Revisiting club convergence in healthcare expenditure and its drivers in the United States

Purpose The study used the convergence test to revisit the disparities in per capita healthcare expenditure and prescription drug spending over time across the 50 US states and the District of Columbia. Design/methodology/approach We employed cross-state balanced panel data covering the period 1980–2020, which yielded 2,091 observations and was estimated using the club convergence test. Findings The results reveal widening disparities in per capita healthcare expenditure and prescription drug spending across US states and the District of Columbia. Further analysis using club convergence tests shows that per capita healthcare expenditure exhibits two convergence clubs and one divergence group. In comparison, per capita prescription drug spending exhibits three convergence clubs. Despite the lack of full convergence in healthcare expenditure and prescription drug spending, states with similar characteristics are converging, and there is a possibility of converging to different equilibria where the disparity in per capita healthcare expenditure and prescription drug spending decreases over time. Other results suggest that the formation of club convergence in per capita healthcare expenditure can be attributed to per capita income (measured by per capita gross domestic product), population growth and the unemployment rate. In contrast, population growth and unemployment affect club formation in per capita spending on prescription drugs. Originality/value First, we extended the data from previous studies. Second, unlike these studies, we examine the macroeconomic determinants of the convergence of healthcare and prescription drug spending.