The Impact of Immigration on Public and Out-of-Pocket Health Expenditure in OECD Countries

This paper examined the impact of the inflow of new immigrants on public and out-of-pocket health expenditure in 33 Organisation for Economic Cooperation and Developments (OECD) countries over the period of 2000–2015. Dynamic panel data analysis is carried out using the one-step system ‘Generalised Method of Moments’ and the instrumental variable (IV) estimation approach whilst controlling for potential endogeneity. The inflow of new immigrants is modelled as a determinant of health expenditure. The results are robust to both static and dynamic models. The results show that an increasing inflow of immigrants is significantly related to out-of-pocket, but, surprisingly, not with public health expenditure. Moreover, the findings are similar for countries that primarily have publicly funded healthcare systems or those more dominated by private financing of healthcare. It can be concluded that new immigrants do not seek publicly funded healthcare at least at the initial years of their relocation and that their arrival does not trigger a significant rise in public healthcare expenditure in the OECD countries.