Health care and ideology: a reconsideration of political determinants of public healthcare funding in the OECD.

In this article, we examined if partisan ideology and electoral motives influence public healthcare expenditure (HCE) in countries of the Organization for Economic Cooperation and Development. We distinguished between the effects on the growth of the expenditures and its adjustment to violations of a long-run equilibrium linking HCE with macroeconomic and demographic trends. Regarding the influence of partisan ideology, we found that if governments are sufficiently long in power, right-wing governments spend less on public health than their left-wing counterparts. Furthermore, if a right-wing party governs without coalition partners, it responds more strongly to deviations from the long-run HCE equilibrium than left-wing governments. With regard to electoral motives, we found that health expenditure increases in years of elections. Independent of their partisan ideology, single-party (minority) governments induce higher (lower) growth of public HCE. Each of these political factors by its own may increase (decrease) HCE growth by approximately one percentage point. Given an average annual growth of HCE of approximately 4.1%, political factors turn out to be important determinants of trends in public HCE.

The determinants of health-care expenditure: new results from semiparametric estimation.

Recent cross-country studies have questioned the existence of a systematic relationship between per capita health-care expenditure (HCE) and explanatory variables such as income, population ageing and total public expenditure. We reexamine this issue mainly focussing at a flexible semiparametric estimation method that allows the parameters of the model to depend on a state variable. Using the age structure of the population as the state variable, we find that the income elasticity increases with population ageing, while other explanatory variables are not significantly influenced by it. Additionally we find that the HCE relationship becomes more and more unstable in ageing economies. These results explain the difficulty to identify both the influence of population ageing and income on HCE in previous studies. Furthermore they indicate that international convergence of HCE across countries crucially depends on the convergence of the population age structure. We also discuss the policy implications of our results regarding the design of a fair health-care financing system and the evolution of HCE to avoid budgetary problems.

The determinants of health care expenditure: testing pooling restrictions in small samples.

Health care expenditure has increased substantially in all Western industrialized countries in the last decades. The necessity to contain the increase in health care expenditure has motivated the analysis of its determinants to explain differences across countries and health systems. However, recent studies have questioned the use of cross section data arguing that health systems are too different to allow for such comparisons. In this paper we investigate whether this criticism is really justified. We analyze the variations of health care expenditure in OECD countries relative to income, population aging and technological change. Our analysis is based on pooled cross section data and time series. Firstly, formulating error correction models for individual countries we demonstrate that in almost all cases the investigated variables are cointegrated. Secondly, we use a bootstrap framework for inference and examine whether the influence of explanatory variables is unique across countries. Applying recursive estimation procedures we find evidence for cross country homogeneity during the period 1961-1979. In the last two decades health care dynamics become more and more country specific thus indicating divergence of health systems and the growing importance of country-specific effects in the explanation of differences in health care expenditure.