The effect of health care expenditures on self-rated health status and the Health Utility Index: Evidence from Canada

Abstract

Studies of the effect of health care expenditures on health status suggest conflicting evidence of a relationship using data from numerous countries. We use data from the Canadian National Population Health Survey and the Canadian Institute for Health Information to estimate the relationship between per capita provincial health care expenditures and both self-assessed health status and the Health Utility Index. Our sample includes all individuals who were 18 years old or over at the beginning of the survey in 1994. We use random effects ordered probits for self-assessed health status and quantile regressions for the Health Utility Index (HUI). Our results show that provincial health care expenditures have a limited effect on self-rated health status and the HUI. It may be that self-rated health status and the HUI are noisy measures of heath status and as such, combined with the small variation observed in health care expenditure trends over the period, make the magnitude of the relationship between health care expenditures and health difficult to estimate.

Appendix 1: Health care expenditure categories

Expenditures on hospitals include expenditures of licensed institutions providing, acute, psychiatric, chronic and convalescent care (CIHI 2005). This category of expenditures includes salaries paid to the staff and physicians on their payroll CIHI 2005, 2012). Expenditures on other institutions include expenditures of all facilities that are approved by governmental authorities to provide long-term care to their residents (CIHI 2005). These include nursing homes, facilities providing care to individuals with physical disabilities, developmental delays, psychiatric disabilities and emotionally disturbed children (CIHI 2005, 2012).

Expenditures on physicians include all fees paid to physicians in private practice for services rendered to the population. Fees paid to physicians who rendered services in hospitals are included in this category when they were paid directly to the physician through a plan (not the provincial health care expenditure plan) (CIHI 2005). Expenditures on other health professionals include reimbursement of dental services, visions care services and others such as massage therapists, chiropractors, orthopedists, osteopaths, physiotherapists, podiatrist, psychologists, private duty nurses and naturopaths (CIHI 2012).

Expenditures on drugs include expenditures on both over-the-counter and prescribed drugs (CIHI 2012). This category of expenditures only includes drugs purchased in retail stores and not drugs dispensed in hospitals and other institutions (these are accounted for in the expenditures on hospitals and other institutions category) (CIHI 2012). Per capita expenditures on drugs increased especially quickly during the period 1990 to 2000, during which they doubled or tripled, depending on the provinces.

Expenditures on capital include money spent on the construction of facilities, as well expenditures incurred for machinery and equipment to provide care (for hospitals, clinics, etc.) (CIHI 2005). It also includes some software of hospitals, clinics, first-aid stations and residential care facilities (CIHI 2012). This series is one of the most volatile as most of the expenditures in this category are big-ticket items that will last for a few years. The government can spend a lot in one year on multiple small projects or less in a year on a smaller number of large projects.

Expenditures on public health include money spent to prevent the spread of communicable diseases (e.g. flu vaccination campaigns), food and drug safety, health promotion activities, health inspections, community mental health programs and occupational health (CIHI 2012). Other health spending includes expenditures on home care, medical transportation, hearing aids and other prostheses, health research and other miscellaneous expenditures (CIHI 2012).