Effects of public and external health spending on out-of-pocket payments for healthcare in sub-Saharan Africa

Abstract

Financing healthcare in sub-Saharan Africa (SSA) is characterized by high levels of out-of-pocket (OOP) payments for healthcare. This renders many individuals vulnerable to poverty and deviates from the Universal Health Coverage (UHC) goal of providing financial protection for healthcare. We examined the relative effects of public and external health spending on OOP healthcare payments in SSA. We used the system generalized method of moments (GMM) estimator and data from the World Bank's World Development Indicators for 43 SSA countries from 2000 to 2017. The results show that reductions in OOP payments are higher with increases in public spending than external spending. This means increases in public health spending, compared with external health spending, will increase the pace towards achieving the financial protection goal of UHC in SSA. But since government spending is limited by fiscal space and parliamentary approval, public health spending through social health insurance might provide a regular means of financing healthcare to speed up achieving the financial protection goal in SSA countries.

Keywords: Public health spending; external health spending; financial protection; out-of-pocket healthcare payment; sub-Saharan Africa.