Effects of Economic and Population Factors on Health Expenditures: Special Case of Pakistan

Abstract

<p>This paper aims to explore the factors affecting the health care expenditures of Pakistan by employing the Multivariate techniques for the annual data series from 1960 to 2010 .The variables we considered are Gross Domestic Product (GDP) as an economic indicator, Population of age 65 and above (P≥65), Population of age 0 to 14 (P(0-14)), Life expectancy at Birth (LE), Crude Birth rate (CBR) and population growth rate (GR) as population indicator and Total Health Expenditure (THE) as an influencing factor. Multiple regression considering Total Health Expenditure (THE) is applied as dependent on the variables mentioned above. Since Variance Inflation Factor (VIF) for all independent variables are very high, the smallest VIF is around 11 goes up to 65. The results obtained by Principal components reveal the effect of population structure and the age factor effect oppositely on Total Health Expenditures (THE). Factor Analysis suggests that the behavior of Health Expenditures is common with Gross Domestic Product (GDP), population of age 65 and above (P≥65) and life expectancy at Birth (LE) in Pakistan while population of age 0 to 14 (P (0-14)), population growth rate (GR) and Crude Birth rate (CBR) are moving in opposite direction i.e. as GDP, P≥65 and LE of Pakistan increases P (0-14), GR and CBR will decreases.</p>