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This study seeks to examine the intricate link between public and private health care expenditures by using a panel of 148 countries over a 19-year period by employing Constant Elasticity of Substitution (CES) type health production function. Under the umbrella of nonlinear and linear estimation techniques, results suggest that private and public health expenditures are complements for high-income OECD countries whereas they are substitutes for low and middle-income countries. Empirical findings reveal that the dominant role of private health spending melts down the impact of public spending on life expectancy and the unbalanced use of health resources could be the source of ill health and low life expectancy rates in low and lower middle income countries. Further results suggest that elasticity of substitution decreases with the level of income.
