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AFRICAN JOURNAL OF HEALTH ECONOMICS - Volume 9 Issue 2, December 2020

Pages: 32-50

Date of Publication: 01-Dec-2020

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The Changing Pattern of Healthcare Financing in Sub-Saharan Africa: Implications for Health Outcomes

Author: M. Femi Ayadi and Akanni O. Lawanson

Category: Review & Research


Background: The healthcare financing landscape of sub-Saharan Africa (SSA) has been characterized in recent years by a changing mix of funding mechanisms to enhance the health status of the population.

Methods: Using data from World Development Indicators, World Governance Indicators, and World Health Organization databases (1995 – 2014), this study employs the two-step difference generalized method of moments estimation to examine the implications of the changing pattern of healthcare financing on health outcomes in thirty SSA countries. The model considers life expectancy, infant, and under-5 mortalities as health outcomes and tracks their responses to variations in healthcare financing from public expenditures, private (out of pocket) expenditures, insurance, and external funding (donor) sources.

Findings: A ten percent increase in share of funding of health insurance in total health expenditure (THE) increases life expectancy by between 2.5 and 5.6 percent, and decreases under-five mortality by between 0.16 and 0.24 percent. A ten percent increase in share of government expenditure on health in THE has the potential of increasing life expectancy by about 5 percent, while the interaction of government expenditure and an institutional variable shows a positive impact. An increase in share external funding in THE results in an increase in life expectancy and a decrease in both infant and under-five mortality. Out-of-pocket expenditure as a share of THE has no potential to promote the health of SSA population across all health outcome estimations.

Conclusions: There is need for SSA countries to build strong institutions to promote efficient healthcare systems.

Keywords: Healthcare Financing; sub-Saharan Africa; Health Outcomes; Public Healthcare Expenditure; Private Healthcare Expenditure




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