Does EU membership prevent crowding out of public health care? Evidence from 28 transition countries

This paper investigates changes in public health care use in 28 transition countries in the aftermath of the global financial crisis using data on more than 60 thousand households from “Life in Transition” surveys II and III conducted by the European Bank for Reconstruction and Development in 2010 and 2016. A difference-in-difference model with robust standard errors clustered at a country level is applied to two sets of transition countries defined by their membership status in the European Union. While there was no difference in public health care use between the two groups in 2010 the share of households using the public health care system dropped by a remarkable 22.2% points between 2010 and 2016 in non-EU transition countries compared to new EU members. There is also some evidence of crowding out of public health care with private out-of-pocket expenditures in non-EU members. These findings represent a serious policy concern in terms of falling access to health care in non-EU transition countries. If one believes in equity benefits from access to public health care for all compared to private out-of-pocket expenditures these results also demonstrates a clear benefit of EU membership.