1. Prof.dr Tammo H.A. Bijmolt t.h.a.bijmolt@rug.nl Do Political or Economic Factors Drive Healthcare Financing Privatisations? Empirical Evidence from OECD R Rasmus Wiese r.h.t.wiese@rug.nl

2. Contribution 1)A novel methodology to detect healthcare privatisations 2)Empirical test of political economy theories and conventional wisdom. Main results: - Economic crisis trigger healthcare financing privatisations - Political factors do not 2

3. Background ›Why/When do countries (not) undertake economic reform? - Sovereign debt crisis imply a lack of reform - Public healthcare expenditure 8% of GDP - Profit and healthcare! 3

4. Motivation ›Lack of studies testing conventional wisdom and theory - Economic crisis, ideology, war of attrition, elections (Drazen & Easterly 2001; Hibbs 1977; Alesina & Drazen 1991) ›Poor measurement of privatisations and reform (Megginson & Netter 2001) ›No quantitative studies of healthcare financing privatisations? 4

5. Do Political or Economic Factors Drive Healthcare Financing Privatisations? Presentation plan: 1)Detecting privatisations 2)Which factors triggered these privatisations? 3)Conclusion 5

6. Detecting privatisations ›General definitions of economic reform and privatisation - Should have a significant economic impact and be a result of planned policy - A shift in ownership (e.g. Saltman 2003) ›Problems: - Policy input or economic outcome data? (Rodrik 1996; Campos & Horváth 2012) - Not necessarily any shift in ownership ›Specific definition of a healthcare financing privatisation: A statistically significant policy induced shift from public to private funding of healthcare 6

7. Detecting privatisations. 2 parts: 1)Detect statistically significant shifts in which “pockets” incur the costs to healthcare. Private vs. public. 2)Validate these shifts using de jure evidence Case study: Healthcare financing privatisations in Austria Part 1: Data and statistical filter ›Data: Public and Private funds incurred to healthcare (OECD) ›Healthcare financing source: 7

8. Healthcare financing source: Austria (Bai & Perron 1998, 2003) privatisation 8

9. In Austria the filter detects: Privatisation in 1968 Privatisation in 1988 Part 2: Validate the detected significant shifts Civil Servants’ Health and Work Accident Insurance Act of 1967 Employment and Social Security Tribunal Act of 1987 Healthcare systems in transition, country reports (WHO) 9

10. Findings in a panel of 23 OECD countries Findings: 33 privatisations detected by the filter 21 can be validated as the result of planned policy Evidence of ‘rigid institutions’ (Acemoglu et al. 2006) Evidence of ‘stroke-of-the-pen’ policies ›Privatisations in 14 out of 23 OECD countries (1960-2010) 10

11. Which factors triggered these privatisations? ›Panel of 23 OECD countries (unbalanced 1975-2006) ›Dependent variable privatisation - Privatisation y it =1, no privatisations y it =0 ›Binary outcome random effects logit model 11

12. Variables of interest ›Political factors - Ideology (Potrafke 2009) - War of attrition (Political fractionalisation, World Bank DPI) - Elections (executive and legislative, World Bank DPI) ›Economic Crisis - Job crisis (unemployment rate, mean + st.d., OECD) - Debt crisis (interest rate on gov. debt, mean + st.d., OECD) - Recession (year with negative growth, OECD) 12

13. Control variables ›Economic factors: Demographics, technological change, inflation (Oxley & MacFarlan 1994, OECD) - percentage of population over 65 - potential years of life lost - inflation rate ›Duration dependence (Beck et al. 1998) - probability of a reform is affected by earlier reforms 13

14. Main empirical results 14

15. Conclusion ›The filter picks-up privatisations - maybe too strict ›Economic crisis trigger privatisations robustly 1) Perception of the need for significant reform (Drazen 2000) 2) Uncertainty of reform outcome (Fernadez & Rodrik 1991) 3) … ›Other political factors do not impact healthcare financing privatisations: Ideology? - Other measures of ideology 15

16. The end Thank you for your attention r.h.t.wiese@rug.nl 16