The effect of out-of-pocket health expenditure on mortality level in Kenya: Direct survey evidence

Abstract

The main objective of this thesis is to estimate the effect of out-of-pocket health expenditure on mortality level in Kenya. A causal link between out-of-pocket health expenditure and mortality is studied taking into account the endogeneity of expenditure and heterogeneity of mortality. The main source of data for the thesis is the household health expenditure and utilisation survey conducted jointly in 2007 by the Kenyan health ministries and the Kenya National Bureau of Statistics.

The results from the analysis show that a percentage increase in the out-of-pocket health expenditure (a proxy for health inputs) is associated with a decrease in mortality level of 0.16%. It is also found that a full subsidy on user charges per visit or on the inputs used to produce health services decreases mortality level by 0.51 % through its favourable effect on the total value of health inputs used by households.

An important policy implication of the thesis is that government should make every effort to increase public health expenditure to reduce user charges for healthcare, which are a barrier to health service utilisation. Currently, user charges at health facilities in Kenya are quite high and unaffordable by the .poor. There is a need for a public policy to address this issue. The thesis provides insights into how such a policy can be designed, illustrating the effect it would have on health at the household level.