Public Pharmaceutical Spending, Governance Quality and Household Health Borrowing in the European Union
Public Pharmaceutical Spending, Governance Quality and Household Health Borrowing in the European Union

Summary/Abstract: Public spending on medicines is expected to shield households from the financial consequences of illness, yet the link between what governments spend on medical products and whether people borrow to pay for care has rarely been tested. This study examines whether government expenditure on medical products is associated with the share of adults who borrow for health reasons, and whether the association depends on institutional quality. The analysis combines government finance statistics, three waves of a global household survey and composite governance indicators for 22 European countries observed in 2014, 2017 and 2021, giving 66 observations. Four pooled least squares specifications are estimated, and the sample is then split at the median of government effectiveness. Government effectiveness is negatively and significantly associated with health borrowing (coefficient −1.85, p = 0.032), while public pharmaceutical spending has a positive, insignificant coefficient in the pooled models (1.42, p = 0.203). The interaction between spending and governance is not significant (p = 0.773); in the better-governed half of the sample the spending coefficient is positive and significant (3.36, p = 0.003); in the other half it is 0.79 and insignificant; the difference (2.57) is not significant (p ≈ 0.21). On these data, higher public pharmaceutical spending is not associated with less household health borrowing. The pattern is more consistent with wider utilisation and coverage in high-spending systems, where co-payments still fall on patients, than with a protective effect of spending; institutional quality, not budget size, tracks financial protection.

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