Predicting key drivers for health care expenditure growth in the Middle East region: a Grossman-PLS modeling approach

Abstract

ABSTRACT Background Numerous studies have provided evidence to the literature on the demand side of the determinants of health-care expenditure by employing the Grossman model. However, understanding the supply side of the determinants of health-care expenditure will be of crucial importance for improving health outcomes. Methods This study has used panel data for 15 Middle-East region countries for the time period of 2000–2016 Initially, Grossman’s model of the demand for care is estimated. Furthermore, a Parallel model of the supply of care is estimated for contradistinction analysis. Finally, an integrated partial least square structural equation model is being developed. Results Results show that the relative wage rate and aging variables are the only indicators that are statistically significant with theoretically consistent signs as postulated by Grossman’s theoretical model. The opposite is true with schooling and the proxy of the medical care relative prices. However, in the parallel model, all the four drivers of the demand for care are statistically significant determinants of health-care spending. Conclusions Therefore, expansion of health insurance coverage particularly for the elderly cohort of the population could be a promising mechanism to boost the demand for care and eventually improve health outcomes.