Dose Environmental Pollution Affect Health Care Expenditure in Korea?: Empirical Evidence from Regional Governments’ Panel Data

Abstract

In this paper, we examine the impact of environmental pollution on health care expenditure in Korea using unbalanced panel data on 16 regional governments over the period 1999-2008. To denote the degree of environmental pollution, we used 4 sectors of air pollution, the number of noise and vibration generating facilities, and 3 sectors of water pollution. In addition, total health care expenditure is divided into 2 categories, such as private and public expenditures as a percentage of GRDP. It is found that the estimated coefficients of environmental pollution have statistically significant and negative impacts on the ratio of private health care expenditure to GRDP without model specifications. The number of noise and vibration generating facilities has a statistically significant and negative impact on both private and public health care expenditures. Hence, we can infer that the growth of GRDP was faster than the increment of health care expenditure in the Korean economy. Furthermore, the results suggest the possibility that public health care expenditure can be determined by the political process that can be affected by income level and demographic factors rather than environmental factors.