Abstract
The importance of health expenditure has been greatly underestimated not only by policy analysts but also by many African countries governments. The popular cliché that health is wealth is more than just a word, it is a fact. This is so because the wealth of any nation is essentially linked to her health. A healthier population will definitely create wealth (ceteris paribus). This study therefore investigate the impact of government health expenditure on health outcomes in Nigeria from the period of 1981 to 2020. The Autoregressive Distributed Lag (ARDL) estimation technique and Error Correction Model (ECM) technique were adopted for analyzing the data used in the study. From the first model estimation, government recurrent expenditure is seen to have a significant negative impact on under 5 mortality rate. The error correction model shows that errors in the short run are corrected in the long run. This relationship was also found to be statistically significant at the 1% level. From model two, both government recurrent and capital health expenditure has a negative impact on life expectancy with only capital health expenditure showing a statistically significant impact on life expectancy. The error correction model shows that short run distortions are corrected up to 28%. There is a unidirectional causal relationship between government recurrent health expenditure and life expectancy with a p-value of 0.0206. Government recurrent and capital health expenditures granger causes under 5 mortality rate. Government recurrent and capital health expenditures also granger causes real GDP. From the various diagnostic tests we find that the models are normally distributed, free from serial correlation. Based on the findings from the study, the following recommendations are made; The government should increase the investment in key critical area of the health sector such as health centers for easy access, in order to curb the menace of under 5 mortality rate. The government should improve the welfare of health care personnel. This will help to improve the health outcomes indices of under 5 mortality rate and life expectancy level. The health care facility should be increased in tandem with the ever increasing population. The government should make health care services both available and affordable especially for under 5 and the elderly.
TABLE OF CONTENTS
Title Page - - - - - - - - - i
Dedication - - - - - - - - - ii
Declaration - - - - - - - - - iii
Certification - - - - - - - - - iv
Acknowledgments - - - - - - - - - v
Table of Contents - - - - - - - - vi
Abstract - - - - - - - - - - x
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study - - - - - - - 1
1.2 Statement of the Problem - - - - - - - 5
1.3 Objectives of the Study - - - - - - - 6
1.4 Research Hypotheses - - - - - - - - 6
1.6 Significance of the Study - - - - - - - 7
1.7 Scope of the Study - - - - - - - 7
CHAPTER
TWO: LITERATURE REVIEW
2.1.1 Conceptual framework - - - - - - 8
2.1.2 Public Health Expenditure- - - - - - 8
2.1.3 Determinants of Health Expenditure - - - - 9
2.2 Empirical Review - - - - - - 18
2.2.1 Summary of Literature Review on Government
Health
Expenditure
and Health Outcomes - - - - - - 32
2.3 Theoretical Framework - -- - -
- - - 38
2.3.1 Keynesian Theory of Public Expenditure - - -- 38
2.3.2 Wagner”s Law of Increasing State Activities - - - - 39
2.3.3 The Theory
of Public Expenditure by Musgrave - - - 41
2.3.4 Baumol’s
Unbalanced Productivity Growth - - - - - 42
2.3.5 Peacock and
Wiseman Theory of Public Expenditure - - - - 42
2.3.6 Classical Theory of Government Expenditure- - - - - 43
CHAPTER THREE: RESEARCH METHODS
3.1 Research Design - - - - - - - - 45
3.2 Nature, Sources and Description of Data - - - - 45
3.3 Model Specification - - - -
46
3.4 Apriori Expectation - - - - - - 47
3.5 Estimation Tecniques - - - - - - - 48
3.6 Descriptive Statistics - - - - - - 48
CHAPTER
FOUR: RESULTS AND DISCUSSION
4.1 Data Analysis - - - - - # 53
4.1.1 Descriptive
Statistics - - - - - 53
4.1.2 Unit Root Tests - - - - - - - - 54
4.2.3 ARDL-Bounds Test Approach
to Cointegration - - - 55
4.3 Model Estimation and Discussion of Findings - - - 57
CHAPTER
FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary - - - - - - - 65
5.2 Major Findings of the Study - - - - - 66
5.3 Policy Implication of the Major Findings - - - - - 67
5.4 Conclusion - - - - - - 67
5.5 Recommendation 68
5.6 Contribution to knowledge
68
References - - - - - - - - - - 70
Appendix - - - - - - - - - - 77
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Tuberculosis
(TB) remains a major health challenge in the sub-Saharan African countries;
Nigeria being one of the most affected countries. A number of interventions
have been employed to reduce the scourge of the disease; however, the burden of
the disease remains of public health dimensions. Globally, over 150 million
people are pushed into poverty annually because they have to pay for health
services directly. To reduce these financial risks, the World Health
Organization (WHO) has asked countries to put in place innovative health
financing systems to ensure universal health coverage (UHC). As well as that,
an increasing numbers of global health players have acknowledged the need to
achieve UHC. The attainment of UHC was one of the main recommendations
following the 2012 Global Symposium on Health Systems Research, and in December
2012, the United Nations passed a draft resolution that would support UHC for
people everywhere.
There is a
strong association between poverty and illhealth. In particular, poor and
vulnerable groups are at an increased risk of tuberculosis (TB) disease and
mortality. The costs patients incur due to illness, including TB, remain
central to the performance of health systems, particularly in terms of equity
and coverage. Excessive out-of-pocket (OOP) payments for health can discourage
poor patients from seeking or continuing care. In resource-poor countries,
there is an urgent need to improve case-detection rates and treatment success
of TB. Due to the strong link between poverty and TB, this will likely require
reducing the economic burden of care.
Several
studies have assessed patient and household costs of TB care. These studies
have two major limitations. First, costs of TB care were reported as averages
and the economic impact of these payments were estimated using average incomes.
Although poor patients generally spend less on treatment compared to other
economic groups, the amount spent constitutes a higher proportion of their
income. Thus, reports based on any average income figure will likely
underestimate the economic impact of illness for patients with a relatively low
economic status, which includes an important proportion of TB patients. Second,
the extent to which TB expenditures risk sending a household into, or further
into, poverty and its determinants, is unknown.
Although,
the WHO recommends that national TB programs lower patient costs of TB
care-seeking through removal of user fees, decentralization of services,
community-based care, and free diagnosis and treatment, an important question
that still needs to be answered empirically is whether household TB expenditures
are large enough to require consumption of other goods to be sacrificed. The
basis of this concept is that such high level of spending must be at the
expense of the consumption of other goods and services in the short- or
long-term. This level of payments is often qualified as catastrophic.
Catastrophic healthcare expenditures have been defined by a rather arbitrary
fraction of the total household income (>10%) or of the total income net of
subsistence expenditure (≥40%) during
a reference period. The second definition better captures the ability to pay
and better distinguishes between the rich and the poor.
In Nigeria,
households provide 70% of their total health expenditures and 90% of these
occur through OOP payments. Although a national policy that exempts TB
patients/suspects from paying for consultations, laboratory tests, TB drugs,
and hospitalization does exist, it was not effective at the not-for-profit
mission hospitals surveyed. All patients who visited the mission hospital
irrespective of their illness are required to pay a nominal consultation fee.
Tuberculosis patients requiring hospital admissions were told to pay additional
fees for accommodation and feeding, but TB laboratory tests and treatment are
provided free of charge. At the public sector hospital surveyed, TB services
(consultations, diagnostic tests, drugs, and hospitalization) are provided free
of charge. However, feeding was not provided for TB patients who were
hospitalized. There is no risk-pooling mechanism in financing health care as
the National Health Insurance Scheme (NHIS) in Nigeria currently covers only
federal government workers, who are <5% of the population.
A healthy worker would consequently be able to secure higher
earnings, ceteris paribus; illness
and disease shorten the working lives of people thereby reducing their lifetime earnings (Mehrare & Musai, 2011).
Better health care is thus a primary human need. According to the World Health Organization (WHO, 2005), fifty
percent of economic growth
differentials between developed and developing nations is attributable to ill
health and low life expectancy.
Developed countries in the realization of the role of health in driving growth spend a high proportion of
their gross domestic income (GDI) on health care
on account that their residents’ health can serve as a major driver for
economic activities and development. To this end, governments in Nigeria, over the years have been making frantic efforts at ensuring that there is an increase
in the level of public expenditure on health. It should however
be noted that despite the increase in government
expenditure in health care in Nigeria the contribution of this to health status of her citizens is marginally low and the
magnitude on health
outcomes is yet uncertain.
The huge deficiency in provision of health
infrastructure in both rural and urban centers
remains a thing of concern as over 80% of the productive force lacks
access to good health care (WHO,
2012)- a very key efficiency booster. In many rural settlements the working
population is prone to several
illness which affects
their ability to work and grow the economy. Government’s response
overtime to these health challenges have been
questionable on the account that most transitional government in the 36
states of the federation have paid
less attention to the health care needs of the people. (WHO, 2005), It was also observed that there is lack of
de-centralization of specialist hospitals from the cities to urban and other rural areas; hence, many patients
travel far distances to get treatment.
The implication of this is that citizens waste many hours in search of health care facilities leading to many labour
hour loss, thereby increasing the cost of getting treatment which eventually affects the income, productivity and
economic growth (Weil, 1995). Access
to essential medicines remains low in these parts of the world, over 50 per cent of Africans lack access to essential
medicines (WHO, 2005). Around the world, over
10 million children in developing countries die unnecessarily from diseases
that are easily preventable
and increasingly cheap to treat, such as diarrhea, measles and malaria (WHO, 2012). Furthermore, majority of patients
in LDCs still have to pay for healthcare out of their own pockets
(WHO, 2012).
According to the World Bank, the infant mortality rate
(IMR) for sub Saharan Africa as a whole
was 56 deaths below the age of one, per 1,000 live births in 2015, compared to
an average of 6 in the OECD countries
(World Bank, 2017). Following the United Nations Summit on Millennium Development Goals in the year 2000, all one
hundred and ninety one (191) United
Nations member countries resolved to strive to achieve the goals which include: eradicating extreme poverty and
hunger; achieving universal primary education;
promoting gender equality and empowering women; reducing child
mortality; improving maternal health;
to combat HIV/AIDS,
malaria, and other diseases; to ensure environmental sustainability; and to develop a global partnership for development (United
Nations, 2004). Since then, huge resources have been committed
to the realization of the goals, among which infant mortality rate is, by international organizations and government of countries of the world (Mustapha et al., 2021).
A consensus of opinion have been formed among
researchers recognizing health as a public
good, the demand and supply of which cannot be left at the mercy of invisible hands or profit maximizing individual as well as on considerations of
utility maximizing conduct alone. The recognition of the above led the World
Health Organization (WHO) to propose at the 2010 World Health
Assembly, issues that will address financing of health, which will ensure qualitative and affordable healthcare services. Riman and Akpan
(2012) also allude that the pattern of health financing is closely and
indivisibly linked to the quality of
health outcomes, capable of achieving the long term goal of enhancing nation’s economic development.
Health care financing does not only involve how to raise sufficient
resources to finance health care needs, but also on how to ensure
affordability and accessibility of healthcare
services, equity in access to medical services
as well as guarantee financial risk protection. (Xu et al., 2007) and Riman
and Akpan (2012) demonstrated that
how health systems are financed largely determines whether people can obtain needed health care and
whether they suffer financial hardship at the
instance of obtaining
care. Given the predominance of public health spending in promoting
access to health care and population health status for developing economies, the effectiveness of such spending should
be top priority in policy makers’ agenda. This
again is important because for developing economies, government revenue
is generated from a small tax base
due to their highly informal nature. To improve health status from public intervention in the health sector,
there is indeed need for improvement in the overall
state of governance in Nigeria (Osakede, 2020). As an evidence of commitment towards
the restructuring of the health sector in its fiscal operation, the Nigerian government has taken responsibility of
providing good healthcare facility by conducting expenditure on health. Available data indicates that on the average
about 2.1% to 5.8% of total
government expenditure were expended on health between 2000 and 2017 while the country’s public expenditure on health as
a percentage of GDP is 4.1 percent against 4.6
percent African average and over 6.3 percent in developed countries
(Olarinde and Bello, 2014). There
are believe that increased public health expenditure would improve the health status that will translate into
healthy human capital formation with its attendant multiplier effect on growth and development. Public
health expenditure as a percentage of government
expenditure has been fluctuating over the years. According to AFDB (2011); UNECA
(2012); World Bank (2013) it was 9.19%, in 2008, 7.63%, in 2009, 7.37%, but
in 2010 it fell to 5.72%, in 2011 it increased to 7.42%, in 2012 it remained almost constant at 7.43%, in 2013 it was
6.48, and in 2014 it was at 8.17%. As a percentage of GDP, from 2010 to 2014 it recorded 0.91%, 1.15%, 1.03%, 0.88%,
0.92% respectively; the highest value
being recorded in 2011. The budgetary allocation for health in 2003 and 2004 represented 2% and 1.2%
respectively, out of the total budgetary estimates for those years
(Olarinde and Bello,
2014).
According to (Yaqub et al., 2012) the country’s
overall health performance was ranked 187th
among the 191 Member States by the World Health Organization (WHO) in 2000. Available statistics from World Bank (2017), also reveal that although TB patients from 140 in the 1970s to 87.8
and 80.4 per 1000 in 2008 and 2011 respectively, the rate is still higher than the regional average for Sub
Saharan Africa of 70.2 and 65.8 for 2008 and 2011 and 57.3 in 2010 for all developing countries. Life expectancy is only 49.8 years compared to 53.5 years for
Sub Saharan Africa, 65.4 years for developing
countries in 2007, while in 2011 the country only managed to achieve marginal
improvement with value
of 51.7 (WDI, 2017).
In 1997, there we re an estimated 7.96 million new cases of
tuberculosis worldwide and 16.2 million pre valent cases (Dye et al. 1999).
Tu b e rculosis is the largest single infectious cause of death among adults in
the world, accounting for about two million deaths per year (Dye et al. 1999).
Ninety-five percent of cases and deaths occur in d e veloping countries and TB
accounts for approximately seven percent of all deaths in developing countries
(Murray et al. 1993, p. 239). The economic impact of tuberculosis comes
both from the size of the problem and from the fact that in developing
countries the majority of disease and death occurs among the most economically
active segment of the population: more than 75% among those 15 to 54 years of
age (Murra y, 1996, p. 212). Tu b e rculosis accounts for almost 20% of all
deaths in this age group and 26% of pre ventable deaths (Murray et al. 1993,
p. 241). Of the estimated number of cases of tuberculosis worldwide, only half
will be detected (Murray et al. 1993; Raviglione and Luelmo, 1996).
Without effective chemotherapy treatment, 50% to 60% of people with
tuberculosis will die of the disease (Murray, 1996, p.203). Those who remain
untreated and are living with active tuberculosis will infect between 10 and 15
other people every year (WHO, 1998a). For those who are detected and receive
treatment, the fatality rate is reduced to about 15% after five years, although
the death rate can be lower depending upon the characteristics of patients and
how drugs are used (Murray et al. 1993; Dolin, Ravigilone, and Kochi,
1994).
Chemotherapy treatment increases the life expectancy of an
otherwise healthy person with TB by 25Ð30 years (WHO, 1997, p. 166). However,
treatment is often inconsistent or incomplete and can result in
multidrug-resistant TB (MDRÐTB). MDRÐTB is more likely to be fatal and is as
much as 100 times more costly to treat (WHO, 1998a). Indeed, the cost is so
greatÑUS$ 250 000 per patient in developed countries and an estimated US$ 1 000
to US$ 10 000 in developing countries (Sawert et al. 1997)Ñthat
treatment is all but impractical in most developing countries.
In many regions of the world, tuberculosis is a growing
problem. Because of a combination of economic decline, insufficient application
of control measures (case detection and chemotherapy), and the HIV/AIDS
epidemic, tuberculosis is on the rise in developing and transitional economies.
Between 1993 and 1996, there was a 13% increase in estimated tuberculosis cases
worldwide, one-third of which can be attributed to HIV (WHO, 1998a). In 1997,
there were 10.7 million people co-infected with TB and HIV(Dye et al. 1999).
A person who is HIV-positive and infected with TB is 30 times more likely to
develop clinical symptoms than is an infected person who is HIV-negative,
because their weakened immune systems allow the bacteria to develop unchecked
(WHO, 1998a). A person who is HIV-positive and develops tuberculosis can expect
to survive only five to six weeks, although chemotherapy can increase such an
individual life expectancy by two to five years (WHO, 1997, pp. 156, 166). It
has been estimated that an additional 105 000 to 210 000 cases of tuberculosis
occur in sub-Saharan Africa each year because of the HIV/AIDS epidemicÑ8% to
16% of all casesÑand about 250 000 in IndiaÑabout 10% of all casesÑ(Murray et
al. 1993, p. 237; WHO, 1997, p. 160). In sum, the HIV epidemic has produced
more TB cases that are more difficult to diagnose and more expensive to treat
(Raviglione et al. 1997).
In Eastern Eu rope and the former Soviet Union, economic
dislocation has contributed to an increase in tuberculosis. For example, the
Russian Federation has reported a 69% increase in new cases between 1991 and
1995. The Russian Federation now has the highest TB mortality rate in Europe
(Migliori et al. n.d.). The conditions leading to an increase in
tuberculosis are unlikely to abate quickly. Consequently, WHO (1998a) estimates
that by the end of the century HIV infection will cause an additional 1.5
million cases of tuberculosis annually. Under conservative assumptions, Murray et
al. (1993) forecast a 10% increase in deaths from tuberculosis between 1990
and 2015. About two-thirds of the increase will result from demographic factors
such as population growth and the changing age-structure of the population; the
remainder will result from increasing incidence rates, except in sub-Saharan
Africa where the proportions will be reversed due to the HIV epidemic (Dolin et
al. 1994).
While tuberculosis is on the increase, economic difficulties
in some countries are putting pressure on health budgets. In these
circumstances, health departments need to use the most cost-effective
treatments for tuberculosis, that is, those approaches that provide effective
treatment or a cure for the lowest cost. In many cases, the most cost effective
treatments are not being used. Furthermore, decisions on what treatment regimes
to follow are often based only on costs to the health ministry. The costs borne
by patients have largely been ignored, even though such costs often exceed the
costs to the health ministry. For example, Saunderson (1995) found that 70% of
the cost of TB treatment in Uganda was borne by the patient and his or her
family. When the costs and benefits of investments in health are being
considered, the total social costs (public costs plus those borne by
individuals), and not just the government costs, should be taken into account
in order that efficient choices in health care may be made (Weinstein et al.
1996). If private costs are ignored, too little investment may be made and
it may be allocated in a way that does not minimize the burden of disease.
1.2 Statement to the Problem
Health undoubtedly is one of the most important
factors that determine the quality of human capital,
a necessary factor
for economic growth.
Therefore, any public
expenditure on health can be
viewed as a form of investment in the overall health status of a nation (Dang et al., 2016). While increase in
budgetary allocation to social services is highly desirable, it is not sufficient to guarantee enhancement in
better health outcome. It could be argued that the system of health care financing
in Nigeria is disproportionate, such that, it pushes the burden and risk of
obtaining health services to the poor. With these efforts, Nigeria overall health status performance outcomes have
not been encouraging (Edeme &
Olisakwe, 2019). In recent times the life expectancy level and infant mortality rate figures have not been encouraging.
Nigeria has the highest rate of infant mortality in Sub-Saharan Africa and third in the world according to the World
Health Organization (WHO, 2017). It
therefore leaves one to wonder if government is doing enough on the aspect of health expenditure. Hence the
need for this study to investigate if government health expenditure has yielded the desired outcome.
1.3 Objectives of the
Study
The main objective of this study is
to investigate the impact of government health expenditure on health outcomes
in Nigeria. Specifically the study will seek to ascertain the
impact of;
•
Government health expenditure on the life expectancy level in
Nigeria
•
Government health expenditure on infant mortality
rate in Nigeria
•
Government health expenditure on economic growth
1.4 Research Hypotheses
The following hypotheses are formulated based on the study’s objectives
Ho1: There is no statistically significant difference between government health expenditure and the life expectancy level in Nigeria.
Ho2: There is no statistically significant difference between Government health expenditure and infant mortality rate in Nigeria
Ho3: There is no statistically significant difference between government health expenditure and economic growth.
1.5 Significance of the Study
The study was borne out of the observation that the
health sector has been in deplorable condition
despite the yearly budgetary allocation in the sector. Several authors in Nigeria, who have researched on this topic Mihaela
Onofrei (2021) and Babatunde
(2014), have failed to look at the mediating role of the population on the overall health outcome. The ever
increasing population growth is an important factor in the health sector since the health expenditure by the government
does not increase in tandem. There is the need for the population
variable to be captured in this research
since this has an important implication on the economy,
as the saying goes “health
is wealth”.
1.6 Scope of the Study
The study will cover a period of 39 years from 1981 –
2020. The study shall be on Government
Health Expenditure and Health Outcomes-The Case of Nigeria. The period (39years) for the research work is large
enough to carry out the important time series
analysis which always
requires large set of data.
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