DETERMINANTS OF EXPENDITURE VARIATION IN HEALTH-CARE AND CARE OF THE ELDERLY AMONG FINNISH MUNICIPALITIES

In Finland, municipal health care expenditure varies from FIM 3 800 pe r capita to FIM 7 800 per capita. The objective of this study was to e stimate the impact of different economic, structural and demographic f actors on the per capita costs of health services and care of the elde rly. Using regression analysis we attempted to explain observed differ ences in expenditure by determining separately the effects of allocati ve and productive inefficiency and the effects of factors influencing the demand for services. We found income level of local population, ge nerosity of central government matching grant, allocative efficiency ( the mix of care between institutional and non-institutional care), pro ductive efficiency of service providers, and factors associated with t he need of services (age structure, morbidity) to be the most importan t determinants of health care expenditure. Our results reveal that mun icipalities have the means at their disposal (by shifting resources to outpatient care and increasing productivity) to significantly reduce expenditure on health services and care of the elderly.