Government Health Expenditure and Public Health Outcomes

Background/purpose: The recent debate about healthcare policy in the United States underscores the significant role government can play in financing, providing, and regulating healthcare systems and services. This role varies widely from country to country. Some countries, such as Sweden and the United Kingdom have developed national healthcare models, while others, including the United States and Japan, use a predominantly public system with government involvement in regulation and certain sectors of the market.

Competing debates exist regarding the role of public health expenditures in various countries. One perspective stresses that increased public health expenditure increases overall positive health outcomes through universal access to healthcare. An alternative asserts that public health expenditures are less efficient than private, and therefore public health quality declines in such a system. This study addresses the lack of empirical evidence examining the relationship between government health expenditure and public health outcomes.

Methods: Two public health outcomes, infant mortality rate and life expectancy at birth, were used as dependent variables. Government health expenditure, the independent variable, was measured by the level of government spending on medical services and goods as a share of GDP. Several control variables were used to control for multiple factors that could influence these countries' public health outcomes. These covariates include total health expenditure as a share of GDP, GDP per capita, unemployment rate, inflation rate, Gini coefficient, average education level, percentage of aging population, and political stability of the countries.

The data used to answer these questions was collected from 27 Organization for Economic Co-operation and Development (OECD) countries between 1980 and 2004. This data presented a picture of 25 years of public health outcomes over time. In addition, public health outcomes for each country could be compared to that country's government health expenditures. This allowed comparisons both within and between countries. A latent growth model was used to analyze this data. To avoid endogenous problem, this study lagged the independent variable by one year. This allowed the researchers to assess the impact of change in public health spending on the following year's outcomes.

Results: A statistically significant association was found between government health expenditure and public health outcomes, controlling for other covariates. Particularly, the findings showed a strong negative relationship (p<.001) between government health expenditure and infant mortality rate, and a positive relationship (p<.02) between government health expenditure and life expectancy at birth. These results indicate that the higher level of government health expenditure is related to good public health outcomes in a given country, as measured by infant mortality rate and life expectancy.

Conclusions/implications: The results suggest that higher government spending on medical goods and services can be shown to provide better overall health results for individuals. This information supports the position that increased government health expenditures are an effective method of obtaining positive public health outcomes. Based on these results, the article discusses the policy implication of recent changes in healthcare policy in the United States. In addition, future research opportunities to develop these ideas more are discussed.