Health Expenditures, Health Infrastructure and Health Status in SAARC Countries: A Panel Data Analysis

Scholars in health economics have been studying the relationship between healthcare expenditure and health outcomes for the last half-century. Researchers emphasized the increase of public health expenditure towards providing primary healthcare based on the logic that health expenditure has a direct effect on the health outcomes of the people. However, such studies have a lot of inconsistencies. Given the background, the present study has three research objectives. First, to investigate the effect of healthcare spending on multiple health outcomes in SAARC nations after controlling for country-specific health infrastructures and economic conditions. Second, to undertake a differential analysis of the effect of public and private healthcare spending (both aggregate and out of pocket) on specific health outcomes. Third, to explore the presence (if any) of the differential effect of health expenditure and health infrastructure variables on specific health outcome variables, including mortality and morbidity indicators. Based on a 20-year (1993–2012) panel data from seven SAARC countries, health expenditure was found to influence improved health outcomes in SAARC nations. In addition, the differential effect of public, private and out-of-pocket (OOP) health expenditure was observed on different health outcomes. Thus, OOP expenditures was found to be the major influencer of life expectancy, death rate and TB instances, while public expenditure was found to be influential for improving infant mortality rate (IMR). The present study supports the notion that disaggregated effects of health expenditure (by including the effect of public, private and OOP expenditures) are needed to get a complete understanding of the health expenditure–health outcome linkage. In addition, the findings emphasize on the role of proximal predictors of health outcomes (alongside expenditure variables in the same model) as important inclusion in the health expenditure-health outcome investigation.