Determinants of health care expenditure in Sweden

Abstract: Sweden faces increasing pressures on health funding. Total expenditure on health care currently accounts for about 10.92% of GDP, which suggests an increase of about twofold over the last five decades. This paper examines the short-run and long-run relationship between income and health care expenditure in Sweden during the period 1980–2017. The study focused on the differences between short- and long-term elasticities. Consistent with the conventional findings, the income elasticity for health care is found to be greater than one, suggesting that health care is a luxury good in Sweden. Additionally, the age structure variable is found to have a significant positive impact on health care expenditure. Finally, the importance of another non-income variable, relative price, is also confirmed, an increase in relative price is associated with lower quantity of health care expenditure.