An Analytical Study on Healthcare Inflation Rate and Its Most Important Components in Iran

Background: Inflation rate is an important indicator of macroeconomics. The trade-off between inflation rate and the social welfare is an important issue, which leads to decreased access to health services. Objectives: The aim of the present study was to investigate the relationship between inflation rate of three components of healthcare, namely, hospitalization, medication, and specialist consultation. The study also attempted to determine the overall health inflation rate in Iran and the relationship between general and health inflation rates. Materials and Methods: The available data on inflation rates from 1985 to 2013 were used to estimate the econometricsʹ models. The stationary condition of variables was assessed by applying Augmented Dickey-Fuller test. Then, two econometrics models were estimated. The first model was used to evaluate the effect of inflation rate of health subcategories on overall health inflation rate, and the second model was applied to analyze the relationship between the rates of health and general inflation. Results: With 1% increase in the rates of inflation related to hospitalization, medication, and specialists’ consultation, the inflation rate of health would respectively increase by 0.41888%, 0.25372%, and 0.16307% in long term. In Iran, 88% of changes in health inflation rate are related to the changes in inflation rates of aforementioned subcategories. In addition, with 1% increase in health inflation rate, the general inflation rate would rise by 0.3070% in long term and more than 11% of changes in general inflation rate can be explained by changes in health inflation rate. Conclusions: Inflation rates of hospitalization, medication, and specialists’ consultation have the greatest effects on overall health inflation rate. Moreover, general inflation rate is directly correlated with health inflation rate.