The Determinants Of Healthcare Expenditure In Ghana

ABSTRACT This study is motivated by the conviction that previous studies on the determinants of per capita government healthcare expenditure are mostly based on international comparisons of healthcare expenditure. The study analyses the main demand side determinants of per capita government healthcare expenditure in Ghana from 1970 to 2006. Using the Johansen cointegration test and an error correction model, the paper identified the key determinants of per capita government healthcare expenditure in the short run. These include; changes in per capita GDP, changes in the proportion of the population aged 65years and above as well as changes in the proportion of the population with access to basic healthcare facilities. Of these, per capita GDP is the dominant determinant of per capita government healthcare expenditure in Ghana. It therefore suggests that in order to meet the minimum expenditure requirement for achieving the health related Millennium Development Goals, per capita GDP ought to be increased considerably. Specifically, the coefficient of per capita GDP is found to be far below unity in the long run and above unity in the short run. One of the major implications of this result is that healthcare in Ghana is a necessity in the long run and a luxury in the short run. This could be an indication that healthcare delivery is one of the most important issues to Ghana’s policymakers.