Evaluation of socioeconomic aspects triggering health care spending

Abstract

The research investigates the effect of various macroeconomic factors on health care spending using time series data for Albania for the period from 2000 to 2020. Health care expenditure is measured as a percentage of gross domestic product (GDP), out-of-pocket expenses, domestic private health expenditure, and external health expenditure per capita. Understanding what influences health spending is the main goal of the following study. In the study, explanatory variables are divided into two groups: demographic and socioeconomic determinants. These determinants include factors, such as GDP per capita, deposit interest rate, remittances, life expectancy, population rate growth, number of physicians, etc. Findings indicate that health expenditure expressed as a percentage of GDP is negatively affected by deposit interest rate and positively influenced by population aged 65 years old and over, life expectancy, mortality rate, and number of physicians for 1,000 people. On the other hand, remittances positively affect household out-of-pocket expenditure and external health expenditure. Remittance flows are significant in driving health care expenditures when compared to income such as GDP per capita. These income flows from abroad may contribute to stabilization in the use of health care services by poorer households or those households lacking health care coverage. This paper certainly contributes to the larger discussion about the relationship between socioeconomic factors and the welfare state.