Aging and Cost Disease Bamol,s in Iranian health Sector

In recent years، population aging causes some concerns among policy makers. Meanwhile، the share of health expenditures (HE) in gross domestic product has been rising rapidly. Some economic theories consider less growth in productivity as main cause of wage increase and absorbing labor force to the health sector. Present study examines that if wage increases in excess of productivity growth can explain health expenditure growth. To this end، unbalanced growth model is used to determine main drivers of health expenditures growth. Beside the main purpose of the study، model setup allows us to concentrate on the role of per capita income and inflation in the health expenditure growth. Estimating a classical econometric model using data period of 1360-1389 shows that wage increases in excess of productivity growth has a significant effect on HE growth. In other words، existence of the unbalanced growth in Iran has not been rejected. By the way، growth in per capita income and price level in health sector have positive and significant effects on the HE growth. According to the unbalanced growth theory and projected population ageing، HE rises can be considered as a main threat to Iranian health system. It is clear that the best palliative against the future rise in health care expenditure is to increase productivity in the health sector.