DETERMINANTS OF HEALTH CARE SPENDING IN NIGERIA (1981-2017)

ABSTRACT

This study investigated the impact of healthcare spending on economic growth in Nigeria between 1981 and 2017. Data sourced from Central Bank of Nigeria (CBN) on per capital public health expenditure, per capital gross domestic product, population with age below 15years, under 5 mortality rate and inflation rate were analyzed through the multiple regression analysis using Ordinary Least Square (OLS) technique to examine the determinants of health care spending in Nigeria. This study made use of the Augmented Engel and Granger 2-step approach co-integration test and the Error Correction Model (ECM) econometric technique to determine the long-run relationship between public spending on health and economic growth in Nigeria. From the study, it was revealed that the variables (public health expenditure and population below 15 years) have positive and significant impact on economic growth in Nigeria. It was also discovered that inflation has negative relationship with public healthcare expenditure in Nigeria. Therefore, based on the findings of this study, it recommended that the Government Budgetary allocation to health sector should be increased and that necessary health policies that support provision of facilities are induced in the country.

Statement of the Problem
In per capita terms, public spending on health stands at less than $5 and in
some parts of the country can be as low as $2, far less than the $34 recommended by WHO for low income countries (Robert, 2003). The burden of healthcare financing lies mainly on individuals, with private expenditure equating 70% of total health expenditure and out-of-pocket expenditure(OOPs) totaling 90% of private expenditure (Gustafsson-Wright and Gaag, 2008:4). Global findings show that far more people suffer financial catastrophe as a result of health care when out- of pocket payments represent more than 15% of total health spending. In fact OOPs are the main factor leading to financial catastrophe even when considering availability of health services and inequality. Evidence suggests that millions globally suffer financial catastrophe every year due to out-of-pocket health expenditure. Nigeria’s enormous population contributes greatly to this global figure (Gustafsson- Wright and Gaag, 2008:29).It is worthy to note that the health care sector does not work like a normal economic sector. Government intervention is very frequent to make up for the existence of many uncertainties and negative externalities (propagation of disease, links between state of health and poverty, need for an implicit choice between different public spending priorities like education and other categories of social protection etc.) (Musgrove, 1996). Thus, governments intervene both directly through provision and funding, but also indirectly, through regulation. Governments have to balance the often conflicting goals of equity and efficiency of health provision.

Previous studies in Nigeria such as Imobighe and Orubu (1999) which focused on economic development, petroleum revenue and degree of trade openness finds that petroleum revenue is a key determinant of public health expenditure in Nigeria; Adeniyi (2005) which focused on innovation and debt servicing finds that debt servicing obligation determines to a large extent public expenditure on health; Omotor (2009) which focused on GDP, the total population and civilian/participatory democratic governments finds that health expenditure in Nigeria is income inelastic and that civilian regime spend more money on public health than military regime; Bassey et al (2010) which focused on health status finds that health expenditure is below unity both in the short-run and in the long run, etc. These studies have not really explored the determinants of public health expenditure in Nigeria because out-of- pocket spending is still the leading source of health care financing in Nigeria in spite of its costs implications. The current overburden of the households requires exploration of an alternative financing source and that is, public health expenditure. There is need to unravel this alternative source of health care financing and its determinants and why it is very important for the improvement of health outcomes in Nigeria. This study intends to do a critical study of determinants of public health expenditure in Nigeria by augmenting previous studies in Nigeria and also, by incorporating other core determinants of public health expenditure in Nigeria such as age structure of the population with age below 15 years, medical progress, and institutional variable or factor not explicitly taken into account by previous studies in Nigeria.

1.3 Objectives of the Study
The broad objective of this study is to investigate the determinants of public
health expenditure in Nigeria. The specific objectives are:
(ii) To find the relationship between public health expenditure and GDP
(ii) To find the relationship between public health expenditure and medical
progress in Nigeria.
(iii) To find the relationship between public health expenditure and population
with age below 15years.