Catastrophic and impoverishing effects of out-of-pocket payments for health care in Albania: evidence from Albania Living Standards Measurement Surveys 2002, 2005 and 2008

Abstract

The absence of or poorly functioning risk pooling mechanisms and high amounts of out-of-pocket payments for health care expose households to financial risks associated with major illnesses or accidents. The aim of this article is to analyse the extent to which out-of-pocket health spending impoverishes households in Albania. The study augments existing evidence by analysing the dynamics of such payments over different years and the weight that informal payments have in the total out-of-pocket health spending. The data used in the study come from the Albania Living Standards Measurement Survey (ALSMS) for 2002, 2005 and 2008. We measure headcount catastrophic payments using different thresholds and the decomposition of indicators by expenditure quintiles to better understand their effects. We find that out-of-pocket and informal payments have increased in real value throughout the years. Even though their catastrophic effect has gone down (due also to declining trends in absolute poverty), the effect for the poorest expenditure quintiles remains high. Out-of-pocket payments deepen the poverty headcount and also enlarge the poverty gap and again the effect is larger for the poorest quintiles. Future policy interventions should provide better protection mechanisms for the poor by providing exemption criteria or subsidized transport. They should also seek to address the widespread informal payments in the country.

Measuring Financial Protection in Hospitalized Patients after the Health Sector Evolution Plan in Iran

“…High OOP payments for health care deter people, especially the poor from receiving needed health services due to the fact that they cannot afford to pay for them (3,7). Often, poorer households are forced to borrow, sell assets, reduce consumption, or resort to their savings in order to pay for health care cost, leading to penury (3,8,9).…”

Financial Catastrophism Inherent with Out-of-Pocket Payments in Long Term Care for Households: A Latent Impoverishment

“…In the same way as health care OOP payments, those for long-term care can also represent a catastrophic expenditure for households if they force individuals or households to suffer a drop in the standards of living now, or in the future [31,84]. The catastrophe threshold (z cat ) has been defined as a certain percentage of (x i ), which households must devote to making the corresponding OOP payment for dependent care, (oop i ), in such a way that when a household has to make a payment above the regulatory percentage, this household is classified as catastrophic.…”

“…Although setting a cut-off point is arbitrary since a small payment may be catastrophic for a poor household, in the literature, these thresholds range from 5% to 40% [31,34,35,83,85]. In order to analyze the sensitivity of our calculations the regulatory percentages used were 10%, 20%, 30%, and 40%.…”

“…Kiil and Houlberg (2014) [23] indicate that some studies find an association between low income and higher elasticity-price of demand, while others do not. In the same vein, González López-Valcárcel et al (2016) [6] only locate three studies analyzing the effect of OOP payment on the use of health services by vulnerable population groups.Although the literature on catastrophe and impoverishment is also limited [31][32][33][34][35][36], the results show that the implementation of health care OOP payment puts many households at financial risk. Even a small payment can generate a financial problem in a poor household, forcing the reduction of other basic expenses such as food, hygiene, or the education of their children, which affects quality of life while families may fall into poverty or become poorer.A review of the literature on OOP payment shows that its effects on health, although varying, are well documented.…”

“…Although the literature on catastrophe and impoverishment is also limited [31][32][33][34][35][36], the results show that the implementation of health care OOP payment puts many households at financial risk. Even a small payment can generate a financial problem in a poor household, forcing the reduction of other basic expenses such as food, hygiene, or the education of their children, which affects quality of life while families may fall into poverty or become poorer.…”