Study of Health Expenditure and Economic Welfare in Indonesia

Abstract

Health human resources is one of the important factors in the growth and economic development of a country, this is because HR is a catalyst of a change and innovation in everything. Health quality of human resources will affect the size of productivity produced in a country, which in turn will affect the amount of income per capita of the community and ultimately will have an impact on the level of community welfare. This study aims to analyse the influence and significance of the relationship between Health Expenditure and economic welfare in Indonesia. The research methods used are Granger Causality and Ordinary least square. Research variables included GDP per capita, health expenditure per capita, household consumption per capita, life expectancy, labour force level. Data sources come from the World Bank and other sources related to research data. The research data is sourced from World Bank in the form of annual time series namely 1980 to 2016. The results of the study show that based on the results of the Granger Causality, public health expenditure with economic growth and household consumption with economic growth has a two-way relationship. While economic growth with the workforce and economic growth with life expectancy has a direct relationship. Whereas based on OLS results show that health expenditure, life expectancy, labour force and household consumption have a significant positive relationship to GDP per capita as evidenced by the probability value. Suggestions that can be policy recommendations are focusing on institutional strengthening and budget allocation planning, especially in the health sector. In addition, with the development of technology, it can provide easy access to health services.