Home Project-material DETERMINANTS OF HEALTH CARE SPENDING IN NIGERIA (1981-2017)

DETERMINANTS OF HEALTH CARE SPENDING IN NIGERIA (1981-2017)

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Abstract

This study investigated the impact of healthcare spending on economic growth in Nigeria between 1981 and 2017. Data sourced from Central Bank of Nigeria (CBN) on per capital public health expenditure, per capital gross domestic product, population with age below 15years, under 5 mortality rate and inflation rate were analyzed through the multiple regression analysis using Ordinary Least Square (OLS) technique to examine the determinants of health care spending in Nigeria. This study made use of the Augmented Engel and Granger 2-step approach co-integration test and the Error Correction Model (ECM) econometric technique to determine the long-run relationship between public spending on health and economic growth in Nigeria. From the study, it was revealed that the variables (public health expenditure and population below 15 years) have positive and significant impact on economic growth in Nigeria. It was also discovered that inflation has negative relationship with public healthcare e

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Government - funded public health activity is an indispensable part of the Nigerian health care system. Public health activities can be viewed as a form of investment in the overall health status of a nation. Public health can be described as the organized response by society to protect and promote health, and to prevent illness, injury and disability. The starting point for identifying public health issues, problems and priorities, and for designing and implementing interventions, is the population as a whole, or population subgroups (NPHP, 1998).

Public health is distinguished from other roles of the health system by its focus on the health and wellbeing of populations rather than individuals. Public health programmes are usually aimed at addressing the factors that determine health and causes illness, rather than their consequences, with the aim of protecting or promoting health, or preventing illness (Australian institute of Health and welfare, 2008).Public health expenditure is commonly defined to include such costs along with expenditure from public budgets (Musgrove, 1996).

Health care is a share responsibility in all Nigerian constitutional set-ups, among the federal, state, and local governments. The local governments are supposed to take care of the primary level (emphasizing preventive Medicare– health clinics, dispensaries, etc.) while state governments are responsible for the secondary level (emphasizing curative Medicare/ first referral- general hospitals, etc). The federal government, on the other hand, is in charge of the tertiary level of care (emphasizing referral Medicare) to which teaching and specialist hospitals belong (Anyanwu et al, 1997).

General health status of Nigerians is measured by life expectancy at birth. The general health of the population has taken a nosedive. In other words, health indicators in Nigeria are below what would be expected from a country with its level of GDP. In 1991, the life expectancy at birth was 53.8 and 52.6 years for females and males respectively but dropped to 48 years for females and 47 for males in 2005, six years after re-establishing democratic governance (WHO, 2007). Currently the life expectancy is 47 and 45 years for females and males respectively. These figures are slightly higher than Niger but lower than Cameroun, neighbouring countries to the north and east.

According to federal ministry of health the decline in life expectancy could be attributed to a sharp rise in mortality among people infected with HIV/AIDS. While only 50,000 persons died of AIDS in Nigeria in 1995, by 2000, the figure had risen to 209,000 and is expected to reach 700,000 by 2010 (FMH, 2002). In 2006 FMH revealed that about 72% of deaths in Nigeria are due to communicable diseases. Infant mortality rate in 2008 was 75 deaths per 1000 live births while the overall under-five mortality rate for the same period is 157 deaths per 1000 live births (NDHS, 2008).Total fertility rate for the country is 5.7 in 2008. According to 2007 multiple indicator cluster survey (MICS), 8.3% of children were underweight while 19.4% were stunted. One million Nigerian children under five die annually (NBS, 2006).There is great inequality in immunization coverage by urban and rural with one-third of urban children being immunized before their first birthday and only 10% of rural children being so. Maternal mortality is the highest in Africa with 1,100 mothers dying per 100,000 live births (WHO, 2006). Tuberculosis (TB) incidence has more than doubled in the last two decades with 311 new cases per 100,000 individuals in 2007 implying over 450,000 new cases per year. TB prevalence is equal to over 890,000 individuals infested.

In terms of government expenditure on health, according to UNDP, government expenditure as a percentage of GDP was 1.3% in 2003 a decline from 2.2% in 2000. In regard to expenditure as a percentage of total expenditure on health, the Nigerian government’s share were 21.7%, 21.8%, 21.9%, 26.1%, 29.1%, 33.5%, 31.4%, 25.6%, 27.4%, 30.8%, 30.9%, and 30.1% in 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005 and 2006 respectively (WHO, 2006), lagging behind many other African counties, even those similarly classified by the World Bank as low income economies. In per capita terms, public spending on health stands at less than $5, and in some parts of the country can be as low as $2, far less than the $34 recommended by WHO for low income countries within the macroeconomics commission Report. Apparently, this level of spending will make it extremely difficult to provide even the most basic services. However, the current UNESCO benchmark for public expenditure on health is 25% of the entire budget.

The public and private sectors are partners in delivering health care through

out the country. While public health expenditure in Nigeria is 1.3% of GDP, private health expenditure is 3.7% (UNDP, 2006). The decline in quality of services provided at public health facilities which, as noted earlier started in mid-1980s led to the emergence and continued growth of private hospitals and clinics in virtually all parts of the country. The surge in number of these facilities has been so rapid that it is estimated that more people receive treatment from them than from public facilities. According to WHO, private expenditure on health as a percentage of total expenditure on health were 88.3%, 84.6%, 84%, 85.9%, 76.8%, and 69.6% in 1997, 1998, 1999, 2000, 2001, and 2004 respectively, and this figure is bound to rise unless there is an urgent and significant infusion of resources to the public sector. Because no such changes have been made, the growth in the proportion of health care provided at private facilities continues to increase, resulting in escalation of cost of treatment and, consequently, diminished access as the cost is unaffordable by most people. There is no social security programme and until recently, there was no health insurance system in the country. As a result, payment for health care is directly made out of pocket in most instances there are private companies underwriting health insurance but their services are grossly under utilized due to high premiums.The budgeting system in Nigeria has gone through several changes. Specifically, Nigeria changed from zero-based budgeting in 2005 to programme-based budgeting called Medium Term Expenditure Framework (MTEF). MTEF is a tool for linking policy, planning and budgeting over a medium term (usually three years) at the sectoral or national levels. This tool consists of an integrated top-down and bottom up system of public expenditure management, rolled yearly by incorporating policy changes to achieve: macro-economic stability without compromising economic development. Direct the bulk of public spending to a nation’s strategic priorities; predictability of both policy and funding so that ministries can plan ahead and programmes can be sustained; and fiscal discipline in line agencies besides autonomy so as to increase the incentives for efficient and effective use of public funds (Economic and management insights limited, 2006). We have MTEF for 2005-2007, 2006-2008, 2007-2009, 2008-2010, 2009-2011, and 2010-2012.



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