The Effect of Macroeconomic Determinants on Public Health Expenditure in Kenya

Health spending remains a significant concern in low and middle-income countries due to limited financial resources allocated to the health sector. In Kenya, one of the key objectives of the government's Big Four development agenda, which is targeted for completion by 2022 and partially realized in some counties by 2023, is achieving universal health coverage. Over the years, health has remained a top priority and a focal point in political campaign agendas, with the government consistently investing substantial funds in the sector. A majority of Kenyans rely on public health insurance, while only a small percentage can afford private insurance or out-of-pocket healthcare payments. This has contributed to increased poverty levels and a higher dependency ratio. Despite these efforts, Kenya continues to face challenges in the allocation of public health expenditure. This study aimed to examine the impact of macroeconomic factors on Kenya's public health spending. This study aimed to examine the effects of corruption, unemployment, and tax revenue on public health expenditure in Kenya. The research was anchored on public expenditure theory, and an explanatory research design was adopted. Secondary data from the Kenya National Bureau of Statistics (KNBS) was utilized, covering annual time series data from 1990 to 2023. Stationarity testing was conducted using the Augmented Dickey-Fuller (ADF) test, Phillips-Perron (PP) test, and Kwiatkowski–Phillips–Schmidt–Shin (KPSS) test to check for unit roots. The study employed the Autoregressive Distributed Lag (ARDL) model to assess the relationship among the variables. The long-run ARDL analysis revealed that corruption (-2.231, p-value = 0.002 < 0.05), tax revenue (0.075, p-value = 0.025 < 0.05), and unemployment (0.227, p-value = 0.03 < 0.05) had a significant impact on public health expenditure in Kenya. To enhance prudent public health expenditure, the study recommends strengthening anti-corruption laws, optimizing tax revenue through efficient policies and broadening the tax base to support public services. Addressing unemployment through job creation and investment in education is essential for maximizing labor force utilization and ensuring sustainable public health financing.