Decomposing the Determinants of Health Care Expenditure: The Case of Spain

Abstract

In this paper the determinants of health care expenditure per capita in Spanish regions are analyzed. The coexistence of several models concerning the degree of spending power decentralization and financing systems makes Spain a singular case and allows us to draw conclusions relevant for other countries decentralizing their health care systems. Analyzing the Spanish case also serves to show a number of pitfalls affecting econometric estimation of the effects of income and demographic structure on health expenditure. Because the reliability of parameter estimates is a key issue in the literature on the determinants of health expenditure, these potential problems should be taken into account when estimating and interpreting results.

Keywords: fiscal federalism, regional health expenditure, regional inequalities

JEL Classification: I18, I38, H73