What drives variations in public health and social services expenditures? the association between political fragmentation and local expenditure patterns

Abstract

The US spends two times more than the OECD average in health expenditure but has a much smaller portion of public health spending to total health expenditure than other OECD countries. While it has been suggested that public health and social services spending is crucial to promoting health outcomes, less is known about what drives variations in public health expenditure across regions. This study aims to examine whether political fragmentation in local governance is associated with variations in public health and social services expenditures. Using the US Census of Governments, we constructed a panel dataset of political fragmentation and local government spending patterns (1997-2012) for 792 US counties (population > 60,882, top 25%) and employed Least Squares Dummy Variable (LSDV) and Generalized Estimating Equations (GEE) models. We found that per capita public health spending tended to be smaller in areas where the degree of political fragmentation was higher (Coef: - 0.034; p < 0.01), particularly when general-purpose governments were more fragmented (Coef: - 0.087; p < 0.001). The proportion of public health spending also decreased when local governments were more fragmented (Coef: - 0.012; p < 0.001). Social services expenditures and their proportions to total government expenditure fell with an increase in the degree of political fragmentation. Our findings suggest that fragmented governance settings, in which localities are more likely to face competition with others, may lead to a reduction in public spending essential for population health and that political fragmentation can also have a deterrent effect on broader categories of health-related social services spending.

Keywords: Health expenditure; Leviathan hypothesis; Political fragmentation; Public finance; Social services expenditures.