The Determinants of Urban Families’ Health Expenditure

Abstract

The method of financing in the health sector is a principal challenge for authorities. In developing countries, including Iran, the main burden of financing in the health sector is on families. This method is an unjust mechanism because the people’s utilization of health goods and services depends on their economic status, not their health conditions. Therefore, in such countries, one of the goals for health authorities is the replacement of “out of pocket” with more equitable methods. The first step for innovating appropriate financing methods in the health sector is identifying and analyzing the determinants of the ability of families to pay. This paper studies the factors that affect Iranian urban families’ health expenditures. In this study, health expenditure modeling is done through a sample selection model using the data obtained from the household income-expenditure survey (HIES) for 18727 families in the urban areas. The results show that there is an increase in the household health expenditure, parallel with an increase in per capita income, education, gender ratio, residents’ health development and the number of the elderly and the non-elderly. In addition, insurance and smoking factors cause a higher amount of household spending in the health sector. Also, the families with married members have the highest health expenditure, while those with never-married members have the lowest. Moreover, there is a sample-selection problem for investigating the determinants of health expenditure in Iranian urban areas; the use of linear regression leads to biased and inconsistent estimations.