Health Expenditure Convergence in Iranian Provinces: A Panel Generalized Moment Model
Subject Areas : -Health economy
1 - Doctor of Economics and Lecturer of Lorestan University, Lorestan, Iran,
Keywords: Beta Convergence, Sigma Convergence, health costs, generalized panel moment,
Abstract :
Introduction: The development of the social sector is one of the key goals of the government of any country, especially less developed or developing countries. The importance of health as one of the key aspects of development and economic well-being of individuals and nations is increasingly recognized in the world. This can be seen from a series of reforms carried out by countries to increase investment in health in order to achieve the health Millennium Development Goals. The lack of investment in health and measures to address environmental and social determinants of health is a serious limitation to improve health outcomes in these countries. Considering that the convergence of governments in per capita health costs leads to a decrease in inequality or an increase in equality across regions, which will be a major development goal of a nation or governments, this research examines the process of convergence in terms of health costs. It evaluates per capita.Methods: In this research, the convergence of health expenditures per capita in the provinces of Iran is studied using the dynamic panel method. Therefore, for this purpose, the data related to 30 provinces of the country during the years 2007 to 2019 have been used. Due to the separation of Alborz province since 2010, the data related to this province has been calculated with Tehran province. In order to analyze the convergence process of per capita health costs of the provinces, the beta and sigma convergence method and the dynamic panel generalized moment model (Panel GMM) will be used.Results: The results showed that there is absolute and conditional beta convergence in health expenditure per capita in the provinces of Iran. The speed of convergence in government per capita expenditures on health is higher than private per capita expenditures, and this has been effective in the general convergence process of per capita health expenditures in each province. Also, the examination of the distribution of per capita health costs in each province indicates the existence of sigma convergence in the provinces of Iran.Conclusion: Although there is a path for convergence, this analysis has revealed the need to invest more resources in the field of healthcare. In fact, the current levels of investments that have been made in the health of the country are not enough to expand the huge project of the health sector. As the convergence of sigma in relation to private and public spending on each person's health showed, the dispersion of the mentioned components has decreased. This means that the variable that has a lower standard deviation (state health expenditures per capita) has created uniform and homogeneous expenditures in the health sector. Government expenses alone are not responsible for healthcare expenses, and the private sector needs to invest in this matter. In general, the health sector requires more expenses than public revenues. As a result, a problem is observed in the healthcare systems of most countries, and that is the pressure on government revenues. As a result, in terms of recommendations for health policies, diversification of financial resources for this level of health, treatment and health is one of the strategies that should be considered.
1- Reeves A, Gourtsoyannis Y, Basu S, McCoy D, McKee, M, Stuckler D. Financing universal health coverage—Effects of alternative tax structures on public health systems: cross-national modelling in 89 low-income and middle-income countries. The Lancet, 2015; 386(9990): 274–280.
2- Youkta K, Paramanik Rajendra N, Convergence analysis of health expenditure in Indian states: Do political factors matter? GeoJournal, 2022; 87(4): 1-10.
3- Kumar R. Lack of social or political demand for good health care in India: Impact on unfolding universal health coverage. Journal of family medicine and primary care, 2015; 4(1): 1-2.
4- Ramanjini, K. G. (2020), Is Public Education Expenditure Pro-cyclical In India? The Institute for Social and Economic Change, ISEC Working Paper; 506: 1-26.
5- Newhouse J. P. Medical-care expenditure: A crossnational survey. The Journal of Human Resources, 1977; 12(1): 115–125.
6- Hartwig J, Sturm J-E. “Robust determinants of health care expenditure growth”, Applied Economics, 2014; 46(36): 4455-4474.
7- Clementea J, Lázaro-Alquézarb A, Monta˜nésa A, (2019), US state health expenditure convergence: A revisited analysis, Economic Modelling, 2019; 83(4): 1-11.
8- Fallahi F. Convergence of Total Health Expenditure as a Share of GDP: Evidence from Selected OECD Countries, MPRA Paper No, 2011; 51324: 1-14.
9- Karimi Tekanlo, Z., Salmani Bishek, M., Nabipour, A. examining the convergence of expenditure and income of households in the provinces of Iran, Research Journal of Macroeconomics, 2016; 23: 59-80.
10- Hitiris T, Posnett J. The determinants and effects of health expen- diture in developed countries. Journal of Health Economics, 1992; 11: 173-181.
11- Wang Z. The Convergence of Health care Expenditures in The US States. Health Economics, 2008; 18: 55-70.
12- Alcalde-Unzu J., Ezcurra R., Pascual P. Cross-country disparities in health-care expenditure: a factor decomposition. Health Economics, 2009; 18: 479-485.
13- Albulescu Claudiu T. Health Care Expenditure in the European Union Countries: New Insights about the Convergence Process, International Journal of Environmental Research and Public Health, 2022; 19(4): 1-16.
14- Dolores Gadea Rivas M, Sanz Villarroya I. Testing the Convergence Hypothesis for OECD Countries: A Reappraisal. Economics Discussion Papers, 2016; No 2016-45. Kiel Institute for the World Economy. http://www.economics ejournal.org/economics/discussionpapers/2016-45.
15- -Mohammadi, A., Abdul Karimi Azar, S., Feqh Majidi, A. Investigating the convergence of the consumer price index between the provinces of Iran using the cluster analysis method, Economic Research, 2018; 54(2): 369-393.
16- Solow R.M. A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 1965; 70: 65-94.
17- Barro R. J, Sala-i-Martin X. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, 1991; 22(1): 107-182.
18- Grossman M. On the concept of health capital and the demand for health. J Polit Econ, 1972; 80(2): 223–55. http://hdl.handle.net/10.1080/00036846.2014.964829.
19- Nghiem S. H, Connelly L. B. Convergence and determinants of health expenditures in OECD countries. Health Economics Review, 2017; 7(29): 1-11.
20- Hembram S, Haldar S. Is India experiencing health convergence? Anempirical analysis, 2020; 53(3): 591-618.
21- Clementea J, Lázaro-Alquézarb A, Monta˜nésa A. Convergence in Spanish Public health expenditure: Has thedecentralization process generated disparities? Health Policy, 2019; 123(5): 503-507. doi: 10.1016/j.healthpol.2019.03.003.
22- Odhiambo S. A, Wambugu A, Kiriti-Nganga T. Convergence of health expenditure in Sub-Saharan Africa: Evidence from a dynamic panel. Journal of Economics and Sustainable Development, 2015; 6(6): 185–205.
23- Hosseini Dost SE, Abbasian E, Rahman Maraneh D. Examining the Sustainability of Health Expenditures in Iran: New Evidence Based on the ARDL Approach, 2017; 7(24): 35-60.
24- Rezapour A, Alipour S, Alipour V, Soleimani Movahed M. Per capita Convergence of Health Expenditures and Health Outcomes in Economic Cooperation Organization Member Countries, Health Management, 2018; 9(4): 27-40 .
25- Rezaei H, Alizadeh M and Nademi Y. Factors affecting health expenditure per capita: comparison of spatial models in a selection of developing countries, 2016; 4(2): 1-26.
26- Hansen, L.P. “Large Sample Properties of Generalized Method of Moments Estimators,” Econometrica, 1982; 50: 1029-1054.
27- Arellano, M. and Bond, S. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations‟. The review of economic studies, 1991; 58(2): 277-297.
28- Arellano, Manuel and Bover, Olympia. Another look at the instrumental variable estimation of error-components models, Journal of Econometrics, 1995; 68(1): 29-51
29- Blundell, R., & Bond, S. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 1998; 87(1): 115-143. https://doi.org/10.1016/S0304-4076(98)00009-8
30- Baltagi, B. (2008). Econometric analysis of panel data (Vol. 1). John Wiley & Sons.
31- Matyas, L. and Sevestre P. (1992). The Econometric Analysis of Panel Data, Handbook of Theory and Application, Dordrech, Kluwer Academic Press.
32- Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators‟. Journal of econometrics, 2005; 126(1): 25-51.
33- Sala-i-Martin X, The Classical Approach to Convergence Analysis, 1996; 106(437): 1019-1036.
34- Mankiw N. G, Romer D, Weil D. N. A contribution to the empirics of economic growth. Quarterly Journal of Economics, 1992; 107: 407–437.
35- Mendez-Guerra Carlos. "Beta, Sigma and Distributional Convergence in Human Development? Evidence from the Metropolitan Regions of Bolivia," MPRA Paper 87627, University Library of Munich, Germany; 2018.
36- Johnstone D.B. The economics and politics of cost sharing in higher education: A comparative perspective. Economics of Education Review, 2003; 23(3): 403–10.
_||_1- Reeves A, Gourtsoyannis Y, Basu S, McCoy D, McKee, M, Stuckler D. Financing universal health coverage—Effects of alternative tax structures on public health systems: cross-national modelling in 89 low-income and middle-income countries. The Lancet, 2015; 386(9990): 274–280.
2- Youkta K, Paramanik Rajendra N, Convergence analysis of health expenditure in Indian states: Do political factors matter? GeoJournal, 2022; 87(4): 1-10.
3- Kumar R. Lack of social or political demand for good health care in India: Impact on unfolding universal health coverage. Journal of family medicine and primary care, 2015; 4(1): 1-2.
4- Ramanjini, K. G. (2020), Is Public Education Expenditure Pro-cyclical In India? The Institute for Social and Economic Change, ISEC Working Paper; 506: 1-26.
5- Newhouse J. P. Medical-care expenditure: A crossnational survey. The Journal of Human Resources, 1977; 12(1): 115–125.
6- Hartwig J, Sturm J-E. “Robust determinants of health care expenditure growth”, Applied Economics, 2014; 46(36): 4455-4474.
7- Clementea J, Lázaro-Alquézarb A, Monta˜nésa A, (2019), US state health expenditure convergence: A revisited analysis, Economic Modelling, 2019; 83(4): 1-11.
8- Fallahi F. Convergence of Total Health Expenditure as a Share of GDP: Evidence from Selected OECD Countries, MPRA Paper No, 2011; 51324: 1-14.
9- Karimi Tekanlo, Z., Salmani Bishek, M., Nabipour, A. examining the convergence of expenditure and income of households in the provinces of Iran, Research Journal of Macroeconomics, 2016; 23: 59-80.
10- Hitiris T, Posnett J. The determinants and effects of health expen- diture in developed countries. Journal of Health Economics, 1992; 11: 173-181.
11- Wang Z. The Convergence of Health care Expenditures in The US States. Health Economics, 2008; 18: 55-70.
12- Alcalde-Unzu J., Ezcurra R., Pascual P. Cross-country disparities in health-care expenditure: a factor decomposition. Health Economics, 2009; 18: 479-485.
13- Albulescu Claudiu T. Health Care Expenditure in the European Union Countries: New Insights about the Convergence Process, International Journal of Environmental Research and Public Health, 2022; 19(4): 1-16.
14- Dolores Gadea Rivas M, Sanz Villarroya I. Testing the Convergence Hypothesis for OECD Countries: A Reappraisal. Economics Discussion Papers, 2016; No 2016-45. Kiel Institute for the World Economy. http://www.economics ejournal.org/economics/discussionpapers/2016-45.
15- -Mohammadi, A., Abdul Karimi Azar, S., Feqh Majidi, A. Investigating the convergence of the consumer price index between the provinces of Iran using the cluster analysis method, Economic Research, 2018; 54(2): 369-393.
16- Solow R.M. A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 1965; 70: 65-94.
17- Barro R. J, Sala-i-Martin X. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, 1991; 22(1): 107-182.
18- Grossman M. On the concept of health capital and the demand for health. J Polit Econ, 1972; 80(2): 223–55. http://hdl.handle.net/10.1080/00036846.2014.964829.
19- Nghiem S. H, Connelly L. B. Convergence and determinants of health expenditures in OECD countries. Health Economics Review, 2017; 7(29): 1-11.
20- Hembram S, Haldar S. Is India experiencing health convergence? Anempirical analysis, 2020; 53(3): 591-618.
21- Clementea J, Lázaro-Alquézarb A, Monta˜nésa A. Convergence in Spanish Public health expenditure: Has thedecentralization process generated disparities? Health Policy, 2019; 123(5): 503-507. doi: 10.1016/j.healthpol.2019.03.003.
22- Odhiambo S. A, Wambugu A, Kiriti-Nganga T. Convergence of health expenditure in Sub-Saharan Africa: Evidence from a dynamic panel. Journal of Economics and Sustainable Development, 2015; 6(6): 185–205.
23- Hosseini Dost SE, Abbasian E, Rahman Maraneh D. Examining the Sustainability of Health Expenditures in Iran: New Evidence Based on the ARDL Approach, 2017; 7(24): 35-60.
24- Rezapour A, Alipour S, Alipour V, Soleimani Movahed M. Per capita Convergence of Health Expenditures and Health Outcomes in Economic Cooperation Organization Member Countries, Health Management, 2018; 9(4): 27-40 .
25- Rezaei H, Alizadeh M and Nademi Y. Factors affecting health expenditure per capita: comparison of spatial models in a selection of developing countries, 2016; 4(2): 1-26.
26- Hansen, L.P. “Large Sample Properties of Generalized Method of Moments Estimators,” Econometrica, 1982; 50: 1029-1054.
27- Arellano, M. and Bond, S. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations‟. The review of economic studies, 1991; 58(2): 277-297.
28- Arellano, Manuel and Bover, Olympia. Another look at the instrumental variable estimation of error-components models, Journal of Econometrics, 1995; 68(1): 29-51
29- Blundell, R., & Bond, S. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 1998; 87(1): 115-143. https://doi.org/10.1016/S0304-4076(98)00009-8
30- Baltagi, B. (2008). Econometric analysis of panel data (Vol. 1). John Wiley & Sons.
31- Matyas, L. and Sevestre P. (1992). The Econometric Analysis of Panel Data, Handbook of Theory and Application, Dordrech, Kluwer Academic Press.
32- Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators‟. Journal of econometrics, 2005; 126(1): 25-51.
33- Sala-i-Martin X, The Classical Approach to Convergence Analysis, 1996; 106(437): 1019-1036.
34- Mankiw N. G, Romer D, Weil D. N. A contribution to the empirics of economic growth. Quarterly Journal of Economics, 1992; 107: 407–437.
35- Mendez-Guerra Carlos. "Beta, Sigma and Distributional Convergence in Human Development? Evidence from the Metropolitan Regions of Bolivia," MPRA Paper 87627, University Library of Munich, Germany; 2018.
36- Johnstone D.B. The economics and politics of cost sharing in higher education: A comparative perspective. Economics of Education Review, 2003; 23(3): 403–10.