What Drives Public Health Care Expenditure Growth? Evidence from Swiss Cantons, 1970-2012

Carsten Colombier, Thomas Braendle

FiFo / October 2015 / Discussion Paper, FiFo

Abstract
A better understanding of the determinants of public health care expenditures is key
to designing effective health policies. We integrate supply and demand-side determinants,
factors from political economy and health policy reforms into an empirical analysis of the
highly decentralized Swiss health care system. We compile a novel data set of the cantonal
health care expenditure in Switzerland spanning the period 1970 - 2012. Using dynamic panel
estimation methods, we find that per capita income, the unemployment rate and the share
of foreigners are positively related to public health care expenditure growth. With regard to
political economy aspects, public health care expenditures increase with the share of women
elected to parliament. However, institutional restrictions for politicians, such as fiscal rules
and mandatory fiscal referenda, do not appear to limit public health care expenditure growth.