Globalization and healthcare policy: a constraint on growing expenditures

ABSTRACT

Research on globalization and social policy has indicated that differentiating between policy fields is a promising way to disentangle the complex relationship between global economic integration and welfare states. Moreover, while there is a specific literature on healthcare spending, it has so far neglected globalization as a potential influence. Consequently, this article examines the impact of globalization on healthcare expenditure. We probe, in addition, whether the relationship varies between different types of healthcare systems. We analyse 22 Organization for Economic Co-operation and Development (OECD) states from 1980 to 2009 in pooled time-series regressions. The results show that an increase in economic openness leads to lower spending growth. As theoretically expected, this relation is stronger in countries with social health insurance systems. This suggests that growing costs of healthcare are increasingly seen as a burden in international economic competition. Owing to strong secular trends of increasing expenditure, it does not translate into lower levels but lower growth of expenditure.

KEY WORDS:

• Comparative welfare state research
• globalization
• healthcare policy
• pooled time-series cross-sectional analysis
• public expenditure

ACKNOWLEDGEMENTS

We are grateful to Carsten Jensen, Monika Ewa Kaminska, Herbert Obinger and two anonymous reviewers for feedback and advice.

Notes

1 Note that these are only ideal-typical and brief characterizations, while real healthcare systems are always more complex and less pure. For example, out-of-pocket payments are part of the funding mix in most healthcare system, especially following recent efficiency-oriented reforms. However, in PHI systems they are present by construction.

2 The first differences are calculated as averages of growth rates of five-year periods because the relative increase is more important than the absolute increase (as done by, for example, Potrafke [2010]).

3 Other systems that contain or used to contain elements of private insurance, but cannot be categorized as pure private insurance systems are Australia and Switzerland (Blank and Burau 2010: 18; Cheng 2010: 1442).

4 We have also split up the time variable into dummies, which hardly changes the results.

Additional information

Notes on contributors

Lukas Fervers

Biographical notes

Lukas Fervers is researcher at the Institute for Applied Economic Research (IAW), Tubingen, and affiliated fellow at the Centre for Social Policy Research, University of Bremen.

Philipp Oser

Philipp Oser is management consultant at Erlkoenig Management Consulting Beijing Co. Ltd.

Georg Picot

Georg Picot is Lecturer in comparative public policy at University of Manchester.