Impact of Tax Revenue on Public Healthcare Financing in Kenya: English

David Lumbasi; Consolata Ngala; Edwin Simiyu

doi:10.51867/ajernet.6.2.10

Authors

David Lumbasi Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0009-0009-7379-2321
Consolata Ngala Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0000-0003-3629-4947
Edwin Simiyu Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0009-0003-5383-5992

DOI:

https://doi.org/10.51867/ajernet.6.2.10

Keywords:

Public Healthcare Financing, Tax Revenue, Universal Health Coverage, Kenya

Abstract

Healthcare financing is a critical aspect of ensuring access to quality healthcare in Kenya. However, there are high incidences of catastrophic out of pocket health spending and poor health outcomes. In the effort to achieve Sustainable Development Goal number 3 (SDG 3), Kenya has been having transformations and reforms in the health sector, however, the country still allocates inadequate funds on healthcare falling below the Abuja Declaration of 2001 which derails achieving national and international healthcare goals. The state of macroeconomic environment in a country such as tax revenue, inflation, public debt, Gross Domestic Product among others contribute to financing decisions towards its healthcare systems and its functioning. In this regard, the study examined the impact of tax revenue on public healthcare financing in Kenya from 2013 to 2022. The study provides valuable insights that can inform evidence-based policymaking, improve resource allocation efficiency, enhance healthcare financial stability and sustainability for improved healthcare access. This study was anchored on the Resource allocation and Grossman model of health demand. Quarterly data was collected, cleaned, coded and arranged in table form before subjecting it to pre-diagnostic tests to ensure its reliability. Data was analysed using Stata 15. Post diagnostic tests were conducted and they all met the required threshold for analysis. The study adopted correlational and causal research design. The ordinary least square (OLS) model revealed that tax revenue had positive and significant impact on public healthcare financing with a p value of 0.007. The study noted that however the increasing trajectory of tax revenue collection in Kenya, the country still collects below its potential against the rising need of funds across the sectors of the economy like healthcare with ever increasing population and the inception of county governments which require adequate funding to support healthcare initiatives. The study recommended putting strategies to improve long-term tax collection efficiency and a more robust tax system that can provide a reliable source of funding for public health in the long run.

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