The Determinants of Public Health Expenditures: Comparing Canada and Spain

The determinants of public health care expenditure are examined in two of the most decentralized countries in the world (Canada and Spain) for two partly overlapping time-spans of data availability: Canada, 1981 to 2013 and Spain, 2002 to 2013. While Canada generally spends more per capita on health care than Spain, over time Spain’s macro level health indicator performance has surpassed Canada’s. Using regression analysis, we find the key determinants of public health care spending include time trend, income, physician numbers and regional fixed effects. Physician numbers are a significant driver of real per capita public health expenditures in Canada but not Spain despite the greater per capita number of physicians in Spain. Differences in the growth and performance of real per capita income explain much of the gap between public health spending between these two countries with some contribution from differences in per capita physician numbers. The differential health indicator outcomes raise the question of what Canada might do to be more efficient.