Information on household out-of-pocket expenditures is only available from household surveys. The World Bank has sponsored Living Standards Measurement Surveys (LSMS) since 1980 from which information on household health expenditures can be extracted (World Bank, 2011b) and World Health Surveys (WHS) sponsored by WHO in 2000-2001 also contain a household expenditure module (WHO, 2011). Demographic and Health Surveys and Multiple Indicator Cluster Surveys include modules on household assets, but not expenditures. There is considerable variability in the types of questions used to obtain household health expenditures, making it important to choose a standard instrument that would enhance comparability across time and countries. Data can be disaggregated by income or wealth quintiles, districts, urban/rural location, and relevant demographic and socioeconomic factors.

Data Source(s):

Household surveys with income and expenditure data (e.g., LSMS or WHS)

Purpose:

This indicator measures the percent of the population at risk of impoverishment as a result of out-of-pocket payments.  Expenditures in excess of the WHO threshold (40 percent of income net of subsistence needs) commonly require households to reallocate expenditures from basic needs, such as food, clothing, and even children’s education. To examine questions of equity, the risk of impoverishment or financial catastrophe can be estimated by income or wealth quintile, if a separate wealth or asset index can be constructed from the same household survey. Optimally, total government expenditure on health should be increasing both in absolute terms and as a proportion of GDP in low-income countries, while the proportion of households facing financial catastrophe as a result of out-of-pocket payments should be decreasing.

Issue(s):

Data collection for household income and expenditures is subject to reporting error and well-trained interviewers using standardized instruments can help reduce this source of error. Comparisons of the indicator by income quintiles need to be interpreted carefully.  In many countries the quintile with the lowest income (or total expenditures) also has a lower incidence of catastrophic payments than richer quintiles. People who are very poor often do not use services for which they have to pay, and thus do not experience a financial catastrophe (although they may suffer health consequences if they have inadequate care).  As people have slightly more income, they may begin to use services and experience adverse financial consequences linked to paying for care.

Poverty and Equity Considerations:

Compared to other areas of health spending, the poor are proportionally higher consumers of public health goods and services (depending on the location of service delivery and other factors affecting access). When government’s take on a greater responsibility for public health spending, this directly contributes to poverty reduction through improved health status and protection from catastrophic losses due to treatment costs (Becker, Wolf, Levine, 2006).

References:

Becker L, Wolf J, Levine R, 2006. Measuring commitment to health. Center for Global Development. http://www.cgdev.org/doc/ghprn/Final%20Indicators%20Consultation%20Report.pdf