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Measuring The Displacement And Replacement Of Government Health Expenditure

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  • Joseph L. Dieleman
  • Michael Hanlon

Abstract

Research assessing the relationship between government health expenditure and development assistance for health channeled to governments (DAHG) has not considered that this relationship may depend on whether DAHG is increasing or decreasing. We explore this issue using general method of moments estimation and a panel of financial flows data spanning 119 countries and 16 years. Our primary concern is how DAHG affects government health expenditure as source (GHES). We disaggregate the average effect of DAHG and separately identify the effects of increases versus decreases in DAHG. We find that a $1 year‐over‐year increase in DAHG leads to a $0.62 (90% confidence interval (CI): 0.15, 1.09) decrease in GHES, whereas a $1 year‐over‐year decrease in DAHG does not have an effect on GHES that is statistically different from zero (CI: −0.67, 1.17). Simulation shows that the displacement of GHES between 1995 and 2010 reduced total government health expenditure by $152.8 billion (CI: 46.9, 277.6). Moreover, the irregular disbursement of DAHG reduced total government expenditure by $96.9 billion (CI: 0.5, 212.4). Thus, this research shows that health aid is fungible and highlights the cost of displacement and erratic aid disbursement. © 2013 The Authors. Health Economics published by John Wiley & Sons, Ltd.

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  • Joseph L. Dieleman & Michael Hanlon, 2014. "Measuring The Displacement And Replacement Of Government Health Expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 129-140, February.
    • Handle: RePEc:wly:hlthec:v:23:y:2014:i:2:p:129-140
    DOI: 10.1002/hec.3016
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    1. Rohan Sweeney & Duncan Mortimer, 2016. "Has the Swap Influenced Aid Flows in the Health Sector?," Health Economics, John Wiley & Sons, Ltd., vol. 25(5), pages 559-577, May.
    2. Dierk Herzer, 2019. "The long-run effect of aid on health: evidence from panel cointegration analysis," Applied Economics, Taylor & Francis Journals, vol. 51(12), pages 1319-1338, March.
    3. Ssozi, John & Amlani, Shirin, 2015. "The Effectiveness of Health Expenditure on the Proximate and Ultimate Goals of Healthcare in Sub-Saharan Africa," World Development, Elsevier, vol. 76(C), pages 165-179.
    4. John Ssozi & Edward Bbaale, 2019. "The Effects of the Catch-Up Mechanism on the Structural Transformation of Sub-Saharan Africa," Economies, MDPI, vol. 7(4), pages 1-27, November.
    5. Barlow, Pepita, 2020. "Global disparities in health-systems financing: A cross-national analysis of the impact of tariff reductions and state capacity on public health expenditure in 65 low- and middle-income countries, 199," LSE Research Online Documents on Economics 104107, London School of Economics and Political Science, LSE Library.

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