Out-of-Pocket Health Expenditures and Agricultural Production Linkages

Out-of-pocket (OOP) health expenditure is the amount a patient pays directly for healthcare when insurance doesn’t cover the full cost. OOP health expenditures represent a significant financial burden on households. In Cameroon where healthcare financing is heavily reliant on OOP payments, the economic impact of health-related expenses is especially pronounced, affecting various sectors, including agriculture, which is the backbone of the country’s economy. Examining the relationship between OOP health expenditures and agricultural production is essential. This study investigates the linkages between OOP health expenditures and agricultural production. Annual time series data from 2000 to 2023 consisting of OOP health expenditure, land use, fertilizer consumption, and agricultural labor for Cameroon were used for this study. Johansen cointegration was used as a test for cointegration among variables. Fully Modified Ordinary Least Square was applied to analyze the impact of OOP health expenditures on agricultural production. Simulation was involved to generate the impact of 30% increase and decrease in OOP health expenditures on agricultural production. The findings reveal that fertilizer, land, labor, and OOP expenditures collectively explain 70% of agricultural production variance, as indicated by the coefficient of determination (R² = 0.7). The Durbin-Watson statistic of 1.44 suggests no autocorrelation. Labor positively and significantly impacts agricultural production at a 5% significance level, emphasizing the importance of labor availability for maximizing crop yields. Conversely, land expansion has a negative impact, potentially due to the cultivation of marginal lands. Additionally, a 30% increase in OOP health expenditures will decrease agricultural production, as financial resources are diverted away from farm investments while a decrease in OOP health expenditures can boost agricultural production by freeing up financial resources that can be reinvested in farming activities. The study recommends policies that enhance labor availability, improve land productivity, and reduce the financial burden of OOP health costs to boost agricultural output.