Determinants of Health

Expenditures: Evidence from

OECD Countries
INTRODUCTION
• Healthcare spending has received a lot of attention when it
comes to welfare payouts.
• Human capital quality in an economy is highly dependent
upon health.
• One of the budgetary objectives for enhancing or preserving
public health is healthcare spending.
• health care spending has been increased due to rise in the
number of people, energy use, industrialization, and
urbanization in the current period.
INTRODUCTION
• Policymakers should be more concerned about factors that
influence healthcare spending due to continuous
demographic shifts.
• The importance of health outcomes on the functioning of
the economy as a whole makes these healthcare
expenditures a worldwide component of development
strategies.
Objectives of Study

The present has the following objectives:

• To evaluate the determinants of private health expenditures,
Govt. Health expenditures and health expenditures per
capita.
• To provide policy implications at the end.
Research Gap

• This study has used data of all 38 OECD Countries.

• Latest data of twenty years is used.
• Maximum possible determinants of private health
expenditures, government health expenditures and Health
expenditures per capita are evaluated here.
• Determinants involves both economic and non-economic
indicators.
Literature Review
Author Country Results
Zhang et al. (2020) Chinese Provinces To support high-quality economic
growth in China, the government
must keep raising the amount of
money allocated to public health
services.
Barkat et al. (2019) Arab countries Their findings indicate a long-term
correlation between overall health
spending and its determinants,
which include GDP, the mortality
rate, and the population over 65.
Anwar et al. (2022) developing nations temperature and air pollution are
important factors that affect health
care costs.
Author Country Results
Xia (2021) Beijing that air pollution levels and
duration of episodes greatly raise
daily hospital visits and medical
costs, especially for the elderly in
case of Beijing.

Sagarik (2016) found that health expenditures are

not significantly determined by the
number of elderly people.

Boachie et al. (2014) Ghana have examined the long-run impact

of CO2 emissions, real GDP, crude
birth rate, life expectancy,
urbanization and inflation on public
health expenditures in Ghana. The
study proved positive impact of
health policies to improve people’s
health, measured by crude birth
rates and life expectancy and real
GDP.
Author Country Results

Cheah et al. (2021) Malaysia explore the sociodemographic

determinants of health expenditure
in the case of Malaysia. The
outcomes explain the importance
of residential location, age,
education and marital status in
determining the household
expenditure on health.

Wang (2009) Another study provided that the

degree of urbanisation, proportion
of population over sixty-five-year
age, GDP and the number of
hospital beds are important
determinants of public health
expenditures
Data, Methodology and Results
• Data
• Data for the current study has been collected from World
Development Indicators(WDI) website.
• OECD countries were selected for a period of 2000-2022.
• Study estimated both economics and non- economics indicators of
healthcare expenditures.
•V
•V
•V
•
Variables
Independent Description
Variables
lnRGDPPC Log of real gross domestic product per capita
lnDW Log of people using safely managed drinking water services (% of population)
Ln GSE Log of Gross enrollment ratio
Lnsan Log of sanitary facilities in a country
lnUr Log of urban population (% of total population
lnP65 Log of population ages 65 and above, total
lnOup Log of out-of-pocket health expenditure (% of total
expenditure on health)
Independent Description
Variables
Ln HB log of hospital beds per 1000 people
Ln phy Log of physicians per 1000 people
Ln LE log of life expectancy at birth, total (years)
LnCO2 Log of CO2 emissions (metric tons per capita)
Results and Discussions
Panel Fully Modified Least Squares (FMOLS)
Cointegration
Kao Residual Cointegration Test

t-Statistic Prob.
ADF -7.22605 0.0000
FMOLS Results: When Dependent variable is
Private Health Expenditures
Variable Coefficient Std. Error t-Statistic Prob.
LNHB -0.0551 0.0027 -20.3561 0.0000
LNPHY 0.8363 0.0044 188.5302 0.0000
LNP65 -0.0319 0.0010 -31.3493 0.0000
LNUR 0.1661 0.0112 14.8259 0.0000
LNLE 10.9458 0.0403 271.3257 0.0000
LDW -8.7059 0.0437 -199.2713 0.0000
LNOUP 0.4480 0.0033 137.1570 0.0000
LNCO2 0.2958 0.0029 101.7991 0.0000
LNSAN -1.1522 0.0385 -29.9086 0.0000
LNGSE 0.1347 0.0091 14.8724 0.0000
LNRGDPPC 0.0249 0.0007 35.9230 0.0000
FMOLS Results: When Dependent variable is
General Govt. Health Expenditures
Cointegration
Kao Residual Cointegration Test

t-Statistic Prob.
ADF -5.571912 0.0000
FMOLS Results: When Dependent variable is
General Govt. Health Expenditures
Variable Coefficient Std. Error t-Statistic Prob.
LNHB 0.0123 0.0023 5.4424 0.0000
LNPHY 0.8490 0.0037 228.0574 0.0000
LNP65 -0.0175 0.0009 -20.4888 0.0000
LNUR -0.2515 0.0097 -25.9337 0.0000
LNLE 7.4839 0.0340 220.0559 0.0000
LNOUP -0.6685 0.0029 -227.8734 0.0000
LNCO2 0.2823 0.0024 116.3135 0.0000
LNSAN -0.0192 0.0321 -0.5993 0.5492
LNGSE 0.3638 0.0076 48.0431 0.0000
LNRGDPPC 0.0369 0.0006 62.3942 0.0000
LDW -5.5525 0.0366 -151.6038 0.0000
FMOLS Results: When Dependent variable is
Health Expenditures per capita
Cointegration
Kao Residual Cointegration Test

t-Statistic Prob.
ADF -7.3028 0.0000
FMOLS Results: When Dependent variable is
Health Expenditures per capita
Variable Coefficient Std. Error t-Statistic Prob.
LNHB -0.0097 0.0048 -2.0398 0.0418
LNPHY 1.1119 0.0078 142.6118 0.0000
LNP65 -0.0580 0.0018 -32.4355 0.0000
LNUR 0.2803 0.0197 14.2357 0.0000
LNLE 13.5319 0.0709 190.8343 0.0000
LDW -10.1040 0.0768 -131.5753 0.0000
LNCO2 0.5151 0.0051 100.8594 0.0000
LNSAN -1.5737 0.0677 -23.2416 0.0000
LNOUP -0.3349 0.0057 -58.3278 0.0000
LNGSE 0.0047 0.0159 0.2948 0.7683
LNRGDPPC 0.0345 0.0012 28.3326 0.0000
Quantile Regression(lnPHE is Dependent
Var.)
lnur
0.05
.4228
0.10
.5173
0.20
.0687
0.3
-.1075
0.40
-.3101
0.50 0.60
-.4094
0.70
.2888
0.80
-.1815
0.90
.0961
0.95
-.0530
(0.001) ( 0.001) (0.517 ) (0.431) 0.053) -.2989 0.000
(0.053) (0.296) (0.792) (0.684)
(0.033)
lnhb -.0690 .0099 .0907 .0578 .1479 .1481 .1146 .1049 .0406 .0670 -.0582
(0.061) ( 0.818) ( 0.002) (0.127) (0.001) (0.000) (0.000) (0.011) (0.400) (0.508) (0.107)
lnphy .3036 .2928 .2990 .3452 .2378 .2557 .2828 .2689 .3615 .5446 .5929
(0.000) ( 0.000 ) ( 0.000) (0.000) (0.003) (0.000) (0.000) (0.000) (0.000) (0.003) (0.000)
lnp65 -.0092 -.01630 -.0179 .0025 .0321 .0486 .0598 .0548 .0523 .0711 .00328
(0.419) (0.219 ) (0.048) (0.829) (0.020) (0.000) (0.000) (0.000) (0.000) (0.023) (0.769)
lnoup .3063 .3239 .2401 .1999 .3027 .2891 .2521 .2531 .3366 .2669 .2154
(0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.019) (0.000)
lnle 14.6389 13.2197 12.5373 11.7946 12.1994 11.8295 11.5299 11.6321 11.7492 14.0465 13.9945
(0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)
ldw -.8639 3.2353 8.4685 10.2509 9.8818 10.7587 8.5860 6.2577 3.7946 4.8024 3.8797
(0.501) (0.031) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.025) (0.175) (0.002)
lnco2 .2409 .1351 .0688 .0658 .0674 .0553 .0568 .0339 .1043 -.0833 -.3433
(0.000) (0.005) (0.037) (0.120) (0.176) (0.204) (0.098) (0.464) (0.053) (0.462) (0.000)
lnsan -3.4092 -4.0055 -5.1986 -5.3451 -4.7157 -4.9355 -4.4682 -3.4772 -3.0235 -1.843 1.973
(0.000) (0.000) ( 0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.249) (0.001)
lngse .2706 .3293 .3536 .3617 .2740 .2488 .3589 .1944 -.0895 -0.7089 -.6577
(0.018) ( 0.014 ) ( 0.000) (0.002) (0.048) (0.040) (0.000) (0.131) (0.551) (.025) (0.000)
lnrgdppc -.0404 -.0489 -.0572 -.0511 -.0278 -.0218 -.0209 -.0289 -.0172 -0.0455 -.0811
(0.000) (0.000) (0.000) (0.000) (0.011) (0.023) (0.006) (0.005) (0.146) (0.067) (0.000)
Quantile Regression(lnGHE is Dependent
Var.) 0.05 0.10 0.20 0.3 0.40 0.50 0.60 0.70 0.80 0.90 0.95
lnur
-.1098 -.0316 0.722 .0817 .1392 0.241 .0960 .2670 .2128 .2623 .3353 0.001 .2718
-.1337 0.404
0.441 0.456 0.387 0.011 0.021 0.009 0.038
lnhb
.1209 .0709 .0509 .04408 .0603 .0395 .01375 0.589 -.0047 -.0198 .01430 0.693
.0075 0.865
0.002 0.004 0.095 0.182 0.050 0.175 0.867 0.479
lnphy
.4852 0.000 .5246 0.000 .5909 0.000 .6575 .7599 .8497 .9078 .8879 .8791 .8461 .8086
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
lnp65
-.0299 .0207 0.131 -.0111271 -.0019 .01063 .0210 0.027 .0037 .0034 .0007 -.00718 -.0200 0.073
0.014 0.144 0.838 0.297 0.674 0.657 0.935 0.407
lnoup
-.5732 -.6017 0.000 -.6436 0.000 -.6491 -.6538 -.6297 -.6632 -.7052 -.6988 -.6758 -.6691
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
lnle
11.6329 10.775 10.1828 9.1368 7.7420 7.1635 6.982 6.417 6.060 5.9567 6.0752
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
ldw
.8200 -.8157 0.345 1.2412 2.3495 1.7149 .4688 .6973 .8334 .4906 0.617 1.3303
-.5248 0.735
0.553 0.244 0.042 0.111 0.645 0.434 0.395 0.294
lnco2
.1605 .1899 0.000 .1928 0.000 .2105 .1907 .17472 .2096 .2389 .2654 .2261 .1698
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
lnsan
-1.8827 -.8093 0.249 -1.0524 0.007 -1.2034 -1.3147 -1.3491 -1.0117 -.5276 -.02440 .8852 0.046 1.1024
0.003 0.013 0.012 0.006 0.028 0.190 0.956 0.054
lngse
.4853 0.000 .4879 0.000 .3388 .4221 0.000 .6452 .4939 .58863 .5883 6.06 .4111 0.000
.6021 0.000
0.000 0.000 0.000 0.000 0.000 0.000
lnrgdppc
.0318 0.001 .0142 .0176 .01793 .01497 .0129 .0049 -.0095 -.0265
.0242 0.027 .0176 0.004
0.057 0.029 0.018 0.037 0.038 0.472 0.164 0.003