Determination of the Amount of Healthcare Public Funding: The Latvian Case

Decisions on public funding allocation are significant challenges for any healthcare system. The Latvian health financing policy faces challenges that threaten its long- term sustainability and the values of solidarity. According to the World Health Organization, health, as a state of complete physical, mental and social well-being, is one of the fundamental rights every human, and is dependent upon the fullest cooperation of individuals and states. This also includes the task to “substantially increase health financing.” Such concepts require the regular measurement of progress in order to explicate the achieved level in statics and dynamics and to make strategic decisions for the coming period, including those on public healthcare expenditure. The purpose of this article is to evaluate the necessary allocations of general government budget expenditures, ensure justification for the strategic decisions for the next planning period on healthcare expenditure, evaluate the achieved level in statics and dynamics, and provide policy recommendations for future health financing system reforms. Research methodology – To achieve the goal of the research, comparative analysis and methods of theoretical research were used. Intelligent data mining methods were employed for the discovery of and the creation of knowledge on existing regularities in health system expenditure based on mutually comparable factual cases – the declared statistical indicators of the EU27 countries. Findings – Using data mining analytical tools, the minimum of the general government health expenditure in EU countries was computed in this study: around €1,500 per capita in 2018. The optimal segmentation of general government health expenditure according to the COFOG classification was also computed. Research limitations – The minimum expenditure calculated is especially relevant for low-expenditure Central and Eastern European countries, while the total public health expenditure segmentation is applicable for any EU country. The benchmarking algorithms are well-suited for comparing aspects of the health sector, identifying leaders with the best performance and best practices, and analyzing how higher performance levels are achieved. However, it should be borne in mind that some dispersion could be caused by heterogeneous environmental conditions. Practical implications – Governments can consider making sustainable policy decisions and performing the programming process of allocating public resources. This would also help to balance cross-sectoral links between public healthcare and the economy during post-COVID-19 recovery. Originality/Value – The use of the data mining analytical tools in this study answered a question that is very important for society: What is the minimum amount an EU country should spend on health? The processing of financial data shows that the widespread assumption of the necessary general government health expenditure of 5% of the GDP is not substantiated.