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Mortality reductions from marginal increases in public spending on health

Author

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  • Edney, L.C.
  • Haji Ali Afzali, H.
  • Cheng, T.C.
  • Karnon, J.

Abstract

There is limited empirical evidence of the nature of any relationship between health spending and health outcomes in Australia. We address this by estimating the elasticity of health outcomes with respect to public healthcare spending using an instrumental variable (IV) approach to account for endogeneity of healthcare spending to health outcomes. Results suggest that, based on the conditional mean, a 1% increase in public health spending was associated with a 2.2% (p < 0.05) reduction in the number of standardised Years of Life Lost (YLL). Sensitivity analyses and robustness checks supported this conclusion. Further exploration using IV quantile regression indicated that marginal returns on public health spending were significantly greater for areas with poorer health outcomes compared to areas with better health outcomes. On average, marginal increases in public health spending reduce YLL, but areas with poorer health outcomes have the greatest potential to benefit from the same marginal increase in public health spending compared to areas with better health outcomes. Understanding the relationship between health spending and outcomes and how this differs according to baseline health outcomes can help meet dual policy objectives to improve the productivity of the healthcare system and reduce inequity.

Suggested Citation

  • Edney, L.C. & Haji Ali Afzali, H. & Cheng, T.C. & Karnon, J., 2018. "Mortality reductions from marginal increases in public spending on health," Health Policy, Elsevier, vol. 122(8), pages 892-899.
    • Handle: RePEc:eee:hepoli:v:122:y:2018:i:8:p:892-899
    DOI: 10.1016/j.healthpol.2018.04.011
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    Cited by:

    1. James Lomas & Stephen Martin & Karl Claxton, 2018. "Estimating the marginal productivity of the English National Health Service from 2003/04 to 2012/13," Working Papers 158cherp, Centre for Health Economics, University of York.
    2. Laura C. Edney & James Lomas & Jonathan Karnon & Laura Vallejo-Torres & Niek Stadhouders & Jonathan Siverskog & Mike Paulden & Ijeoma P. Edoka & Jessica Ochalek, 2022. "Empirical Estimates of the Marginal Cost of Health Produced by a Healthcare System: Methodological Considerations from Country-Level Estimates," PharmacoEconomics, Springer, vol. 40(1), pages 31-43, January.
    3. Ghazala Aziz, 2023. "Impact of Green Innovation, Sustainable Economic Growth, and Carbon Emission on Public Health: New Evidence of Non-Linear ARDL Estimation," Sustainability, MDPI, vol. 15(4), pages 1-20, February.
    4. Ammi, Mehdi & Arpin, Emmanuelle & Dedewanou, F. Antoine & Allin, Sara, 2024. "Do expenditures on public health reduce preventable mortality in the long run? Evidence from the Canadian provinces," Social Science & Medicine, Elsevier, vol. 345(C).
    5. Emanuele Arcà & Francesco Principe & Eddy Van Doorslaer, 2020. "Death by austerity? The impact of cost containment on avoidable mortality in Italy," Health Economics, John Wiley & Sons, Ltd., vol. 29(12), pages 1500-1516, December.

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