Catastrophe and impoverishment in paying for health care: with applications to Vietnam 1993–1998

Abstract

This paper presents and compares two threshold approaches to measuring the fairness of health care payments, one requiring that payments do not exceed a pre-specified proportion of pre-payment income, the other that they do not drive households into poverty. We develop indices for 'catastrophe' that capture the intensity of catastrophe as well as its incidence and also allow the analyst to capture the degree to which catastrophic payments occur disproportionately among poor households. Measures of poverty impact capturing both intensity and incidence are also developed. The arguments and methods are empirically illustrated with data on out-of-pocket payments from Vietnam in 1993 and 1998. This is not an uninteresting application given that 80% of health spending in that country was paid out-of-pocket in 1998. We find that the incidence and intensity of 'catastrophic' payments - both in terms of pre-payment income as well as ability to pay - were reduced between 1993 and 1998, and that both incidence and intensity of 'catastrophe' became less concentrated among the poor. We also find that the incidence and intensity of the poverty impact of out-of-pocket payments diminished over the period in question. Finally, we find that the poverty impact of out-of-pocket payments is primarily due to poor people becoming even poorer rather than the non-poor being made poor, and that it was not expenses associated with inpatient care that increased poverty but rather non-hospital expenditures.

An assessment of financial catastrophe and impoverishment from out-of-pocket health care payments in Swaziland

“…Two widely used measures of financial protection are considered in this paper – financial catastrophe and impoverishment resulting from paying out-of-pocket for health services [3]. …”

“…Any household that exceeds this share incurs financial catastrophe. Earlier methodologies [3,24] use a uniform threshold for all households irrespective of their income levels. Recently, however, there is growing concern to vary this threshold by the income levels of households [19,25].…”

“…The impoverishment effect of out-of-pocket spending is assessed by examining the extent to which individuals are pushed below the poverty line as a result of paying out-of-pocket for health services [3]. Indices of interest include the impoverishment headcount and gap (including the normalised and mean positive gap).…”

“…This gap is equal to if , and zero otherwise. The associated pre-payment poverty gap is defined as [3]: …”

“…Financial catastrophe, on the other hand, arises when such out-of-pocket payments exceed a certain fraction of a household’s income. This fraction is assumed as the maximum share that direct health costs can account for without disrupting the household’s standard of living, including forgoing spending on basic necessities like food [3]. Some households even incur debts or sell productive assets to cope with out-of-pocket payments [4,5].…”