Healthcare Financing, Primary Care Strength, and Population Health in Europe: Evidence from a Dynamic Panel Threshold Model

This paper examines how healthcare financing arrangements and the strength of primary care jointly shape population health outcomes across European countries. Focusing on 25 European health systems, we analyse the role of public healthcare expenditure, voluntary health insurance and out-of-pocket payments, while explicitly accounting for differences in sectoral orientation toward primary versus secondary care. Using a two-step approach, we first identify distinct healthcare system typologies through principal component and cluster analyses. We then estimate a dynamic panel threshold model with age-standardised disability-adjusted life years as a measure of population health. Our results show that public healthcare spending is associated with improved population health outcomes, with stronger marginal effects below a threshold of approximately 5 per cent of GDP. The effectiveness of public expenditure is further enhanced in systems characterised by strong primary care. This finding is further supported by the significant role of preventive expenditure in reducing DALYs. By contrast, we find no robust evidence that voluntary health insurance improves population health. Out-of-pocket payments exhibit a non-linear and adverse association with population health outcomes, beyond an endogenously determined threshold.