Multifaceted dynamics of health expenditure in the European Union: macroeconomic, environmental, social and medical determinants

This study explores the impact of a multidimensional mix of factors—macroeconomic, environmental, social and medical on the annual variation of the current health expenditure as a share of GDP of the European Union countries between 2000 and 2022. A comprehensive investigation was conducted through static and dynamic panel regression techniques to ascertain the extent to which spending on health is influenced by economic growth, CO2 emissions, life expectancy, urbanization, hospital beds and physicians. The results show a negative association between GDP growth and the health expenditure to GDP ratio, which a decomposition analysis suggests largely reflects a mechanical denominator effect, while the residual, non-mechanical relationship between economic growth and health spending appearing positive. Furthermore, the analysis identifies a negative association between annual variations in CO2 emissions and health spending dynamics, which may reflect interactions between environmental policies and healthcare financing. Concurrently, positive annual variations in life expectancy growth signal a marginal decrease in health expenditure variations, reflecting enhanced preventive strategies. Urbanization increases the burden on healthcare spending primarily by intensifying service demand. Hospital beds and physicians exert upward pressure on the health sector’s direct costs. The findings indicate several determinants that can inform public policies aimed at achieving an efficient and sustainable level of health expenditure.