Rasmus Wiese r.h.t.wiese@rug.nl

1. Do Political or Economic Factors Drive Healthcare Financing Privatisations? Empirical Evidence from OECD R Rasmus Wiese r.h.t.wiese@rug.nl

2. Contribution • A novel methodology to detect healthcare privatisations • Empirical test of political economy theories and conventional wisdom. Main results: - Economic crisis trigger healthcare financing privatisations - Political factors do not

3. Background • Why/When do countries (not) undertake economic reform? - Sovereign debt crisis imply a lack of reform - Public healthcare expenditure 8% of GDP - Profit and healthcare!

4. Motivation • Lack of studies testing conventional wisdom and theory - Economic crisis, ideology, war of attrition, elections (Drazen & Easterly 2001; Hibbs 1977; Alesina & Drazen 1991) • Poor measurement of privatisations and reform (Megginson & Netter 2001) • No quantitative studies of healthcare financing privatisations?

5. Do Political or Economic Factors Drive Healthcare Financing Privatisations? Presentation plan: • Detecting privatisations • Which factors triggered these privatisations? • Conclusion

6. Detecting privatisations • General definitions of economic reform and privatisation - Should have a significant economic impact and be a result of planned policy - A shift in ownership (e.g. Saltman 2003) • Problems: - Policy input or economic outcome data? (Rodrik 1996; Campos & Horváth 2012) - Not necessarily any shift in ownership • Specific definition of a healthcare financing privatisation: A statistically significant policy induced shift from public to private funding of healthcare

7. Detecting privatisations. 2 parts: • Detect statistically significant shifts in which “pockets” incur the costs to healthcare. Private vs. public. • Validate these shifts using de jure evidence Case study: Healthcare financing privatisations in Austria Part 1: Data and statistical filter • Data: Public and Private funds incurred to healthcare (OECD) • Healthcare financing source:

8. Healthcare financing source: Austria (Bai & Perron 1998, 2003) privatisation

9. In Austria the filter detects: • Privatisation in 1968 • Privatisation in 1988 Part 2: Validate the detected significant shifts • Civil Servants’ Health and Work Accident Insurance Act of 1967 • Employment and Social Security Tribunal Act of 1987 Healthcare systems in transition, country reports (WHO)

10. Findings in a panel of 23 OECD countries Findings: • 33 privatisations detected by the filter • 21 can be validated as the result of planned policy • Evidence of ‘rigid institutions’(Acemoglu et al. 2006) • Evidence of ‘stroke-of-the-pen’ policies • Privatisations in 14 out of 23 OECD countries (1960-2010)

11. Which factors triggered these privatisations? • Panel of 23 OECD countries (unbalanced 1975-2006) • Dependent variable privatisation - Privatisation yit=1, no privatisations yit=0 • Binary outcome random effects logit model

12. Variables of interest • Political factors - Ideology (Potrafke 2009) -War of attrition (Political fractionalisation, World Bank DPI) - Elections (executive and legislative, World Bank DPI) • Economic Crisis - Job crisis (unemployment rate, mean + st.d., OECD) - Debt crisis (interest rate on gov. debt, mean + st.d., OECD) - Recession (year with negative growth, OECD)

13. Control variables • Economic factors: Demographics, technological change, inflation (Oxley & MacFarlan 1994, OECD) - percentage of population over 65 - potential years of life lost - inflation rate • Duration dependence (Beck et al. 1998) - probability of a reform is affected by earlier reforms

14. Main empirical results

15. Conclusion • The filter picks-up privatisations - maybe too strict • Economic crisis trigger privatisations robustly 1) Perception of the need for significant reform (Drazen 2000) 2) Uncertainty of reform outcome (Fernadez & Rodrik 1991)3) … • Other political factors do not impact healthcare financing privatisations: Ideology? - Other measures of ideology

16. The endThank you for your attentionr.h.t.wiese@rug.nl