Healthcare Expenditure, Socioeconomic Development, and Life Expectancy: A Cross-Country Panel Analysis of Global Health Outcomes

Abstract

Wealth of the societies in general is regarded as one of the key drivers of health of the people and the role of healthcare spending on it may vary in the context of other socioeconomic and institutional factors. The research analyzed the correlation among healthcare expenditure, socioeconomic development level and life expectancy, based on the international panel data set of 3793 country-year observations from 179 countries from 2000 to 2022. The descriptive statistics, correlation analysis, country and year fixed-effects regression models, and robustness tests using alternative health financing indicators were applied. The descriptive results revealed that there was a strong positive correlation between the variables of healthcare expenditure per capita and life expectancy. After accounting for GDP per capita, urbanization, basic sanitation, government effectiveness, country-specific characteristics, and common time effects, however, the association of healthcare expenditure with the other factors described above was not statistically significant. In the fully adjusted model, only basic sanitation achieved statistical significance, suggesting that the provision of public-health facilities could play a significant role in longevity. Other indicators such as health expenditure as a share of gross domestic product, government health expenditure, government proportion of healthcare expenditure and out-of-pocket expenditure were also not significant on their own. The results imply that the direct cost of health care is not necessarily sufficient to improve health. To achieve sustainable improvements in life expectancy, health financing must work hand-in-hand with better sanitation, better governance, equitable access to services, and inclusive socioeconomic development