Do the poor gain more?: the impact of secondary care expenditure on health inequality

Misael Anaya-Montes, Katja Grasic, James Lomas, Laura Anselmi, Miqdad Asaria, Christodoulos Kypridemos, Benjamin Barr, Matthew Sutton, Chris Bentley and Richard Cookson

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Background: Quasi-experimental studies of mortality variation and trends among large administrative areas of England in the 2000s and early 2010s have suggested that more deprived populations gain larger mortality benefits from marginal increases in public expenditure on secondary care. Objective: To identify causal effects of marginal changes in expenditure on mortality variation in 2018 among 32,784 more and less deprived small areas of England, with a mean population of 1700, allowing more fine-grained measurements of deprivation and mortality. Methods: We used cross-sectional data on secondary-care funding allocated to 195 National Health Service administrative areas in England in 2018/19 and employed a well-established instrumental variable approach based on the “distance from target” component of the funding formula, which generates quasi-exogenous variation in funding based on historical factors unrelated to current need for secondary care. Results: We found an inverted U-shape pattern of mortality gains by deprivation group, whereby the middle group gained significantly more than others. However, we could not reject the null hypothesis that the two more deprived groups received the same mortality gain as the two less deprived groups. These findings were robust to extensive sensitivity analysis using different levels of analysis, control variables, mortality outcomes, functional forms, first-stage regression specifications, and exclusions, and our preferred specifications all satisfied standard instrumental variable diagnostic tests. Conclusions: We found that the poor do not always gain more from marginal increases in public expenditure on secondary care and, conversely, might not always bear the largest share of the health opportunity costs of cost-increasing programmes.

Keywords: equity; health inequality; deprivation; geographical resource allocation; instrumental variables; mortality; secondary care expenditure; socioeconomic factors; small area variation (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2025-12-16
New Economics Papers: this item is included in nep-hea
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Published in Applied Health Economics and Health Policy, 16, December, 2025. ISSN: 1175-5652

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