The Effectsof Health Expenditureon Health Outcomes Basedon the Classification of Public Health Expenditure: A Panel Data Approach

Health expenditure is among the factors affecting the improvement of a society’s health status. Hence, recognizing the effects of public and private health expenditure on health status is vital for making the required decisions.

This study aimed to compare the effects of different levels of health expenditure on life expectancy, infant mortality rate, and under-five mortality rate as health indicators.

The current study is an analytical research, which was conducted based on a cross-sectional and annual time series data. In this study the effects of private and public health expenditure on health indicators from 2000 to 2015 were investigated. The selected countries had the middle or high-income level and were classified into three groups based on the public health expenditure rate and k-mean method. The required data were collected from the World Bank site and for estimating the model, panel data regression models were used.

Public health expenditure had a significant effect on health indicators in all groups, thus, an increase in public health expenditure led to increasing life expectancy and decrease infant and under-five mortality rate in all groups. Also, the group with the highest share of health expenditure had a greater impact on life expectancy and infant mortality, however, in regards to the under-five mortality rate, it was contrary. The effect of private health expenditure was different and in most cases it had no significant effect.

The findings of this study indicated that public health expenditure is more effective than the private health expenditure and it also improved health status by creating positive external effects. Therefore, the governments must provide enough required financial resources for improving health status.