The determinants of the public-private mix in Canadian health care expenditures: 1975-1996

Abstract

The health care policy issue regarding the balance between public and private health spending is examined. An empirical model of the determinants of the public-private mix in Canadian health care expenditures over the period 1975-1996 is estimated for total health care expenditures as well as separate expenditure categories such as hospitals, physicians and drugs. The results find that the key determinants of the split are per capita income, government transfer variables and the share of individual income held by the top quintile of the income distribution. Much of the public-private split is determined by long term economic forces. However, the importance of the federal health transfer variables and the variables representing shifts in fiscal transfer regimes suggest the increase in the private share of health spending since 1975 is also partly the result of the policy choice to reduce federal health transfers.