1. Jung, Hongjoo Kim, Dohyun / SKKU
The Effect of Health Care Expenditure on Economic Growth in OECD Countries -Focusing on the Expenditure Mixes and Financing Arrangements-
Moscow, Russia
July 29, 2014
Jung, Hongjoo
Kim, Dohyun / SKKU

2. 1. Introduction
Macroeconomists’ interest in health is that a healthy population is likely to be more productive and improving the health status of the population should foster economic growth(Hartwig, 2010)

3. 2. Health capital and Economic growth
- Since Schultz(1961) first proposed health as human capital, health is important factor productivity improvement for the future
- Mankiw, Romer, and Weil(1992) : education as a human capital
- Knowles and Owen(1995) : health variable as a human capital
- health capital measurement
: life expectancy - Knowles and Owen(1995), Bloom et al.(2001),
McDonald and Roberts(2002), Li and Huang(2010)
: adult surviving rate - Bhargava et al(2001), Jamison et al.(2005)
: health expenditure - Heshimati(2001), Gyimah-Brempong &
Wilson(2004), Rivera and Currais(2004), Hartwig(2010)

4. 2. Health capital and Economic growth
- `life expectancy’, `adult surviving rate’ variables is similar
effects on economic growth
- but, `health care expenditure’ variable : controversial in
high income country (Weil, 2007)
: positive
Heshimati(2001)와 Rivera and Currais(1999a, 1999b, 2003, 2004)
: insiginificant Hartwig(2008)
Knowles and Owen(1995, 1997), McDonald and Roberts(2002)
: negative
Bhargava et al.(2001)

5. Health care expenditure
3. Empirical model
The objective of this paper is demonstrating an effect of population health on economic growth
Study on the economic growth of the health care expenditure mixes and financing arrangements adopted in 26 OECD countries
Health capital
Economic growth
Health care expenditure
GDP per capita
Total expenditure
public expenditure
Rivera and Currais(2004)
Financing source
NHS / NHI
private expenditure
National Health Service(NHS) : mainly funded ultimately from general taxation
National Health Insurance(NHI) : mainly funded ultimately from compulsory
contributions

6. 3. Empirical model Model (using System GMM) Variables Variables
Definition
source
GDP
Real GDP per capita (US$ PPP)
OECD statistics
THE
Total health expenditure per capita (US$ PPP)
PHE
Public health expenditure per capita (US$ PPP)
PFHE
Capital formation health expenditure per capita (US$ PPP)
PCHE
Public current health expenditure per capita (US$ PPP)
PIHE
Private insurance per capita (US$ PPP)
PEE
Primary and middle school enrollment rate
World Bank Edstats TI
Total investment rate
PGRW
Population growth rate

7. 4. Data Descriptions Descriptive statistics of variables(26 OECD) NOB.
Mean
S.D.
Max.
Min.
분석기간1)
GDP
664
THE
662
983.61
88.70
PHE
639
761.15
19.10
PFHE
512
58.31
43.20
273.00
2.20
PCHE
731.13
16.50
PIHE
387
122.53
509.30
0.30
PEE
642
102.04
8.64
135.22
83.24 TI
22.71
5.42
47.79
10.39
PGRW
0.56
1.13
26.45
-0.083

8. 4. Data Descriptions Descriptive statistics of variables(NHS vs NHI)
NOB.
Mean
Max.
Min.
GDP
269
395
THE
276.63
393
88.70
PHE
177.71
370
19.10
PFHE
222
1.05
1.22
1.02
290
1.18
1.01
PCHE
162.59
16.50
PIHE
150
97.77
509.33
.50
233
120.86
505.01
.30
PEE
256
103.12
131.61
83.23
386
101.32
135.21
83.62 TI
21.37
42.30
11.50
23.62
47.79
10.39
PGRW
.64
2.86
-.74
.53
26.45
-.83

9. 4. Data Descriptions unbalanced panel (1980-2008) - 26 OECD countries
No.
NHS
Australia, Canada, Denmark, Iceland, Ireland, Italy, Newzealand, Portugal, Sweden, UK 10
NHI
Austria, Belgium, Czech, Finland, France, Germany, Greece, Hungary, Japan, Korea, Mexico, Netherland, Norway, Poland, Spain, Switzerland 16

10. 5. Empirical Analysis Health expenditure and economic growth
OECD 26개 국가
Financing source
Unbalanced
NHS
NHI
THE +
PHE
PFHE -
(-)
PCHE
PIHE
(+)
Footnote: ( ) means statistically insignificant results

11. 5. Empirical Analysis
Footnote: 1) ***, **, * mean 1%, 5%, 10% significance
2) figures in ( ) are standard deviations

12. 5. Empirical Analysis (NHS)

13. 5. Empirical Analysis (NHI)

14. 6. Conclusions
This paper presents the results on the economic growth consequences of the health care expenditure mixes and financing arrangements adopted in 26 OECD countries
The general finding of this study shows health care expenditure contributes to positive effect on economic growth from 1980 to 2008

15. 6. Conclusions
However, their relative importance varies by source of payment and arrangement of financing
- First, Public and public current health care expenditures tend to have positive economic growth effects. (Heshimati(2001), Rivera and Currais(2004))
The Private insurance has not significant results.
The results using a balanced panel from show conflicting effects in total, public, and public current health care expenditures.
- Second, for both NHS and NHI countries total, public health care expenditures tend to foster economic growth. However, the public current health care expenditures, and the private insurance tend to retard economic growth in NHS countries, and encourage in NHI countries.