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Policy choice or economic fundamentals: what drives the public–private health expenditure balance in Canada?

Published online by Cambridge University Press:  22 December 2008

LIVIO DI MATTEO
LIVIO DI MATTEO*
Affiliation:
Department of Economics, Lakehead University, Canada
*
*Correspondence to: Livio Di Matteo, Department of Economics, Lakehead University, Thunder Bay, Ontario P7B 5E1, Canada. Email: Livio.DiMatteo@Lakeheadu.ca
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Abstract

The public share of Canadian total health expenditure declined between 1975 and 2005 but categories such as physicians stayed constant while drugs, other institutions, and capital spending saw increases. Regressions find the key determinants of the public share to be: the relative price of health care, per capita income, federal transfers, proportion of population over age 65, provincial dummy variables, political parties, the onset of the Canada Health Act and the Canada Health and Social Transfer (CHST), and a time trend invoking technological change. Increasing income inequality is not a factor eroding the public share. Moreover, provinces governed by center-left parties are associated with lower public shares in the physician and other health professional categories. The significance of variables like the Canada Health and Social Transfer, the Canada Health Act and provincial differences suggest the increase in the private share of health spending since 1975 is partly the result of policy choices. As the public share has only declined from approximately 76% to 70% over 30 years, it appears the shift towards private care is one of marginal increments. Canadians remain in conflict over their health care system as they appear willing to tolerate only marginal accretions in the overall private share of health spending but accept larger changes across health expenditure categories and provincial systems.

Type
Articles
Information
Health Economics, Policy and Law , Volume 4 , Issue 1 , January 2009 , pp. 29 - 53
Copyright
Copyright © Cambridge University Press 2009

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