Abstract
BackgroundPublicly funded healthcare forms an intricate part of government spending in most Organisation for Economic Co-operation and Development (OECD) countries, because of its reliance on entitlements and dedicated revenue streams. The impact of budgetary rules and procedures on publicly funded health care might thus be different from other spending categories. In this study we focus on the potential of fiscal rules to contain these costs and their design features.MethodsWe assess the relationship between fiscal rules and the level of public health care expenditure of 32 (OECD) countries between 1985 and 2014. Our dataset consists of health care expenditure data of the OECD and data on fiscal rules of the International Monetary Fund (IMF) for that same period. Through a multivariate regression analysis, we estimate the association between fiscal rules and its subcategories and inflation adjusted public health care expenditure. We control for population, Gross Domestic Product (GDP), debt and whether countries received an IMF bailout for the specific period. In all our regressions we include country and year fixed effects.ResultsThe presence of a fiscal rule on average is associated with a 3 % reduction of public health care expenditure. Supranational balanced budget rules are associated with some 8 % lower expenditure. Health service provision-oriented countries with more passive purchasing structures seem less capable of containing costs through fiscal rules. Fiscal rules demonstrate lagged effectiveness; the potential for expenditure reduction increases after one and two years of fiscal rule implementation. Finally, we find evidence that fiscal frameworks that incorporate multi-year expenditure ceilings show additional potential for cost control.ConclusionsOur study shows that there seems a clear relationship between the potential of fiscal rules and budgeting health expenses. Using fiscal rules to contain the level of health care expenditure can thus be a necessary precondition for successful strategies for cost control.
Highlights
Funded healthcare forms an intricate part of government spending in most Organisation for Economic Co-operation and Development (OECD) countries, because of its reliance on entitlements and dedicated revenue streams
In Appendix 1 we provide a more detailed explanation of what constitutes Organisation for economic co-operation and development (OECD)’s definition of public health care expenditure
Our results can be seen as a call for attention to budgetary governance, which turns out to be a critical feature in studying the success of different systems in terms of fiscal performance, and the assessment of preconditions that determine such success
Summary
Funded healthcare forms an intricate part of government spending in most Organisation for Economic Co-operation and Development (OECD) countries, because of its reliance on entitlements and dedicated revenue streams. There have been widespread efforts to identify the main drivers behind the growth of health care expenditure [1,2,3,4], as identifying these drivers allows policy makers to develop (effective) measures to contain health care costs. Important determinants in these studies include demographic changes such as Policy measures that target the drivers of health expenditure growth have been much debated over the Schakel et al BMC Public Health (2018) 18:300 past decades. It is of interest to study the potential of fiscal rules to contain publicly funded health care, and its design features
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