Do the Poor Gain More? The Impact of Secondary Care Expenditure on Health Inequality

Background: Quasi-experimental studies of mortality variation and trends among large administrative areas of England in the 2000s and early 2010s have suggested that more deprived populations gain larger mortality benefits from marginal increases in public expenditure on secondary care. Objective: To identify causal effects of marginal changes in expenditure on mortality variation in 2018 among 32,784 more and less deprived small areas of England, with a mean population of 1,700, allowing more fine-grained measurements of deprivation and mortality. Methods: We used cross-sectional data on secondary care funding allocated to 195 National Health Service administrative areas in England in 2018/19 and employed a well-established instrumental variable approach based on the “distance from target” component of the funding formula, which generates quasi-exogenous variation in funding based on historical factors unrelated to current need for secondary care. Results: We found an inverted-U shape pattern of mortality gains by deprivation group, whereby the middle group gained significantly more than others. However, we could not reject the null hypothesis that the two more deprived groups received the same mortality gain as the two less deprived groups. These findings were robust to extensive sensitivity analysis using different levels of analysis, control variables, mortality outcomes, functional forms, first stage regression specifications, and exclusions, and our preferred specifications all satisfied standard instrumental variable diagnostic tests. Conclusions: We found that the poor do not always gain more from marginal increases in public expenditure on secondary care and, conversely, might not always bear the largest share of the health opportunity costs of cost-increasing programmes.