Abstract:
Current evidence on the convergence of health care expenditures across the US
states into a single convergence club is non-existent. Against this backdrop, we use a
modified panel unit root test that accounts for smooth structural changes, spanning the
period of 1966–2009. The results illustrate that the ratio of the individual health care
expenditures relative to the cross-sectional average is broken trend-stationary, not only in
the aggregate panel, but also across all 50 US states. The findings also document that the
evidence of convergence is possibly due to the convergence of personal disposable income
across the US states.
