Abstract

INTRODUCTION A sharp increase in expenditure is one of the challenges of the health system in Iran. Every macroeconomic variable affects health, and if it is disregarded, it will lead to higher macrobudgets. Physical and mental health as well as the use of health services change according to the macroeconomic conditions and business cycles (boom and recession). The present study aimed to determine the effect of macroeconomic indicators on health expenditure. METHODS This study was descriptive analytical. The required data related to macroeconomic indicators and health expenditure in public and private sectors were collected during 1995-2014. The data were analyzed using the time series models in econometrics, Vector Auto Regression, and Granger causality technique. RESULTS The results of this study indicated that health expenditure has a positive bilateral relationship with gross domestic production (GDP), gross national production, national income, and national consumption. On the contrary, expenditure has a negative bilateral relationship with liquidity rate and inflation rate. In addition, budget deficit has a negative unilateral relationship with health expenditure while population rate has a positive unilateral relationship with health expenditure. CONCLUSION The results of this study indicated the increase of health expenditure in Iran that GDP is the most critical determining factor of health expenditure. In general, the total expenditure in the health sector in the world increases when the countries become richer. In line with the increase of resources, innovative financing methods and efficiency improvement are required for providing basic health services in low-income countries.