Marginal Benefit Incidence of Public Health Spending: Evidence from Indonesian Sub-National Data

34 Pages Posted: 26 Dec 2009

See all articles by Ioana Kruse

Ioana Kruse

affiliation not provided to SSRN

Menno Prasad Pradhan

Vrije Universiteit Amsterdam, School of Business and Economics; University of Amsterdam - Faculty of Economics and Business (FEB)

Robert A. Sparrow

Vrije Universiteit Amsterdam

Date Written: December 7, 2009

Abstract

We examine the marginal effects of decentralized public health spending by incorporating estimates of behavioural responses to changes in public health spending through benefit incidence analysis. The analysis is based on a panel dataset of 207 Indonesian districts over a 4-year period from 2001 to 2004. We show that district-level public health spending is largely driven by central government transfers, with an elasticity of public health spending with respect to district revenues of around 0.9. We find a positive effect of public health spending on utilization of outpatient care in the public sector for the poorest two quartiles. We find no evidence that public expenditures crowd out utilization of private services or household health spending. Our analysis suggests that increased public health spending improves targeting to the poor, as behavioural changes in public health care utilization are pro-poor. Nonetheless, most of the benefits of the additional spending accrued to existing users of services, as initial utilization shares outweigh the behavioural responses.

Keywords: decentralization, public spending, health care utilization, benefit incidence, Indonesia

JEL Classification: H72, H75, I18

Suggested Citation

Kruse, Ioana and Pradhan, Menno and Sparrow, Robert A., Marginal Benefit Incidence of Public Health Spending: Evidence from Indonesian Sub-National Data (December 7, 2009). Available at SSRN: https://ssrn.com/abstract=1526565 or http://dx.doi.org/10.2139/ssrn.1526565

Ioana Kruse

affiliation not provided to SSRN ( email )

Menno Pradhan (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31(0)20 444 6137 (Phone)
+31(0)20 444 6127 (Fax)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Robert A. Sparrow

Vrije Universiteit Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands

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