The convergence of health care expenditure in the US states

Abstract

In response to rising health care costs, many have called for more effective regional health policy coordination. In this paper, we address the issue by examining the degree of convergence in per capita health care expenditure and its nine components across the US states from 1980 to 2004. The major finding is the moderate evidence of convergence in total health care expenditure and the diverse performance of the expenditure components regarding convergence. We also find hospital care to be responsible for the bulk of cross-state convergence in total expenditure. The expenditure on prescription drugs is the most important diverging factor. Policy implications of these empirical results are discussed.