Abstract

The aim of this article is to investigate the relationship between the public and the private health expenditure (macroeconomic and microeconomic approach) over time and within the recession and austerity period in Greece, in order to find out whether the strict Memorandum health policies pass, influence, or go along with the health expenditure to the final consumer, i.e., the health services user. In this context, by using econometric tools, such as multiple regression and cointegration analysis on the raw microdata of Household Budget Surveys from 1987/88 up to 2018, as well as by using data of public expenditure of Organization for Economic Co-operation and Development–Health Statistics 2019 in the Stata version 13, the study compares the variation of household and public health expenditures before and after the financial crisis in Greece and also examines the correlation between the two variables. The analysis demonstrated that the Greek household health expenditure (HHE) was rapidly increasing during the period 1988–2008, and afterward, it started decreasing. Moreover, the total private and the total public health expenditures seem to have a bidirectional long-run relationship and significant cointegration. The same was observed regarding the public expenditure and household medical services expenditure, as well as pharmaceuticals. Furthermore, the results indicate that over the years of recession, the monthly HHE decreases, due to the confiscation of middle-class income, which led to consumerism restrictions. However, as households are now spending a bigger portion of their shrunken income for health (as health is an inelastic commodity), HHE, as a proportion of total private expenditure, has eventually risen.

Highlights

  • The study of health expenditure over time is a difficult task, because it has to be considered the fact that health is a product of inelastic demand and that the public sector has a role of “payer,” and it has the power to regulate the market prices

  • The present study examined the level of the public health expenditure and the private Greek household health expenditure (HHE) within the period 1988–2018

  • In the last section of results, data are presented regarding the integration of the HHE to the public expenditure as a percentage of gross domestic product (GDP)

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Summary

Introduction

The study of health expenditure over time is a difficult task, because it has to be considered the fact that health is a product of inelastic demand and that the public sector has a role of “payer,” and it has the power to regulate the market prices. The health sector in Greece, after a period of growth within the first decade of the millennium, when total expenditure on health [% gross domestic product (GDP), (1)] exceeded 10% (above the European Union average), the following years it began to moderate. In May 2010, pharmaceutical industry became the focus of fiscal consolidation, and it was one of the main areas of intervention, in order to reduce public pharmaceutical expenditure to 1% of GDP, approaching the European average (3). Public pharmaceutical expenditure decreased by 60.8% between 2009 and 2014, reaching e2billion in 2014 against e5.1 billion in 2009 (4)

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