Healthcare Spending: The Role of Healthcare Institutions from an International Perspective

Abstract

Healthcare systems differ greatly across the world, however, it appears that the extent of public insurance (publicly/government funded healthcare) is the only institutional characteristic that plays a significant role in accounting for the large disparities in total healthcare spending. Other factors, such as whether healthcare services are provided by the private or public sector, play much less of a role, highlighting the important distinction between how services are provided and how those services are funded. A regression analysis is conducted utilising an existing categorisation of the predominately high-income countries of the OECD in 2009. It is found that more public insurance and less private insurance is associated with significantly lower spending after controlling for differences in income through GDP and healthcare quality/outcomes through life expectancy. This result is robust to the inclusion of additional controls for lifestyle factors and the proportion of the population aged 65 and over, as well as the inclusion or exclusion of the US that could otherwise be seen as some kind of outlier. A typical country relying largely on private provision and insurance, such as the Netherlands, Germany or the US, could reduce total healthcare spending by around a third by moving to a system with extensive public insurance whilst retaining extensive private provision of services, a situation typical of some countries such as Austria, Greece and Japan.