The impact of health expenditure on the number of chronic diseases

•We investigate effects of health expenditure on health outcomes on individual data in 13 countries.•Lagged health expenditure affects negatively changes in the number of chronic diseases.•The effect varies according to age, health behavior, gender, income, and education.•Findings are confirmed when instrumenting with parliament political composition.

We investigate the impact of health expenditure on health outcomes on a large sample of Europeans aged above 50 using individual and regional level data. We find a negative and significant effect of lagged health expenditure on subsequent changes in the number of chronic diseases. This effect varies according to age, health behavior, gender, income, and education. Our empirical findings are confirmed also when health expenditure is instrumented with parliament political composition.