The health financing transition: A conceptual framework and empirical evidence — Fan 2014

Two significant trends in health financing are seen almost universally: an increase in health spending per individual and a decrease in the percentage of people who pay for their own healthcare. We describe these patterns as a "health financing transition" to provide a conceptual framework for understanding health markets and public policy. Regressions in levels and first differences are used to examine the different explanations for changes in health spending and its composition using data from 126 countries collected between 1995 and 2009. Our estimate of the income elasticity of health expenditure, which is in line with recent studies of a similar nature, is about 0.7. Our research also reveals a significant trend in health spending, which is increasing by about 1% annually. This trend is attributed to a variety of factors, including evolving technology and medical practices, cost pressures, and organizations that fund and manage health care.

Fan, V. Y., & Savedoff, W. D. (2014). The health financing transition: A conceptual framework and empirical evidence. Social Science & Medicine, 105, 112–121. https://doi.org/10.1016/j.socscimed.2014.01.014