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Health Financing and Health Outcomes in the Eastern Mediterranean Region

Published on: January 2010​
Genre: Economics/Finance​ Category: Research Report/ Research Paper/ White Paper​

This paper presents an overview of health spending and health outcomes in the WHO Eastern Mediterranean region over the time period 1995-2006, using cross-country and over-time comparisons. Overall, the region experienced improvements in health outcomes measured in terms of reductions in infant, under-5 child mortality and maternal mortality. However, there are notable exceptions to this trend of declining mortality in countries such as Afghanistan. In addition to providing an overview of changes in health outcomes and health spending over the 12-year period, the paper examines the following two issues:

  1. The responsiveness of health care spending to changes in a country’s income; and,
  2. The impact of spending on health care services on health outcomes.

The methodological approach adopted in this paper is multivariate regression analysis. I employ random effects models with year dummies, which are appropriate for panel data analysis. I also use double-log formulas for econometric necessity and ease of interpreting the results. The findings indicate that a 1 percent increase in GDP per capita is associated with 0.89 percent increase in health spending in the region and that income growth does not explain all the variation in health spending, indicating that other factors, such as the organization of the health care system, influence health care spending levels. This is an important finding because it suggests that on the one hand, cost-containment, and on the other, mobilizing more funds for the health care sector, are possible with appropriate interventions. The findings on the importance of spending on health care for achieving better health outcomes demonstrate that investing in health care matters; a 1 percent increase in health spending is associated with 0.11 percent reduction in infant mortality and 0.14 percent reduction in under-5 child mortality. These results are likely to be underestimating the effect of health spending because of the inclusion of a country’s income in the models. Gender parity in secondary school education also had a significant impact on reducing infant and child mortality. Government effectiveness had a strong and significant effect on reducing maternal mortality. The results contradict the notion that increases in income through better nutrition and living conditions alone are responsible for improvements in health outcomes. The results of this analysis clearly indicate that investing in health care also matters.

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