Privatization and Pandemic: A Cross-Country Analysis of COVID-19 Rates and Health-Care Financing Structures

The outbreak of coronavirus and the infectious disease it causes (COVID-19) have taken different paths around the world, with countries experiencing different rates of infection, case prevalence and mortality. This simultaneous yet heterogenous process presents a natural experiment for understanding some of the reasons for such different experiences of the same shock. This paper looks at the privatization of healthcare as one key determinant of this pattern. We use a cross-section dataset covering 147 countries with the latest available data. Controlling for per capita income, health inequality and several other control variables, we find that a 10% increase in private health expenditure relates to a 4.3% increase in COVID-19 cases and a 4.9% increase in COVID-19 related mortality. Globalization also has a small positive effect on COVID-19 prevalence, while higher hospital capacity (in beds per 1,000 people) is significant in lowering COVID-19 mortality. The findings suggest caution regarding policies which privatize healthcare systems in order to boost efficiency or growth in the short-run, as these reduce countries' long-term preparedness for dealing with pandemics.