Impact of Demographical Structural Change on Public Health Care Expenditure in Malaysia

The main objective of this paper is to shed light on the empirical relationship between demographic structure and public health care expenditure. A voluminous literaturehas pointed out the significant impact of demographic changes on public expenditure. Some scholars have attributed the growth effects of certain categories of public expenditure to age-specific effects, others recognized them as age-transition effects. On the other hand, past researchers have also identified the aging population as a contributing factor to increasing health care expenditure. Therefore, this paper empirically examines how public health care expenditure in Malaysia responds to population changes using the Autoregressive Distributed Lag (ARDL) Bounds testing approach. Empiricalevidence from this finding demonstrated that the demography structure has a significant positive relationship with public health care expenditure. Hence, this study highlighted the existence of generational conflict in the allocation of health care expenditure. Additionally, bidirectional causality was identified to run between public health care expenditure and government education spending, confirming the correlation between these expenditures. The results also provide important implications that need to be taken into consideration by Malaysian policymakers when developing policies.