Does Health Expenditure effect Health Outcomes A Cointegration based Approach to Indian Health Care System

Abstract

The main purpose of this paper is to see whether the health expenditure (LHE) is going to have any influence on life expectancy (LLE) and on under-five mortality rates (LUM) in case of India. The data for these variables were taken for a period 1980-2018. To see the relationship among these variables we have used Johansen method of co-integration and VECM for knowing the direction of causality. To check the strength of causality, VDA and IMFs were used. A long-run causal relationship between health expenditure and health outcomes were observed showing both these variables got influenced by the health expenditure. This relationship was also found in the short run but is unidirectional. This relationship supports that better health expenditure leads to better health outcomes. Therefore, we suggest that if more health expenditure leads to better health outcomes, why shouldn't then health expenditure be enhanced to have better health outcomes?