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ABSTRACT
This paper attempts to investigate the impact of health financing and environmental quality on health outcome in low and lower-middle income countries using Generalized Method of Moments (GMM). Data were obtained from World Development Indicators and World Governance Indicators. Results based on system GMM reveal that health financing plays a positive role in stimulating life expectancy, whereas the reverse is observed if health is financed privately or from individuals' out-of-pocket expenditure. At the same time, improved environmental quality is found to be an influential factor that can contribute to a better health condition. These findings enhance our understanding of good health as a product of the combination of different factors.
JEL Classification: I1; Q5; H51; C2.
Keywords: Health Care Financing; Environmental Quality; Health Outcome; System GMM.
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1. INTRODUCTION
The right to benefit from the highest possible level of physical and mental health is considered an ultimate human right. In order to achieve this goal, countries are required to provide accessible, available and nondiscriminating health-care services and goods. In most countries there appears to be a trend towards increasing health expenditure. The main reasons for this increase are changes in medical technology, aging population, higher pricing of health-care services, and changes in health financing management (Fan and Savedoff, 2014). Public health spending has become an important concept in most developed and developing countries. Reforms have been made to ensure efficient and affordable health-care services and goods. As medical treatment is gradually increasing, one important consequence of these reforms is the change in health care financing. Since life expectancy in many developing and developed countries has gradually increased, the question arises: to what extent do health-care funding schemes funding affect health outcome measured in life expectancy?
Out-of-pocket payments, where patients are entitled to share the cost of treatment, have altered health services financing. Out-of-pocket payments force individuals to weigh up private insurance costs against the benefits; however, out-of-pocket enables patients to reduce medical care treatment. Out-of-pocket payments are an intuitive way to compel individuals to reduce unnecessary health-care treatment and minimise costs of treatment (van de Ven, 1983). The reduction in public funding of health-care treatment against increases in out-of-pocket payments leads to increased revenues for private care providers. Out-of-pocket...