The relationship between health care expenditure and health outcomes

Evidence and caveats for a causal link
Original Papers


The relationship between health care expenditure and health outcomes is of interest to policy makers in the light of steady increases in health care spending for most industrialised countries. However, establishing causal relationships is complex because, firstly, health care expenditure is only one of many quantitative and qualitative factors that contribute to health outcomes, and, secondly, measurement of health status is an imperfect process. This study reviews key findings and methodological approaches in this field and reports the results of our own empirical study of countries of the European Union. Our analysis examines life expectancy and infant mortality as the ‘output’ of the health care system, and various life-style, environmental and occupational factors as ‘inputs’. Econometric analyses using a fixed effects model are conducted on a panel data set for the former 15 members of the European Union over the period 1980–1995. The findings show that increases in health care expenditure are significantly associated with large improvements in infant mortality but only marginally in relation to life expectancy. The findings are generally consistent with those of several previous studies. Caveats and improvements for future research are presented.


Health care expenditure Health outcomes Aggregate data Macro-health 



We express our thanks to Dr. Theo Hitiris, formerly of the Department of Economics and Related Studies, University of York, for his input to the econometric analyses and constructive criticisms in the preparation of this manuscript.

Conflict of interest:

No information supplied


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Copyright information

© Springer Medizin Verlag 2006

Authors and Affiliations

  1. 1.Centre for Reviews and DisseminationUniversity of YorkUK
  2. 2.Chair of Economics and Management of Health ServicesConservatoire National des Arts et MétiersParisFrance
  3. 3.Centre for Reviews and DisseminationUniversity of YorkYorkUK

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