The Macroeconomic Implications on Healthcare Expenditures: Challenges Facing South Asian Countries

Abstract

Rising healthcare costs have become a concern for individuals and governments around the world. Governments try to estimate the balance between the allocation of healthcare costs to improve human health and economic efficiency. The study examined the relationship between public healthcare costs and macroeconomic indicators within South Asian countries. The study used data mainly from the World Bank World Development Indicators for eight South Asian countries from 2000 to 2020. The weighted least squares method and the pool regression were employed in the analysis of the study. The main findings of the study demonstrate that GDP per capita and foreign direct investments (FDI) increase public healthcare spending. The inflation and budget deficit showed to be significant determinants regarding healthcare spending, specifically for some of the countries in the pool. Based on the findings, the study recommends that governments jump on policies that improve economic growth and tax revenues, as well as stabilize inflation. These economic policies could increase public healthcare costs because they have a strong relationship with macroeconomic indicators.