Households’ healthcare expenditure determinants in Tanzania: rural–urban differences

Household healthcare expenditure remains an important health economics issue because of its implication for household welfare and financial protection. This study examines the rural–urban differences in the determinants of household healthcare expenditure in Tanzania, using the 2020/2021 National Panel Survey data (NPS-5) comprising 3792 households. A Two-part model (TPM) was employed, where the first part used a logistic regression to estimate the probability of incurring healthcare expenditure, while the second part utilized a generalized linear model (GLM) with log link and Gamma family distribution to estimate expenditure determinants among households reporting positive healthcare expenditure. Moreover, interaction terms between urban residence and selected explanatory variables were incorporated in the models, to examine the rural–urban differences. The findings indicate that household income significantly increased both the probability of incurring healthcare expenditure and the amount of expenditure irrespective of residence location. However, significant rural–urban heterogeneity exists in the expenditure equation (GLM). Specifically, the effects of secondary and tertiary education, access to finance, sanitation conditions, illness incidence, and hospitalization differ significantly between rural and urban households. The positive effects of education and incidence of illness or injury on healthcare expenditure are stronger among rural households, whereas financial access and hospitalization exert larger effects among urban households. The findings demonstrate that the determinants of household healthcare expenditure are not homogeneous across residence locations, highlighting the need for spatially differentiated health financing and healthcare delivery policies in Tanzania.