Abstract
The current paper assesses the drivers of health care expenditure such as urbanization, natural resources, economic expansion, and CO2 utilizing quarterly data from 2000Q1 to 2018Q4. The research applied the novel dual adjustment approach to identify the long run association between healthcare expenditure and urbanization, economic growth, natural resource and CO2 emissions. The main novelty of the dual adjustment approach is that the approach offers another way to cointegration analysis by relaxing the implicit assumption of the singular adjustment in cointegration analysis. The outcome of the dual adjustment approach affirmed cointegration among the variables in the long run. Furthermore, we applied fully modified ordinary least square (FMOLS), dynamic ordinary least square (DOLS) and canonical cointegrating regression (CCR) estimators and their results disclosed that economic growth, urbanization, and CO2 emissions increase health care expenditure while natural resource rent mitigates healthcare expenditure in China. Moreover, the spectral causality test uncovered that urbanization, economic growth, natural resource, and CO2 emissions can predict healthcare expenditure at various frequencies. Based on these findings, China’s policymakers should establish strategic environmental management policies that improve healthy and clean air to reduce healthcare costs. In addition, policymakers in China should reevaluate their urban development strategies to avoid negative externalities associated with fast urbanization.
Highlights
The pursuit of economic progress fueled by high amounts of energy usage has resulted in an increase in air pollution, which is hazardous to human health (Shahzad et al, 2020; Adebayo et al, 2021a; Güngör et al, 2021; Adebayo et al, 2021b)
We investigate the interrelationship between health spending and its determinants in China, which is the most populated country in the world
Though academics and scholars have studied the causes of healthcare expenditures for several different samples since the 1970s, studies that focus on the probable effects of urbanization and natural resources on health expenditures are scant
Summary
The pursuit of economic progress fueled by high amounts of energy usage has resulted in an increase in air pollution, which is hazardous to human health (Shahzad et al, 2020; Adebayo et al, 2021a; Güngör et al, 2021; Adebayo et al, 2021b). For several nations, developing a responsive health system to combat the growing health implications of environmental degradation is critical. All emerging countries such as China want to build a strong healthcare system, but rising health spending is eating up a large portion of their gross domestic product (Doğan et al, 2021; Fareed et al, 2021; Ghazouani et al, 2021; Shah et al, 2021). According to (UNEP, 2016), emerging nations spend around 5% of their GDP on health-linked expenses caused by pollution (UNEP, 2016). The goal of universal healthcare access is jeopardized due to rising healthcare expenses (Atuahene et al, 2020; Yang et al, 2021; Zeeshan et al, 2021)
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