Research on the Efficiency of Local Government Health Expenditure in China and Its Spatial Spillover Effect

The efficiency of the local government health expenditure (GHE) in China determines the level of public health services. However, the local government does not pay much attention to that efficiency, though the scale of local GHE is increasing. In this paper, first, we use the data envelopment analysis (DEA) method to measure the static overall efficiency of the local government health expenditure (GHE) in each region of China from 2007 to 2016. Then, based on the spatial statistical theory, global and local spatial Moran’s I value is utilized to investigate its spatial correlation and spatial agglomeration phenomenon. Finally, the spatial spillover effect (SSE) of the static overall efficiency of local GHE in each region is measured by constructing a spatial Durbin model (SDM). It is demonstrated that there are significant differences in the efficiency of the local GHE between different regions of China. In addition, it is shown that Moran’s I value of the static overall efficiency of the local GHE from 2007 to 2016 is positive. It passed the test of the 5% significance level, indicating that there is a positive spatial correlation between the efficiency of the local GHE and a spatial spillover effect. On the other hand, the decomposition of the SDM reveals that the proportion of GHE to financial expenditure, gross domestic product (GDP) per capita, and population density have a positive effect on the efficiency of the local GHE. Hence, their growth will improve the GHE efficiency in the local region and neighboring regions. In contrast, the proportion of urban population, illiteracy, and fiscal decentralization have a negative effect. Thus, their growth will decrease the GHE efficiency in the local region and neighboring regions. The results are discussed and suggestions are given based on the analysis in this paper. The main contribution of this work is to consider the spatial spillover effect in terms with realistic meaning. The results obtained can be used as a reference for optimizing the structure and improving the efficiency of government health inputs. It breaks the government’s GDP-only theory-based assessment system and helps to improve it by assessing the GHE efficiency.