Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-24T22:04:46.190Z Has data issue: false hasContentIssue false
  • English
  • Français

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: [email protected]
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abizadeh, S. and Gray, J.A. (1992), ‘Politics and provincial government spending in Canada’, Canadian Public Administration, 35(4):519–533.Google Scholar
Agrell, S. (2005), ‘Canadians more open to private health’, National Post, 22 November.Google Scholar
Alberta (2001), ‘A framework for reform’, Report of the Premier’s Advisory Council on Health, Chaired by the Rt. Hon. Don Mazankowski, Edmonton.Google Scholar
Bac, C. and Le Pen, Y.(2002), ‘An international comparison of health care expenditure determinants’, Conference Paper, 10th International Conference on Panel Data, Berlin.Google Scholar
Barer, M.L., Bhatia, V.Stoddart, G.L.and Evans, R.G.(1994), ‘The remarkable tenacity of user charges: a concise history of the participation, positions, and rationales of Canadian interest groups in the debate over “Direct Patient Participation” in health care financing’, Premier’s Council on Health, Well-Being and Social Justice.Google Scholar
Barer, M.L., Pulcins, I.R., Evans, R.G., Hertzman, C., Lomas, J., and Anderson, G.M. (1989), ‘Trends in use of medical services by the elderly in British Columbia’, Canadian Medical Association Journal, 141(July): 39–45.Google ScholarPubMed
Barros, P.P. (1998), ‘The black box of health care expenditure determinants’, Health Economics, 7: 553–544.Google Scholar
Barros, P.P.(2007), ‘The slow and unnoticed changes in the funding mix’, Health Economics, 4:437–440.Google Scholar
Baumol, W.J. (1967), ‘Macroeconomics of unbalanced growth: the anatomy of urban crisis’, American Economic Review, 57(3): 415–426.Google Scholar
Baumol, W.J. (1993), ‘Health care, education and the cost disease: a looming crisis for public choice’, Public Choice, 77(1): 17–28.CrossRefGoogle Scholar
Baxter, J. (2006), ‘Report provides Klein with third way out’, Calgary Herald, 27 April 2006, p. A6.Google Scholar
Bird, Richard, M. (1993), ‘Threading the fiscal labyrinth: some issues in fiscal decentralization’, National Tax Journal, 46(2):207–227.Google Scholar
Blendon, R.J., Schoen, C., DesRoches, C.M.Osborn, R.and Scoles, K.L. (2002), ‘Trends: inequities in health care – a five country survey’, Health Affairs, 21(3): 182–191.Google Scholar
Blomqvist, A.G. and Carter, R.A.L. (1997), ‘Is health care really a luxury?’, Journal of Health Economics, 16: 207–229.Google Scholar
Canada (2002a), ‘Building on values: the future of health care in Canada’, Final Report, Chaired by the Hon. Roy Romanow, Ottawa.Google Scholar
Canada (2002b), Parliament, Senate, Standing Senate Committee on Social Affairs, Science and Technology, ‘The Health of Canadians: The Federal Role’, Vol.6, Recommendations for Reform, Chaired by the Hon. Michael J.L. Kirby, Ottawa.Google Scholar
Canadian Institute for Health Information (2005a), National Health Expenditure Trends 1975–2005, Ottawa.Google Scholar
Canadian Institute for Health Information (2005b), Health Care in Canada, OttawaGoogle Scholar
Carter, G.E. (1988), ‘Established programs financing: a critical review of the record’, Canadian Tax Journal, 36(5): 1225–1243.Google Scholar
Carter, G.E. (1994), ‘Federal restraints on the growth of transfer payments to the provinces since 1986–87: an assessment’, Canadian Tax Journal, 42(6):1504–1532.Google Scholar
Clemente, J., Marcuello, C., Montanes, A. and Pueyo, F. (2004), ‘On the international stability of health care expenditure functions: are government and private functions similar’, Journal of Health Economics, 23:589–613.CrossRefGoogle ScholarPubMed
Cleveland, W.S. (1979), ‘Robust locally weighted regression and smoothing scatterplots’, Journal of the American Statistical Association, 74(368):829–836.Google Scholar
Cleveland, W.S. (1985), The Elements of Graphing, Wadsworth Advanced Books and Software, Monterey, California.Google Scholar
Cleveland, W.S. (1993), Visualizing Data, New Jersey: Hobart Press.Google Scholar
Culyer, A.J. (1983), ‘Public or private health services? A skeptics view’, Journal of Policy Analysis and Management, 2(3): 386–402.Google Scholar
Culyer, A.J. (1988), Health Care Expenditures in Canada: Myth and Reality; Past and Future, Canadian Tax Paper No. 82 (Canadian Tax Foundation).Google Scholar
Cutler, D.M., McClellan, M.Newhouse, J.P.and Remler, D.(1998), ‘Are medical prices declining? Evidence from heart attack treatments’, Quarterly Journal of Economics, 113(4): 991–1024.Google Scholar
Denton, F.T. and Spencer, B.G. (1975), ‘Health-care costs when the population changes’, Canadian Journal of Economics, 8(1):34–48.CrossRefGoogle Scholar
Denton, F.T. and Spencer, B.G. (1983), ‘Population aging and future health costs in Canada’, Canadian Public Policy, 9: 2.Google Scholar
Denton, F.T. and Spencer, B.G. (1995), ‘Demographic change and the cost of publicly funded health care’, Canadian Journal on Aging, 14(2):174–192.Google Scholar
Denton, F.T., Neno Li, S., and Spencer, B.G. (1987), ‘How will population aging affect the future costs of maintaining health care standards?’, in Marshall, Victor W. (ed.), Aging in Canada, 2nd Edition, Fitzhenry & Whiteside.Google Scholar
Devereaux, P.J. et al. . (2004), ‘Payments for care at private for-profit and private not-for-profit hospitals: a systematic review and meta-analysis’, Canadian Medical Association Journal, 170(12): 1817–1824.Google Scholar
Di Matteo, L. (2000), ‘The determinants of the public–private mix in Canadian health care expenditures: 1975–1996’, Health Policy, 52: 87–112.Google Scholar
Di Matteo, L. (2004), ‘What drives provincial health expenditure’, Canadian Tax Journal, 52(4): 1102–1120.Google Scholar
Di Matteo, L. and Di Matteo, R. (1998), ‘Evidence on the determinants of Canadian provincial government health expenditures: 1965–1991’, Journal of Health Economics, April.Google Scholar
Duckett, S.J. (2005), ‘Living in the parallel universe in Australia: public Medicare and private hospitals’, Canadian Medical Association Journal, 173(7):745–747.Google Scholar
Duckett, S.J. and Jackson, T.J. (2000), ‘The new health insurance rebate: an inefficient way of assisting public hospitals’, Medical Journal of Australia, 172: 439–442.Google Scholar
Emery, J.C.H. and Gerrits, K. (2005), ‘The demand for private health insurance in Alberta in the presence of a public alternative, health services restsuctruring: new evidence and new directions’, John Deutsch Institute Conference, Queen’s University, 17–18 November 2005.Google Scholar
Epple, D. and Romano, R.E.(1996a), ‘Public provision of private goods’, Journal of Political Economy, 104:57–84.CrossRefGoogle Scholar
Epple, D. and Romano, R.E. (1996b), ‘Ends against the middle: determining public service provision when there are private alternatives’, Journal of Public Economics, 62:297–325.CrossRefGoogle Scholar
Evans, R.G. (1983), ‘Health care in Canada: patterns of funding and regulation’, Journal of Health Politics, Policy and Law, 8(1): 1–43.Google Scholar
Evans, R.G. (1987), ‘Hang together, or hang separately: the viability of a universal health care system in an aging society’, Canadian Public Policy, 13(2):165–180.Google Scholar
Evans, R.G., Barer, M.L., Stoddart, G.L., and Bhatia, V. (1994), Who Are the Zombie Masters, and What Do They Want? Premier’s Council on Health, Well-being and Social Justice.Google Scholar
Evans, R.G., Lomas, J., Barer, M. L.Labelle, R.J.Fooks, C., Stoddart, G.L. Anderson, G.M.,Feeny, D.,Gafni, A.Torrance, G.W., and Tholl, W.G.(1989), ‘Controlling health expenditures – the Canadian reality’, The New England Journal of Medicine, 320(9): 571–577.CrossRefGoogle ScholarPubMed
Gbesemete, K.P. and Gerdtham, U.-G. (1992), ‘Determinants of health care expenditure in Africa: a cross-sectional study’, World Development, 20(2):303–308.Google Scholar
Gerdtham, U.G., Jonsson, B., MacFarlan, M., and Oxley, H. (1998), ‘The determinants of health expenditure in the OECD countries: a pooled data analysis’, Zweifel, P. (ed.), Health, the Medical Profession and Regulation: Developments in Health Economics and Public Policy, Vol. 6, Boston, pp. 113–134.Google Scholar
Gerdtham, U.G., Sogaard, J., Andersson, F.and Jonsson, B. (1992), ‘An econometric analysis of health care expenditure: a cross-section study of the OECD countries’, Journal of Health Economics, 11:63–84.Google Scholar
Gouveia, M. (1996), ‘The public sector and health care’, International Tax and Public Finance, 3: 329–349.Google Scholar
Gouveia, M. (1997), ‘Majority rule and the public provision of a private good’, Public Choice, 93: 221–244.Google Scholar
Hall, J. and Maynard, A. (2005), ‘Healthcare lessons from Australia: what can Michael Howard learn from John Howard’, British Medical Journal, 12 February, 357–359.Google Scholar
Hartwig, J. (2006), ‘What drives health care expenditure? – Baumol’s Model of “unbalanced growth” revisited’, KOF Working Papers/KOF Swiss Economic Institute, ETH Zurich, 103.Google Scholar
Hitiris, T. and Posnett, J. (1992), ‘The determinants and effects of health expenditure in developed countries’, Journal of Health Economics, 11: 173–181.CrossRefGoogle ScholarPubMed
Hogan, S. and Hogan, S. (2002), ‘How will the ageing of the population affect health care needs and costs in the foreseeable future?’, Discussion Paper No. 25, Commission on the Future of Health Care in Canada.Google Scholar
Jaffey, J. (2007), ‘Has Chaouli created an interest in the business of health’, Lawyer’s Weekly, 14 September, 27, 18.Google Scholar
Jeong, H.-S.(2005), ‘Health care reform and change in public–private mix of financing: a Korean case’, Health Policy, 74: 133–145.Google Scholar
Kleiman, E. (1974), ‘The determinants of national outlay on health’, in Perlman, M.(ed.), The Economics of Health and Medical Care, London: Macmillan.Google Scholar
Krauss, C. (2006), ‘As Canada’s slow-motion public health system falters: private medical care is surging’, New York Times, 26 February.Google Scholar
Leong, M. (2006), ‘51% say private care OK’, National Post, 2 June, p. A1.Google Scholar
Leu, Robert, E. (1986), ‘The public–private mix and international health care costs’, in Culyer, A.J. and Jonsson, B.(eds), Public and Private Health Services, Oxford: Basil Blackwell.Google Scholar
Lynch, M. and Calnan, M. (2003), ‘The changing public/private mix in dentistry in the UK – a supply-side perspective’, Health Economics, 12: 309–321.Google Scholar
Marchand, M. and Schroyen, F.(2005), ‘Can a mixed health care system be desirable on equity grounds?’, Scandinavian Journal of Economics, 107(1):1–23.Google Scholar
Marchildon, Gregory, P. (2005), ‘The Chaoulli case: two-tier Magna Carta?’, Law and Governance, Longwoods Publishing, June 2005.Google Scholar
Mendelsohn, M. (2002), ‘Canadian thoughts on their health care system: preserving the Canadian model through innovation – a review of public opinion’, June, Royal Commission on the Future of Health Care in Canada.Google Scholar
Mickleburgh, R. (2007), ‘Not eyeing private-clinic increase, B.C. says’, The Globe and Mail, 2 October.Google Scholar
Mohanty, S., Woolhandler, S., Himmelstein, D.U.Pati, S., Carrasquillo, O.and Bor, D.H. (2005), ‘Health care expenditures of immigrants in the United States: a nationally representative analysis’, American Journal of Public Health, 95(9):1431–1437.Google Scholar
Naylor, C. David (2002), ‘Your money/or your life’, Canadian Medical Association Journal, 166(11).Google Scholar
Newhouse, J.P. (1977), ‘Medical care expenditure: a cross-national survey’, The Journal of Human Resources, 12(1):115–125.Google Scholar
Newhouse, J.P. (1992), ‘Medical care costs: how much welfare loss?’, The Journal of Economic Perspectives, 6(3):3–21.Google Scholar
O’Brien, K. and Watts, M. (2007), ‘Business opportunities in private health care in Canada’, The Osler Outlook, Spring, p. 3.Google Scholar
Parkin, D., McGuire, A.and Yule, B. (1987), ‘Aggregate health care expenditures and national income: is health care a luxury good’, Journal of Health Economics, 6: 109–127.Google Scholar
Perry, J.H. (1989), A Fiscal History of Canada–The Postwar Years, Canadian Tax Foundation, Canadian Tax Paper No. 85.Google Scholar
Pooley, E. (2006), ‘Clinical trials’, Canadian Business Magazine, 19 June–26 July, Issue.Google Scholar
Poullier, J.P. (1986), ‘Levels and trends in the public–private mix of the industrialized countries’ health systems’, in Culyer, A.J. and Jonsson, B. (eds), Public and Private Health Services, Oxford: Basil Blackwell.Google Scholar
Propper, C. (2000), ‘The demand for private health care in the UK’, Journal of Health Economics, 19: 855–876.Google Scholar
Provincial and Territorial Ministers of Health (2000), ‘Understanding Canada’s health care costs’, Final Report, August, www.health.gov.on.ca/english/public/pub/ministry_reports/ptcd/ptcd_doc_e.pdf -Google Scholar
Rubin, R.M. and Koelln, K. (1993), ‘Determinants of household out-of-pocket health expenditures’, Social Science Quarterly, 74(4):721–735.Google Scholar
Saskatchewan (2001), ‘Caring for Medicare: sustaining a quality system’, Commission on Medicare, Chaired by Kenneth J. Fyke, Regina.Google Scholar
Schieber, George, J. (1990), ‘Health expenditures in major industrialized countries, 1960–87’, Health Care Financing Review, 11(4):159–167.Google Scholar
Schrimper, R.A. and Clark, R.L. (1985), ‘Health expenditures and elderly adults’, Journal of Gerontology, 40(2): 235–243.Google Scholar
Seshamani, M. and Gray, A.M. (2004), ‘A longitudinal study of the effects of age and time to death on hospital costs’, Journal of Health Economics, 23: 217–235.Google Scholar
Stabile, M. (2001), ‘Private insurance subsidies and public health care markets: evidence from Canada’, Canadian Journal of Economics, 34(4): 921–942.Google Scholar
Steinbrook, R. (2006), ‘Private health in Canada’, New England Journal of Medicine, 354(16): 1661–1664.Google Scholar
Stoddart, G.L., Barer, M.L., Evans, R.G.and Bhatia, V.(1993), Why Not User Charges? The Real Issues, Canada: Premier’s Council on Health, Well-being and Social Justice.Google Scholar
Stoddart, G.L. and Labelle, R.J. (1985), Privatization in the Canadian Health Care System: Assertions, Evidence, Ideology and Options, Canada: Ministry of Supply and Services.Google Scholar
Tountas, Y., Karnaki, P., Pavi, E., and Souliotis, K. (2005), ‘The “unexpected” growth of the private health sector in Greece’, Health Policy, 74: 167–180.Google Scholar
Tuohy, C.H., Flood, C.M.and Stabile, M.(2004), ‘How does private finance affect public health care systems? Marshaling the evidence from OECD nations’, Journal of Health Politics, Policy and Law, 29(3):359–396.Google Scholar
Waldo, D.R., Sonnefeld, S.T., McKusick, D.R., and Arnett, R.H. (1989), ‘Health expenditures by age group, 1977 and 1987’, Health Care Financing Review, 10(4): 111–120.Google Scholar
Williams, A. (1988), ‘Priority setting in public and private health care: a guide through the ideological jungle’, Journal of Health Economics, 7: 173–183.Google Scholar
Supplementary material: PDF

Di Matteo supplementary material

Appendix.pdf

Download Di Matteo supplementary material(PDF)
PDF 113.7 KB