The Impact of Business Cycle on Health Financing: Subsidized, Voluntary and Out-of-Pocket Health Spending

Hao Dong, Zhenghui Li and Pierre Failler
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Hao Dong: School of Economics and Statistics, Guangzhou University, Guangzhou 510006, China
Zhenghui Li: Guangzhou International Institute of Finance and Guangzhou University, Guangzhou 510006, China
Pierre Failler: Economics and Finance Group, Portsmouth Business School, University of Portsmouth, Portsmouth PO1 3DE, UK

IJERPH, 2020, vol. 17, issue 6, 1-24

Abstract: Diverse types of healthcare systems in countries offer opportunities to explore the heterogeneous sources of health financing. This paper widely explores the effect of the business cycle on subsidized, voluntary and out-of-pocket health spending in 34 countries with different types of healthcare systems, by the methodology of hierarchical linear modeling (HLM). We use a panel of annual data during the years from 2000 to 2016. It further examines the business cycle-health financing mechanism by inquiring into the mediating effect of external conditions and innovative health financing, based on the structural equation modeling (SEM). The empirical results reveal that the business cycle harms subsidized spending, whereas its effect on voluntary and protective health spending is positive. Results related to the SEM indicate that the mediating effect of external conditions on the relationship between the business cycle and health financing is negative. However, we find that the business cycle plays a positive effect on health financing through innovative health financing channels. Thus, designing and implementing efforts to shift innovative health financing have substantial effects on the sustainability of healthcare systems.

Keywords: business cycle; health financing; subsidized; voluntary and out-of-pocket health spending; hierarchical linear model; structural equation modeling (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
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