Is healthcare a ‘Necessity’ or ‘Luxury’? an empirical evidence from public and private sector analyses of South-East Asian countries?

Abstract

South-East Asian Regional (SEAR) countries range from low- to middle-income countries and have considerable differences in mix of public and private sector expenditure on health. This study intends to estimate the income-elasticities of healthcare expenditure in public and private sectors separately for investigating whether healthcare is a ‘necessity’ or ‘luxury’ for citizens of these countries. Panel data from 9 SEAR countries over 16 years (1995-2010) were employed. Fixed- and random-effect models were fitted to estimate income-elasticity of public, private and total healthcare expenditure. Results showed that one percent point increase in GDP per capita increased private expenditure on healthcare by 1.128%, while public expenditure increased by only 0.412%. Inclusion of three-year lagged variables of GDP per capita in the models did not have remarkable influence on the findings. The citizens of SEAR countries consider healthcare as a necessity while provided through public sector and a luxury when delivered by private sector. By increasing the public provisions of healthcare, more redistribution of healthcare resources can be ensured, which can accelerate the journey of SEAR countries towards universal health coverage.