The Role of Policy and Institutions on Health Spending

Abstract

This paper investigates the impact of policies and institutions on health expenditures for a large panel of Organisation for Economic Co‐operation and Development countries for the period of 2000–2010. A set of 20 policy and institutional indicators developed by the Organisation for Economic Co‐operation and Development are integrated into a theoretically motivated econometric framework, alongside control variables related to demographic (dependency ratio) and non‐demographic (income, prices and technology) drivers of health expenditures per capita. Although a large share of cross‐country differences in public health expenditures can be explained by demographic and economic factors (around 71%), cross‐country variations in policies and institutions also have a significant influence, explaining most of the remaining difference in public health spending (23%). Copyright © 2016 John Wiley & Sons, Ltd.