Healthcare financing in South-East Asia: Does fiscal capacity matter?

ABSTRACT

Financing healthcare and achieve sustainable development goals by 2030 is the prime focus of many low-income and middle income countries. Improved public healthcare and reduce the burden of out-of-pocket health expenditure is the overarching public health policy objective across the Asia-Pacific region. This study examines the impact of fiscal capacity on health expenditure by controlling socio-economic factors in South-East Asia for the period of 1995–2013. We have employed a panel fixed effects regression model in order to capture country-level unobserved heterogeneity and macroeconomic policy changes in the health sector. Overall result shows that annual change in per capita government health expenditure (pooled financing) is influenced positively by the per capita income, fiscal capacity, ageing, and the prevalence of tuberculosis and rate of urbanization. The income elasticity of government health expenditure is less than one, which implies that the health expenditure is treated as a necessity for the public health providers. Overall empirical analysis concludes that pooled financing mechanism positively influenced by the size of fiscal capacity thereby the share of out-of-pocket health expenditure to total health expenditure declines over the period. The result suggests that the faster movement towards health financing transition would possible through the generation of fiscal capacity by improving public finance policies.

KEYWORDS:

• Healthcare financing
• South-East Asia
• fiscal capacity
• Health expenditure
• fixed effects model

JEL:

• I130
• H510
• H3
• C330
• H510

Declaration of conflicting interests

The author (s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Notes

1 Health system includes all the activities whose primary purpose is to promote, restore or maintain health. In precisely health systems are not just concerned with improving people’s health but with protecting them against the financial costs of illness. The challenge facing governments in low-income countries is to reduce the regressive burden of out-of-pocket payment for health by expanding prepayment schemes, which spread financial risk and reduce the spectra of catastrophic health care expenditures [2].

2 UHC provides assurance of health services to all needy people under three objectives such as equity in access, quality of health services and ensuring financial risk protection [2].

3 Total health expenditure (THE) included both public and private expenditure on health both domestic and external agents. Government health expenditure from domestic sources (GHE) included government expenditure on health from general government revenue and payroll taxes. It excluded External funds channeled through governments. Out-of-pocket expenditure (OOPE) included payments for doctor’s consultation fees, medication, laboratory tests and hospital bills. It can be in the form of user charges in general or cost-sharing under insurance policies [34].

Additional information

Funding

No funding