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The United States ranks third in 2013 among the nations of the world in per capita health care expenditures. However, there is wide variation in health care spending across states. This paper explores factors that influence the per capita outlays in health care across the United States between 2000 and 2009. A Spatial Durbin Panel Model is used to account for the possibility that the health care expenditures of any particular state may influence health care expenditure patterns in neighboring states in the same way. Results indicate that, apart from the presence of positive spatial dependence in health care spending across the states, var-iables such as a state’s gross domestic product (GDP), Medicaid expenditures, proportion of the population that is elderly, number of active physicians per 100,000 people, and poverty rate positively influence per capita state-level health expenditures. GDP (by state), proportion of population above age 65, and poverty rate negatively affect the neighboring states’ per capita health expenditures. Furthermore, the number of hospital beds per 1,000 people and number of hospitals per 1,000 people positively influence bordering states’ per capita health expenses.


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