Predicting key drivers for health care expenditure growth in the Middle East region: a Grossman-PLS modeling approach

ABSTRACT

Background

Numerous studies have provided evidence to the literature on the demand side of the determinants of health-care expenditure by employing the Grossman model. However, understanding the supply side of the determinants of health-care expenditure will be of crucial importance for improving health outcomes.

Methods

This study has used panel data for 15 Middle-East region countries for the time period of 2000–2016 Initially, Grossman’s model of the demand for care is estimated. Furthermore, a Parallel model of the supply of care is estimated for contradistinction analysis. Finally, an integrated partial least square structural equation model is being developed.

Results

Results show that the relative wage rate and aging variables are the only indicators that are statistically significant with theoretically consistent signs as postulated by Grossman’s theoretical model. The opposite is true with schooling and the proxy of the medical care relative prices. However, in the parallel model, all the four drivers of the demand for care are statistically significant determinants of health-care spending.

Conclusions

Therefore, expansion of health insurance coverage particularly for the elderly cohort of the population could be a promising mechanism to boost the demand for care and eventually improve health outcomes.

KEYWORDS:

• Health care expenditure
• socio-demographic indicators
• health system capacity indicators
• Grossman model
• partial least square model

Author contributions

All the authors were involved in the conceptualization and design of this study. S Singh, M Bala, & N Kumar analyzed the data. All the authors were involved in the critical review of the manuscript. All the authors have read the final draft and approved its submission for publication.

Declaration of interest

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

Reviewer disclosures

One peer reviewer is employed by PRECISIONheor (which provides health economics and outcomes research consulting for life sciences companies, in particular, pharmaceutical companies), and holds equity in the parent company, Precision Medicine Group. Peer reviewers on this manuscript have no other relevant financial relationships or otherwise to disclose.

Additional information

Funding

This paper was not funded.