Full Paper The Effects of Public and Private Health Care Spending on - PDF document

Full Paper The Effects of Public and Private Health Care Spending on Child Mortality in Developing Countries First Author: Presenting Author Md Juel Rana PhD Research Scholar Population Studies Centre for the Study of Regional Development School of Social Sciences Jawaharlal Nehru University Email: jranajnu@gmail.com Second Author: Dr. Srinivas Goli Assistant Professor Population Studies Centre for the Study of Regional Development School of Social Sciences Jawaharlal Nehru University Email: sirispeaks2u@gmail.com 1

Abstract Though, many developing countries made significant progress in achieving Millennium Development Goal-4 which is a reduction in child mortality to one- third by 2015 but, still numerous countries are lagged behind. In the post-2015 development agenda, the Sustainable Development Goals have the healthy lives to all. Hence, this study attempts to evaluate the effects of public and private health care spending on child mortality in developing countries using World Bank’s database. The findings from Random Effects models suggest that the total health care spending has significant negative effect on child mortality. The public spending is negatively associated with child mortality but the private spending is not associated, rather it becomes supplementary of the public care spending. The public spending on health care in both absolute and relative forms reduce the risk of child mortality. It provides universal and equitable health coverage, but the private sector denies the poor. The public financing in health care system should be increased and the role of private sector should carefully be fixed so that universal and equitable health care utilisation which will result in the better health outcome in general and reduced child mortality in particular in developing countries. Keywords: Public and private health care spending, Health outcome, Child mortality, Developing countries, Random effects. Introduction The developed countries experienced a dramatic decline in under-five mortality over the last century. The developing countries also followed the same trend after second World War but the nature of these countries is less optimistic than that of the former one (Mason 1997; Kirk 1996). On the post-2015 development agenda, the United Nations Sustainable Development Goals (SDGs) have healthy lives for all by 2030. The Millennium Development Goal-4 (MDG- 4) had targeted to reduce the one-third child mortality between 1990 and 2015. However, the progress has been made; an estimation showed that only 10 countries out of 67 with high child mortality were on the track for meeting the MDG-4 while in total, only 60 countries out of 195 are on the track (You et al. 2015). World Health Organisation (WHO) estimated that about six million children died in the last year (WHO 2014). The majority of them are were from the 2

developing and lag behind countries of MDG-4 such as Caucasus and Central Asian, Southern Asian, Sub-Saharan African countries. The prevalence of child mortality in developing countries is very high compared to the developed. For instance, one in twelve and one in nineteen child death was in Sub-Saharan Africa and South Asia respectively while the same was one in one hundred and forty seven in developed countries (WHO 2014). The developing countries were poorly performed in curbing the child mortality. Adequate and efficient public health spending on the workforce and infrastructure are widely considered as inevitable to the improvement of child health status and under-five mortality (Ssozi and Amlani 2015; Turner 1991; Pritchard and Williams 2011). Higher public spending on health care does not always result in better health outcomes because of efficiency in spending (Pritchard and Williams 2011). On the other hand, however, private health facilities are assumed to be better health care provider but many times, patients face fraud, over- medication, exploitative pricing and unnecessary surgery (Dreze and Sen 2013; Sreevidya and Sathyasekaran 2003). Studies also found that inaccurate diagnosis and inappropriate treatment are practiced under both public and private health care system (Das et al. 2012; Das and Hammer 2004). The efficient health care spending may translate better health outcome, and it must be reached to the poor particularly in developing countries. Use of private health care facilities increase with the increase in household income because studies found that health care facilities are necessary in the public sector but become luxury in the private sector (Khan and Manumud 2015; Gerdtham et al. 1992; Farag et al. 2012; Barros 1998; Parkin et al. 1987). However, one can argue that the public health care spending may translate better health outcomes in developing countries as the public sector may provide universal and equitable health care facilities to all irrespective of paying capability of service seekers. Economic instability of a country affects changes in the key areas of public funding particularly health, education and infrastructure (Williams and Maruthappu 2013; Horton 2009). The effects of economic crisis on human health are evident with a broad range of health outcome including child health (Ensor et al. 2010; Maruthappu et al. 2015). After the recent global recession and economic crisis, the public health care spending has decreased in many countries (Maruthappu et al. 2015). The lower and lower-middle income countries are more vulnerable to the economic fluctuations (Garenne and Gakusi 2006). The overall public health spending has decreased in many countries while the private health expenditure has grown in developing countries (World Bank 2015). In this backdrop, an analysis of effects of public and private 3

health care spending on health outcome in required in developing countries as these countries are more vulnerable to the economic shocks. A number of studies were carried out to find out the relationship between health expenditure and health outcomes. Some studies found a strong association between an increase in health care spending and health outcome while others find a weak link between them. Novignon et al. (2012) shown both public and private health expenditure have a significant effect on reducing child mortality while the public has stronger effects than the private. Evidence from Lesotho suggests that along with female literacy, availability of physicians and child immunisation, health expenditure significantly improved the status of child health (Akinkugbe and Mohanoe 2009). Another study using panel data analysis and fixed effects model estimated that 10% rise in health expenditure contributes about 21% and 22% fall in child and infant mortality respectively in 47 African countries during 1990-2004 (Anyanwu and Erhijakpor 2007). Other previous studies also came with similar findings that there is a positive association between health spending and health outcome (Gupta et al. 2003; Khan and Mahumud 2015). Baldacci et al. (2008) draw a channel connecting social spending and human capital to economic growth. They found that health spending has a significant positive effect on human capital and economic growth. They advocated that good governance may accelerate the effects of health spending on health outcome. On the contrary, several studies documented that the effects of health spending on health outcomes are weak or insignificant and even negative. Gupta et al. (2002) investigated the cross-sectional data of 50 countries and found that public spending has a weak effect on health outcome particularly infant and child mortality. Filmer and Pritchett (1999) found a weak relationship between the increase in health spending and reduction in mortality. Rather, 95% country level variation in mortality can be explained by some other factors such as country’s per capita income, unequal income distribution, female education, religion and ethnic fragmentation. Evidence from 91 countries during 1990-2003 shown that the public health spending has a weak association with child mortality but the association is more effective in well governed countries while it is insignificant in poorly governed countries (Rajkumar and Swaroop 2008). Other literatures advocate that some socioeconomic and technological factors such as the level of education, income, cultural variation, technological changes make a difference in health outcomes rather than direct health spending (Geweke et al. 2003; Glied and Lleras-Muney 2008). Wagstaff and Cleason (2004) noted that the effects of public health 4