Mortality reductions from marginal increases in public spending on health. Issue 8 (August 2018)

• Record Type: Journal Article
• Authors: Edney, L.C.; Haji Ali Afzali, H.; Cheng, T.C.; Karnon, J.
• Is Part Of: Health policy. Volume 122:Issue 8(2018)
• Page Start: 892
• Page End: 899
• Publication Date: 2018-08
• Subjects: Australia -- Health spending -- Health outcomes -- Mortality -- Instrumental variable -- Quantile regression; Medical education -- Periodicals; Medical policy -- Periodicals; Delivery of Health Care -- Periodicals; Education, Medical -- Periodicals; Health Education -- Periodicals; Health Planning -- Periodicals; Public Policy -- Periodicals; Enseignement médical -- Périodiques; Politique sanitaire -- Périodiques; Medical education; Medical policy; Periodicals; Electronic journals; Electronic journals; 362.1
• DOI: 10.1016/j.healthpol.2018.04.011
• Languages: English
• ISSNs: 0168-8510

Abstract

Highlights: We study the relationship between public health spending and mortality. We use mean and quantile IV regression methods. Marginal increases in public health spending are associated with significant reductions in mortality. Public health spending has a greater impact in areas with poorer health outcomes. 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.