UC Berkeley

We estimate the effect of changes in the per capita expenditures of county departments of public health on county-level general health status. Using panel data on 40 counties in California (2001-2009), dynamic panel estimation techniques are combined with the Lewbel instrumental variable technique to estimate an aggregate demand for health function that measures the causal cumulative impact that per capita public health expenditures have on county-level general health status. We find that a $10 long-term increase in per capita public health expenditures would increase the percentage of the population reporting good, very good, or excellent health by 0.065 percentage points. Each year expenditures were increased would result in approximately 24,000 individuals moving from the “poor or fair health” category to the “good, very good, or excellent health” category across these 40 counties. In terms of the overall impact of county public health departments on general health status, at current funding levels, each annual expenditure cycle results in over 207,000 individuals being in the “good, very good, or excellent” categories of health status rather than the “poor or fair” categories.