The Effect of Healthcare Expenditure on the Health Outcomes in Sub-Saharan African Countries

Abstract

Health is a major component for a fulfilled life that everyone in the world desires to acquire. Governments are expected to play a vital role in providing quality health service to their people. Even though an increased health care expenditure is mostly considered as a primary contributor for an improved health outcome, empirical studies however indicate controversial results. The primary objective of this paper is to examine the effect of health expenditure on the selected health outcomes (Life Expectancy, Infant Mortality, Under-Five Mortality and Crude death) in Sub Saharan Africa. The linear dynamic generalized method of moments instrumental variable (GMM-IV) was used on a panel of 39 Sub-Saharan African Countries for the years 1995-2014. Results of this study showed that health expenditure significantly improves life expectancy and lowers infant mortality, under-five mortality & crude death in Sub Saharan Africa. The separate effects of Public and private health expenditures have also shown a significant positive relationship on life expectancy and negative on infant mortality, under-five mortality & crude death. The one period lag of health expenditure was estimated and the regression results indicated statistically significant relationship with health outcomes. In addition to health expenditure, other determinants like Gross Domestic Product (GDP) per capita, urbanization, immunization and basic drinking water brought improvement on life expectancy, infant mortality, under-five mortality & crude death. In contrast, HIV prevalence and unemployment are factors that reduce life expectancy and increase infant mortality, under-five mortality & crude death. This study indicated that health expenditure is an important element in attaining improved health outcome in Sub-Saharan African Countries. Therefore, increasing the amount of health expenditure allocated to the health sector yields a better health status. More on, revising policies to improve GDP per capita, immunization, urbanization and basic drinking water service, and strategies intended to reduce HIV prevalence and unemployment assure a better health outcome.