PUBLIC HEALTH EXPENDITURE AND HEALTH OUTCOMES : AN EMPIRICAL STUDY ANALYSIS

Abstract: Public health expenditure plays a critical role in enhancing the health and well-being of a nation's population. Despite its significance, there is limited research exploring the link between public health expenditure and health outcomes. Over recent years, mounting interest has arisen in investigating this relationship due to changing demographics, escalating healthcare costs, and increased awareness of public health's importance. The study objectively analyzed the effect of health care expenditure on health outcomes, guided by the question; what are the effects of health expenditure on health outcomes? This thesis focuses on three income categories (low, middle, and high) to examine the relationship between Health Expenditure (HE) and four key health outcomes: Infant Mortality Rate (IMR), Under 5 Mortality Rate (U5MR), Maternal Mortality Rate (MMR), and Life Expectancy (LE). The study utilizes data from 64 countries sourced from the World Health Organization and UNICEF databases. Fixed and random effect econometric methods were employed, with model selection based on the Hausman test. The results indicate that public health expenditure significantly influences health outcomes at various income levels. Middle-income countries show a strong positive relationship (0.342) between IMR and HE, while low-income countries exhibit strong positive relationships (4.159) with U5MR and MMR. The impact on life expectancy differs slightly across income categories. This study found significant negative correlations between public health expenditure, sanitation improvements, and immunization coverage with infant and under-five mortality rates, while life expectancy positively correlated with GDP per capita. Higher health expenditure and immunization were associated with lower mortality rates across income levels. Policymakers can use these findings to prioritize investments in public healthcare and improve health outcomes worldwide.