakers have to draw effective cost strategies in order to temper them.