The Determinants of Health Expenditure in Italian Regions

Abstract

The health care expenditure in Italian regions is examined, applying the model selection procedure and panel methodologies to identify the determinants of health expenditure at the state level. After a brief introduction and a survey of the economic literature on this issue, we discuss the data and briefly introduce the methodologies. Empirical results suggest that the real gross state product, the unemployment rate, the number of beds in community hospitals, the urbanization degree and the percentage of the population with at least the junior high school degree had a direct impact on the real health care outlay. Furthermore, the income elasticity is below the unity (0.83-0.88 according to the static panel estimates, 0.43-0.48 for the dynamic methods), implying that health expenditure is a necessity rather than a luxury good at the state level.