The impact of macro-fiscal factors and private health insurance financing on public health expenditure: evidence from the OECD countries for the period 2000-2017

Purpose Because of the 2008 global financial crisis aftermaths, economic downturn and prolonged recession, several OECD countries have adopted an austerity compound by significantly reducing public health expenditure (PHE) for dealing with their fiscal pressure and sovereign-debt challenges. Against this backdrop, this study aims to examine the responsiveness of PHE to macro-fiscal determinants, demography, as well to private health insurance (PHI) financing. Design/methodology/approach The authors gather annual panel data from four international organizations databases for the total of OECD countries from a period lasting from 2000 to 2017. The authors apply static and dynamic econometric methodology to deal with panel data and assess the impact of several parameters on PHE. Findings The authors' findings indicate that gross domestic product, fiscal capacity, tax revenues and population aging have a positive effect on PHE. Further, the authors find that both unemployment rate and voluntary private health insurance financing present a negative statistically significant impact on our estimated outcome variable. Different specifications and sample periods applied in the regression models reveal how inseparably associated are PHE and OECD's economies compliance on macro-fiscal policies for offsetting public finances derailment. Practical implications Providing more evidence on the responsiveness of PHE to several macro-fiscal drivers, it can be a helpful tool for governments to reconsider their persistence on fiscal adjustments measures and rank public health financing to the top of their political agenda. Health systems policies for meeting Universal Health Coverage (UHC) objectives, they should also take into consideration the voluntary PHI institution, especially for economies with insufficient fiscal capacity to raise public health financing. Originality/value To the best of knowledge, the impact of unemployment and voluntary PHI funding on public health financing, apart from other macro-fiscal and demographical parameters effect, remains unnoticed in the existing published studies on the topic.