Analysis Of The Scale, Structure And Performance Of Government Health Expenditure In China

Government Health Expenditure (GHE) in China has been growing rapidly over the past forty decades. This rapid growth brings an improvement in life expectancy and quality of life to Chinese people, but it also jeopardizes the sustainability of public budgets. Consequently, there are increasing research interests in the determinants of health care expenditures, as well as the linkage between government health expenditures and health outcomes. Those findings would provide certain evidence for the purpose of establishing an effective health care system with country characteristics, without which the goal of raising the health level of the people could not be fully realized.On this basis, this paper is to further focus on all including the level, structure and performance about government health expenditure. Having given an up to date overview of the literature on the theories of public financing, health capital and health determinants, this paper analyzes the determinants of the scale, structure and performance of the government health expenditure in China. On the ground of making clear definitions, the paper sets a logic framework involving study scope and clue for the full page. Empirical analysis is done with STATA 10.0 to explore the effect of various determinants and the performance of government health expenditure, using econometric models.The results suggest that:First, determinants of government health expenditure in China range from economic factors to social and health factors, among which economic factors are most important drivers of government health expenditures, consistent with other studies. The paper expands current research content of the scale of government health expenditure by exploring its determinants at national, regional and provincial levels using a fixed-effect-model. Besides, several factors, such as age, birth rate, incidence rate of communicative disease, also contribute to the government health expenditure.Second, the functional structure of Chinese government health expenditure is expected to change. Together with the result of an international comparison, significant relationships are found between the structure of government health expenditure on the one hand and GDP, total government expenditure, aging population etc. on the other hand. With the economic development and an aging population, we would probably see a higher proportion of health insurance and public health in total government health investment than other components in future. Thus, efforts should be made to construct and improve the government health investment mechanism and both the central and local governments shall increase their health investment, and reconcile the needs of both the supplier and the recipient.Finally, consistent with most findings in the literature, Chinese government health expenditure turns out to have a positive impact on both health improvement and economic development, including crude mortality, infant mortality rate, and under-five mortality rate. Based upon huge literatures in the field of public financing, health capital theory, as well as determinants of government health expenditure, this paper attempts to explore the contribution of government health expenditure on health and economic outcomes by empirical analysis. From this we conclude that the government should stand at the dominant position in providing public health and basic health care services; and the government also ought to make serious analysis of the efficiency of the current expenditure patterns before increasing expenditures in health or other sectors, as health outcomes are also determined by factors other than just government health expenditures; besides, the government should make efforts to make sure that the fairness and efficiency of funds utilization to maximize health outcomes.Above all, this paper introduces and then tests a theoretical framework to gain a full picture of appropriate arrangement of government health expenditure in China, in the hope of providing some innovative evidence for policy-making in practice.