The political and fiscal determinants of public health and curative care expenditures: evidence from the Canadian provinces, 1980-2018.

Abstract

Public health systems have been centre stage during the COVID-19 pandemic, but governments invest relatively little in public health as compared to curative care. Previous research has shown that public health expenditures are under pressure during recessions and could be politically determined, but very few studies analyze quantitatively their determinants. This study investigates the political and fiscal determinants of public health and curative care expenditures. After constructing a dataset building on disaggregated health expenditures in the Canadian provinces from 1975 to 2018, we use error correction models to study the short-run and long-run influence of fiscal and political determinants on public health expenditures and on curative expenditures. Fiscal determinants include measures of public debt charges and federal transfers. Political determinants include government partisanship and election cycles. We also explore whether curative expenditures crowd out public health expenditures. We find no difference between left and right governments in curative care expenditures but show that left governments spend more on public health if we control for past spending decisions in favour of curative care. Fiscal austerity reduces both public health and curative expenditures, and provincial governments use additional intergovernmental transfers to increase their curative care budgets. A growth in the proportion of curative care relative to total health budgets is associated with a decline in public health expenditures. Even though they have low political salience, public health expenditures remain driven by partisanship and electoral concerns. Despite their widely acknowledged importance, public health programs develop in the shadow of curative care priorities.