Government Healthcare Financing Transition in Nepal

The general objective of this paper is to have insight and understanding of the trajectory of determinant of government healthcare expenditure in developing country like Nepal. The specific objective of the study is to explore the factors associated with government healthcare expenditure and to find the trends of determinants of per capita government healthcare expenditure in Nepal. The time series data from 1980 to 2018 on per capita government healthcare expenditure, gross domestic product, real GDP per capita, share of health expenditure as a percentage of government expenditure, doctors available in government healthcare system for per 10000 population,  population to government health institutions ratio, hospital beds available per 1000 population in government healthcare system, auxiliary health workers available for per 1000 population government healthcare system, annual consumer price index was used in the  study. The data series of the variables of time series under this study are stationary at both level I(0) and first difference I(1).  Therefore, ARDL model was used as per Pesaran and Shin (1999) suggestion. The ARDL bound test model takes into consideration the existence of long run relationship and the Error Correction Model (ECM) integrates the short-run dynamics with the long-run equilibrium without losing long-run information and avoids problem such as spurious relationship. The calculated error correction term make inference on the existence of long run relationship and speed of adjustment of the error of previous time period which is estimated to be 14.2 percent. The empirical results indicated that per capita government healthcare expenditure is significantly predicted by explanatory variables like real GDP per capita, healthcare expenditure as percent of total government expenditure, doctors available for per 10000 populations, auxiliary health workers available for per 1000 population, population health institution ratio and consumer price index. Therefore, the policy makers should take these components into consideration while making resource allocation decision to upgrade public healthcare facility.