Public Management of Health Expenditures in Response to COVID-19 and Traditional Infectious Diseases: The Korean Experience

This study investigates the effectiveness, allocative efficiency, and crowding-out effects of health expenditures in response to traditional infectious diseases and the COVID-19 pandemic. Through theoretical analysis and empirical data from Korean local governments, employing a two-way fixed effects model, we derive several key findings. First, social insurance health expenditures were significantly effective in controlling both traditional infectious diseases and COVID-19, whereas general government health expenditures were not. Second, allocative efficiency, the principle of allocating more resources where needed, was not observed in the response to traditional infectious diseases but was significant in the COVID-19 response. Third, we identified a crowding-out effect where increased health expenditures for COVID-19 reduced funds for traditional infectious disease responses. These findings offer strategic insights for Asia-Pacific countries in optimising health resource allocation and budget management amidst evolving health crises.