Factors Affecting Household Health Expenditures: Evidence from Iran

Abstract Background Productivity plays a crucial role in driving economic growth, and its primary determinant is human capital. Human capital, in turn, is influenced by health and education investments, leading both households and governments to allocate substantial resources toward these sectors. Understanding the factors influencing health expenses is vital for designing effective policies. Methods This study investigates the factors affecting health costs by analyzing data from various provinces in the Islamic Republic of Iran, spanning from 2006 to 2019. The data, sourced from the Statistics Center of Iran, was analyzed using the panel data approach to uncover the relationships between health expenditure and several key variables. Results The analysis revealed significant disparities in health expenditure among provinces. Sistan & Baluchestan had the lowest health expenditure per household, while Tehran reported the highest. Inflation emerged as a significant factor, having a negative impact on health expenses due to its influence on purchasing power. Conversely, the education and salary of household heads had a positive impact on health expenditure. Notably, economic growth did not exhibit a significant relationship with health expenses. Conclusions The study highlights the importance of education and income levels in shaping health expenditures, while inflation can curtail spending on health due to reduced purchasing power. Policymakers should consider these factors to ensure equitable and effective allocation of health resources. Key messages • Improving health and well-being, essential for comprehensive progress and human development, relies significantly on household health expenditure. • The efforts to enhance human capital should focus on reducing inflation.