This paper uses a panel data analysis and a co-integration test to explore the factors affecting the health care expenditures of Taiwan and 23 OECD countries over the period 1980-2001. The findings show that incomes have significant positive effects on cross-national differences and long-term trends in health care expenditures. The average income elasticity of 1.17 for the sample countries indicates that the growth rate for health care expenditures is higher than the growth rate of incomes. Also, Taiwan's income elasticity of 1.3~1.4 suggests that the impact of income growth on health care expenditures is stronger for Taiwan than that for the OECD countries.
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