Health status and medical expenditures: Is there a link?

Until now, cross-national studies have not demonstrated a positive relationship between health care expenditures and improved health status, as measured by such indicators as age-adjusted mortality rates. It has therefore been argued that cutting expenditures will not have a negative effect upon health status. Using health and life-style data from the OECD for Germany, the United Kingdom, The Netherlands, France, Sweden and the United States, this study finds that when one holds constant those changes in life style that have an impact upon health (e.g. smoking, drinking, traffic accidents, dangers on the job) and adjusts for inflation and population size, health care expenditures do bear a positive relationship to health status. This suggests that reductions in health care expenditures may well have some cost in terms of overall health.