An Analysis of the Relationship Between Health Expenditure and Health Outcomes

Abstract

With the effects of the 2007 world financial crisis still overshadowing the country's financial security, the US is looking to cut back in many areas, including health care. The US currently spends twice the average amount on health than the average of the other OECD nations. Despite these levels of expenditure, we see lower outcomes and relatively smaller improvements in outcomes than these countries. This paradox has led many researchers to explore other factors influencing health outcomes. The purpose of this study was to analyze the relationship between health expenditure and health outcomes with the inclusion of lifestyle variables. Another unique aspect of this study was the use of happiness and satisfaction as measures of health. We hypothesized that once lifestyle choices had been accounted for, health expenditure would lose significance and we would see that lifestyle factors had a greater influence on health. The lifestyle variables included measures of education, alcohol consumption, and tobacco use. Education was found to be negatively associated with both infant mortality and PYLL. Alcohol consumption was found to be positively associated with infant mortality, and tobacco use was negatively associated with life expectancy and positively associated with PYLL. While the results from the lifestyle variables align with the hypothesis, it is important to note that we had expected to see health expenditure lose significance once lifestyle variables were accounted for. This was not the case. In addition to these unexpected findings, the variables accounting for well-being (happiness and satisfaction) did not appear to act as hypothesized either.