HEALTH CARE AND IDEOLOGY: A RECONSIDERATION OF POLITICAL DETERMINANTS OF PUBLIC HEALTHCARE FUNDING IN THE OECD

Abstract

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.