Elsevier

The Lancet

Volume 362, Issue 9378, 12 July 2003, Pages 111-117
The Lancet

Articles
Household catastrophic health expenditure: a multicountry analysis

https://doi.org/10.1016/S0140-6736(03)13861-5Get rights and content

Summary

Background

Health policy makers have long been concerned with protecting people from the possibility that ill health will lead to catastrophic financial payments and subsequent impoverishment. Yet catastrophic expenditure is not rare. We investigated the extent of catastrophic health expenditure as a first step to developing appropriate policy responses.

Methods

We used a cross-country analysis design. Data from household surveys in 59 countries were used to explore, by regression analysis, variables associated with catastrophic health expenditure. We defined expenditure as being catastrophic if a household's financial contributions to the health system exceed 40% of income remaining after subsistence needs have been met.

Findings

The proportion of households facing catastrophic payments from out-of-pocket health expenses varied widely between countries. Catastrophic spending rates were highest in some countries in transition, and in certain Latin American countries. Three key preconditions for catastrophic payments were identified: the availability of health services requiring payment, low capacity to pay, and the lack of prepayment or health insurance.

Interpretation

People, particularly in poor households, can be protected from catastrophic health expenditures by reducing a health system's reliance on out-of-pocket payments and providing more financial risk protection. Increase in the availability of health services is critical to improving health in poor countries, but this approach could raise the proportion of households facing catastrophic expenditure; risk protection policies would be especially important in this situation.

Introduction

Health systems can deliver health services, preventive and curative, that can make a difference to peoples' health. However, accessing these services can lead to individuals having to pay catastrophic proportions of their available income and push many households into poverty. The potential impact of how health systems are financed on the wellbeing of households, particularly poor households, has affected the design of health systems and insurance mechanisms in countries as diverse as the USA, Australia, India, and Indonesia.1, 2, 3, 4, 5, 6 The protecting of people from catastrophic payments is widely accepted as a desirable objective of health policy.7, 8, 9, 10, 11, 12, 13 Catastrophic health expenditure is not always synonymous with high health-care costs.14 A large bill for surgery, for example, might not be catastrophic if a household does not bear the full cost because the service is provided free or at a subsidised price, or is covered by third-party insurance. On the other hand, even small costs for common illnesses can be financially disastrous for poor households with no insurance cover.

Little, however, is known about which health-system characteristics protect households from catastrophic payments, or the factors that lead some households to face such payments while others are protected. Most of the limited evidence comes from case studies. For example, in two US studies,15, 16 households headed by older people, people with disabilities, the unemployed, or poor people, and those with reduced access to health insurance were more likely to be affected than other households.

In Georgia, the results of a survey undertaken after the transition to a decentralised, market-driven system showed that 19% of households seeking care had to borrow money or sell personal items to pay, and that 16% were unable to afford the medications prescribed.17 The characteristics of the households were not reported. In Thailand, the poor have been reported as more likely to have to pay for health services from their own household income than richer people, which, when combined with lower incomes, places these people at higher risk of catastrophic health payments.18, 19

In designing their health systems, policy makers need to understand whether any characteristics make people more vulnerable to catastrophic payments. Knowledge is also necessary of which households are more vulnerable for any set of system characteristics. We aimed to quantify the extent of catastrophic payments and explore the conditions under which they are most likely to occur, taking advantage of the increasing number of available household income and expenditure surveys.

Section snippets

Household assessments

Health spending is taken to be catastrophic when a household must reduce its basic expenditure over a period of time to cope with health costs,14 but there is no consensus on the threshold proportion of household expenditure. In past studies,14,20 the threshold has varied from 5% to 20% of total household income. We used a higher threshold of payments of at least 40% of a household's capacity of pay.

A household's capacity to pay is defined as effective income remaining after basic subsistence

Results

We considered 65 surveys for inclusion; six surveys did not meet the inclusion criteria and were excluded, leaving 59 for analysis. Table 1 provides a summary of the years, type, sample size, and key attributes of the included surveys. Some national surveys were part of international survey initiatives or were part of continuing national survey programmes including the Living Standards Measurement Studies, Household Budget Surveys, and Household Income and Expenditure Surveys. All surveys

Discussion

The results, although powerful, should be interpreted in view of several qualifications. For example, no information on the distribution of payments within households was available, so some members of households without catastrophic expenditure could, individually, be placed at financial risk because of health payments. On the other hand, although financial transfers between households are captured in the survey data, some non-financial transfers that might enable households to survive the

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