Abstract
Public health spending is central to human capital formation, yet the role of fiscal composition in shaping longevity in Sub-Saharan Africa remains underexplored. This paper investigates the intertemporal trade-offs of health financing in a low-income African setting, focusing on Kenya, using a dual empirical strategy: A Vector Error Correction Model (VECM) of national time-series data (1981-2023) and region fixed-effects models on census microdata. Macroeconomic results reveal a structural bias in fiscal composition with implications for long-run state capacity. The recurrent health expenditure ratio shows a significant negative long-run association with life expectancy (β=-28.39,p<0.05). While recurrent spending improves short-run service delivery, it is capital accumulation through infrastructure, technology, and sanitation that shifts the longevity frontier. Micro-level analysis highlights distributional effects: recurrent spending interacts positively with maternal education (β=0.007,p<0.05) substituting for household human capital deficits and reducing child mortality among children of uneducated mothers. Female secondary education parity emerges as a binding macro constraint (β=250.71,p<0.001) suggesting diminishing returns to primary schooling. We also document a kinship dividend: higher dependency ratios protect child survival (β=-0.389,p<0.001) challenging conventional dependency-burden models and underscoring the role of extended family systems. Taken together, these findings support a twin-track fiscal strategy: governments should safeguard capital health investments to build long-run state capacity, while deploying recurrent expenditure strategically to mitigate inequality across regions and households.