Family health care spending in Latin America

Household budget data from surveys in six Latin American countries, 1966-75, are used to estimate income elasticities of private health care spending. For ten cities in five countries the elasticity is constant at 1.5; for metropolitan, other urban, and rural areas of Brazil it is constant at 1.17. The Brazilian data also show 30 percent higher spending in small than in large cities, and 50 percent higher in the countryside. These results are consistent with supposing that private care is a luxury compared to public care, and that more is spent on the former when the latter is not available. Geographic differences may be exaggerated by differences in payment mechanisms, since reported out-of-pocket expenditure is not net of public reimbursement. Different components of spending such as drugs and hospitalization show very different behavior from the total.