The effect of health care expenditures on sickness absence
- Presenter:
Mon June 5, 2006 9:30-10:45 Room Alumni Lounge
Rationale: Previously, the effects of individuals’ health status on sickness absence have been estimated. From a public policy perspective it is also helpful to know how a policy variable like public expenditures on health care can influence the absence rate. The paper also relates to the still open question of whether increased expenditure on health care on an aggregated level actually does improve the health statues of the population.
Objective: The objective of this paper is to estimate the impact of public health care expenditures on absence from work due to sickness or disability.
Methodology: Using panel data on the Swedish municipalities during the period of 1993-2003, the effect of public health care expenditures on the sickness absence in the municipalities is estimated. Demographic characteristics and educational levels are included as proxies for health. The model also incorporates proxies for working conditions and economic incentives to remain at work. Finally, municipality and year specific fixed effects are included to take account of time-invariant heterogeneity between the municipalities and changes over time common to all municipalities in Sweden. An instrumental variable method is used to avoid the potential problem of endogeneity. The main sources of data are Statistics Sweden, The Swedish Social Insurance Agency and The Swedish Association of Local Authorities and Regions.
Results: Preliminary results indicate that the public expenditures on health care have a significant negative effect on the absence days. According to the estimate, an increase of the operating cost on health care with 1000 SEK (~$125 USD) per inhabitant reduces the absence with approximately 0.6 days per insured. Since there are roughly two inhabitants per insured, this indicates that the cost of avoiding one day of absence by increasing operating cost on health care accounts to approximately 3 300 SEK (~$413 USD). This can be compared with the GNP per working day in Sweden, which is roughly 3 000 SEK (~$375 USD).
Conclusions: The results from this paper indicate that public expenditures on health care have an effect on the number of absence days. These results give support for a positive causality between health care expenditures and the health of the population.
