Health Expenditures in Developing Countries: Determinants and Guidelines

In this paper, the health expenditures function of developing countries is estimated with a panel data model. 

All credible determinants of health expenditures in these countries are probed and their coefficients are found out. Variables that affect health expenditures in developing countries are income, demographic features, social characteristics, and technological progress. Old proportion is used as a proxy of demographic features, education as a proxy of social characteristics, and improved sanitation as a proxy of technological progress. 

The results show that the effects of these variables on health expenditures are 0.050094, 10537.04, -2681.737, and 3406.551, respectively. Since it was revealed that health expenditures determinants in these countries are not under the direct control of the government, an increase in health expenditures is inevitable in the near future. This condition would jeopardize the feasibility of not only financing this newly extended part of the economy but also all social security schemes. Greater investments in health care without corresponding economic and tax revenue growth may result in fewer resources for state-funded social services, which may influence health outcomes. 

Since it was revealed that health expenditures determinants in these countries are not under the direct control of the government, an increase in health expenditures is inevitable in the near future. This condition would jeopardize the feasibility of not only financing this newly extended part of the economy but also all social security schemes. Greater investments in health care without corresponding economic and tax revenue growth may result in fewer resources for state-funded social services, which may influence health outcomes. Therefore, we highly recommend that governments pursue cost containment measures, concentrate more on investment in human capital to enhance health care education with consequential benefits, improve health throw sectors other than the health sector and enforce health in all policy. Thus, all policymakers in executive and legislative branches of government should participate in health improvement and health expenditures containment. For that matter, health policies need to expand to address all factors, including those outside the medical system. In this article, these factors are discovered and their effects on health expenditures are estimated.