Determinants of public health expenditure in the EU

Public health expenditure is one of the fastest-growing spending items in EU member states. As the population ages and wealth increases, governments allocate more resources to their health systems. In view of this, the aim of this study is to identify the key determinants of public health expenditure in the EU member states.

This study is based on macro-level EU panel data covering the period from 2000 to 2018. The association between explanatory variables and public health expenditure is analyzed by applying both static and dynamic econometric modeling.

Although GDP and out-of-pocket health expenditure are identified as the key drivers of public health expenditure, there are other variables, such as health system characteristics, with a statistically significant association with expenditure. Other variables, such as election year and the level of public debt, result to exert only a modest influence on the level of public health expenditure. Results also indicate that the aging of the population, political ideologies of governments and citizens' expectations, appear to be statistically insignificant.

Since increases in public health expenditure in EU member states are mainly triggered by GDP increases, it is expected that differences in PHE per capita across member states will persist and, consequently, making it more difficult to attain the health equity sustainable development goal. Thus, measures to reduce EU economic inequalities, will ultimately result in reducing disparities in public health expenditures across member states.