State-Level Variations in Healthcare Financing in the United States

International Journal of Applied Economics, 13(2), September 2016, 46-73

36 Pages Posted: 15 Sep 2015 Last revised: 5 Mar 2018

See all articles by Srimoyee Bose

Srimoyee Bose

Georgia State University; West Virginia University, Davis College of Agriculture, Natural Resources & Design, Students

Tesfa Gebremedhin

West Virginia University

Usha Sambamoorthi

West Virginia University

Date Written: September 10, 2015

Abstract

Healthcare spending (total) in the United States (US) is the highest in the world. As state governments are a vital driver of healthcare implementation and as healthcare policy responses in containing healthcare expenses vary among states based on the underlying state-level factors, it is critical to examine state-level variations in healthcare funding.

The aim of the study was to evaluate the state-level variations in healthcare financing and the factors that affect financing of healthcare. This research used publicly available data from 2001 to 2009.

Fixed effect analysis reported that state-level variations in public financing of health care (Medicare and Medicaid) are associated with demographic composition (proportion of the female population, percentage of individuals over age 65, percentage of Hispanic population), economic factors (unemployment rate, per capita gross domestic product (GDP) of the state, per capita state tax revenue, FMAP rate), political climate (percentage of individuals enrolled in Medicare or Medicaid, rate of enrollment in HMO), healthcare supply factors (active physicians per 100,000 population, number of hospitals and beds) and healthcare needs (obesity rate). Additionally, variations in state-level private insurance financing was proportional to the economic factors (rate of federal funding, per capita state GDP), a supply side factor (active physicians per 100,000 population), political climate (percentage of individuals enrolled in Medicare or Medicaid) and healthcare needs (obesity rate). Lastly, state-level variations in out of pocket expenditures were associated with economic factors (per capita state tax revenue, per capita state GDP), demographic factors (percentage of African-Americans, percentage of female population, percentage of elderly population (aged 65 and above), percentage of Hispanic individuals, proportion of the population below age 17), a supply side factor (active physicians per 100,000 population), political characteristics (percentage of individuals enrolled in Medicare or Medicaid) and healthcare needs (obesity rate).

Therefore’ findings of the study specified the need for convergence of the two sectors: communities and health. Promoting health with synergistic efforts from the economic, social and health sectors of the economy at the state-level can lead to improved health outcomes and lower healthcare expenditures and financing.

Keywords: healthcare financing, panel, state level, public, out-of-pocket, private

JEL Classification: I100, I130, H710, I180, C180, C120

Suggested Citation

Bose, Srimoyee and Gebremedhin, Tesfa and Sambamoorthi, Usha, State-Level Variations in Healthcare Financing in the United States (September 10, 2015). International Journal of Applied Economics, 13(2), September 2016, 46-73 , Available at SSRN: https://ssrn.com/abstract=2658838

Srimoyee Bose (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

West Virginia University, Davis College of Agriculture, Natural Resources & Design, Students ( email )

Morgantown, VA
United States

Tesfa Gebremedhin

West Virginia University ( email )

PO Box 6025
Morgantown, WV 26506
United States

Usha Sambamoorthi

West Virginia University

PO Box 6025
Morgantown, WV 26506
United States

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