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The European Journal of Health Economics
Published in: The European Journal of Health Economics 3/2019

01-04-2019 | Original Paper

Do political factors influence public health expenditures? Evidence pre- and post-great recession

Authors: Héctor Bellido, Lorena Olmos, Juan Antonio Román-Aso

Published in: The European Journal of Health Economics | Issue 3/2019

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Abstract

This paper analyses whether government ideology and other political- and electoral-related factors influence country-level public healthcare expenditures, focussing on the impact of the Great Recession on that relationship. We test this hypothesis for the OECD countries in 1970–2016. Our results reveal the presence of a partisan effect, left-wing governments being more likely to raise public expenditures in the health sector. We also find that coalitions increase these expenditures, whilst minority governments and those with a high presence in the lower house decrease them. Meanwhile, the opportunistic behaviour of incumbents related to the timing of elections is not supported by our results. The percentage of public expenditures over total health expenditures is also examined, obtaining similar results regarding the partisan effect. However, the onset of the Great Recession has altered these relationships, neutralizing the impact of political factors.
Footnotes
1
See Martin et al. [55] for a review of the determinants in the OECD countries. See Gbesemete and Gerdtham [32], Ghobarah et al. [36] and Ke et al. [54] for analogous analyses in developing countries.
 
2
Hansen and King [37] argue that some of these studies suffer from misspecification, hypothesis later rejected by McCoskey and Selden [57].
 
3
Latvia joined the OECD in 2016, the last year of our sample, and Lithuania and Colombia were invited to join the OECD in 2018, out of our temporary sample, which is why these three countries are not considered in the analysis.
 
4
Parkin et al. [64] recommend the use of PPP, arguing the importance of both prices and quantities in the relationship between GDP and PHCE. Recent papers, such as Herwartz and Theilen [40], also use monetary data in PPP.
 
5
The U.S. is a paradigmatic case since both public and private HCE per capita are very high, but their efficiency is low, as shown in Joumard et al. [52]. Nevertheless, the analysis of efficiency is beyond the scope of this paper.
 
6
Parties are classified as right-wing, centre, or left-wing according to their economic ideology.
 
7
During the period 2003–2013, Turkey was ruled by a single party classified as other ideologies, so we consider these observations as missing values.
 
8
Further discussion about other methodological issues is found in Okunade et al. [61].
 
9
We apply the Im-Pesaran-Shin [43] test to the political series that are not affected by cross-sectional dependence (elections and years in office), as well as to the series with less evidence of cross-sectional dependence (ideology index and force government). Results strongly reject the null hypothesis of the presence of a unit root.
 
10
Since we introduce time fixed effects in the empirical model, we have to exclude one of the temporal effect variables to avoid collinearity problems.
 
11
See Baskaran [12] for a discussion about the “common pool problem”, strongly linked to the veto player theory.
 
12
See Dreher et al. [28] and Meinhard and Potrafke [56] for an extensive debate.
 
13
We want to note that Models 3D and 4C include the same set of variables.
 
14
According to Joumard et al. [52]. We select the countries with a score of decentralisation higher than 3, though results do not change if this threshold changes.
 
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Metadata
Title
Do political factors influence public health expenditures? Evidence pre- and post-great recession
Authors
Héctor Bellido
Lorena Olmos
Juan Antonio Román-Aso
Publication date
01-04-2019
Publisher
Springer Berlin Heidelberg
Published in
The European Journal of Health Economics / Issue 3/2019
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-018-1010-2

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