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Increased social spending is generally not associated with lower health care costs

Countries that spend more on social provision such as care for the elderly and unemployment support also tend to spend more on health care, according to a new study from the London School of Economics and Political Science (LSE) and Harvard University.

The study, published in Health Affairs, evaluated 2015 data from the Organisation for Economic Cooperation and Development (OECD). The researchers investigated whether OECD countries that spend less on social services spend more on health care and if increases in social spending are associated with decreases in health care spending.

A common theory is that low spending on social care results in a population who need more healthcare, leading to higher health care costs. Advocates of this theory suggest countries with high healthcare costs, such as the US, should increase investment in social care to reduce health spending.

However, the study revealed an unexpected positive association between social spending and health care spending as well as a positive association between growth in social spending and that in health care spending over time. Taken together, these results suggest that countries that spend more on social services also spend more on health care.

The researchers note, “If there were a trade-off between social spending and healthcare spending, one would expect the relationship between them to be negative. Yet our findings show that on average, countries with higher social spending tend to spend more on health care.”

This positive association persists even when factors such as a higher population of older people or higher unemployment rates are taken into account.

One explanation offered by the researchers for the positive association between social care and health spending is that when societies value spending in areas such as family, old age benefits and education they are also likely to value spending on health care services.

However, they warn the findings should not be interpreted as suggesting social spending might not be effective at lowering health care costs for subpopulations such as the frail elderly or those who are homeless. To support this, they point to other research which shows investment in specific social interventions can result in a decrease in health spending for a subset of high-need patients.

Commenting on the findings, Dr Irene Papanicolas from the Department of Health Policy at LSE said:  “While social spending is linked to better population health outcomes our study shows that higher social spending does not correlate with lower health care spending. Countries should invest in social programs to improve health outcomes, but might want to consider other strategies to lower health care spending.”

Source: London School of Economics and Political Science

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