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
Date Written: September 10, 2015
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: Suggested Citation