Cliometrics of Health Spending

Cliometrics has contributed immensely to the quantitative historical study of health, but research on health spending in economic history remains largely undiscovered country. Health spending growth is largely a feature of the twentieth century with rising health expenditure to gross domestic product ratios (H/GDP) in all countries but with variation in the quantity of resources devoted to health. From H/GDP ratios well below 2% prior to World War II for most of the current advanced OECD economies, spending rose in the post-World War II era reaching approximately 4% in 1960 and nearly 9% in 2019 before surging to almost 10% during the pandemic in 2020. This increase in spending has produced positive health outcomes, but diminishing returns have set in. The key longer-term determinants of spending have been rising incomes, aging populations, and technological extension though institutional and political factors have influenced outcomes. In terms of whether this spending is in any sense an optimum, one can opine that ultimately the optimal amount of health spending is whatever a society wants it to be and is willing to pay for. In terms of directions for cliometrics on health expenditures, research would benefit from longer time series health expenditure data sets for the advanced economy countries as well as extending efforts to other countries around the world. More important may be efforts to acquire historical micro data on health expenditure given the abundance of public and private sector health spending data from the operation of health systems.