What Drives Health Care Expenditure? Baumol's Model of 'Unbalanced Growth' Revisited

  title={What Drives Health Care Expenditure? Baumol's Model of 'Unbalanced Growth' Revisited},
  author={Jochen Hartwig},
  journal={Health Care Delivery \& Financing},
  • Jochen Hartwig
  • Published 1 March 2006
  • Economics
  • Health Care Delivery & Financing
The share of health care expenditure in GDP rises rapidly in virtually all OECD countries, causing increasing concern among politicians and the general public. Yet, economists have to date failed to reach an agreement on what the main determinants of this development are. This paper revisits Baumol's (1967) model of 'unbalanced growth', showing that the latter offers a ready explanation for the observed inexorable rise in health care expenditure. The main implication of Baumol's model in this… 

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