OOP Health Expenditures

The world spent nearly 7 trillion dollars on health care in 2011, whilst the share of Out-of-Pocket payment was less than 15% of total health care expenditure on health, low income countries’ OOP share was nearly 50% of total health care expenditure [1]. Evidence also shows that nearly 150 million people in the world incur catastrophic out-of-pocket expenditures and 80 million fall below poverty line as a result of paying direct out-of-pocket payments for health care (Xu, Evans et al. 2003; Xu, Evans et al. 2007). The burden of out-of-pocket is significantly higher among the poorest individuals.

Various institutions, including the World Health Organization, OECD, USAID and ICF-MACRO have proposed various innovative tools that can facilitate the preparation of National Health Accounts (NHA) for tracking resources (UN System Task Team 2013). Tracking use of financial resources is also a core interest of different development partners and organizations that fund specific disease conditions, including HIV/AIDS, Malaria, Tuberculosis and Child health programs. These include different international philanthropy organizations such as the Bill & Melinda Gates and the Rockefeller foundations and other bilateral and multilateral donors such as the Global Funds to Fight HIV/AIDS, Tuberculosis, and Malaria (GF), etc. Tracking the source and use of financial resources helps in the assessment of value for money of different supports that are given by these partners and also explores how countries progress towards different internationally agreed development indicators including the Millennium Development Goals which countries are striving to achieve by 2015. However, existing platforms do not reliably track out-of-pocket expenditure at country level and in relation to disease specific expenditure.

National Health Accounts (NHA) is the commonly used tool to track health care expenditure across countries. Normally, this tool uses information from various sources including government expenditure reporting systems, health insurance offices data, data reported by donors, and data reported by employers and NGOs. All the above sources help to capture health care expenditures through third party payments, including general taxation, donor funding and health insurance. However, a large challenge remains in getting accurate and reliable information on direct household and individual out-of-pocket (OOP) payments for health care access. Current approaches to estimate out-of-pocket payments rely on data from national surveys, like Living Standard Surveys (LSS) and Household Budget Surveys (HBS). Since these surveys are not specifically designed to capture health care expenditures, they suffer a number of limitations when used to prepare country NHAs. Most of the existing national representative surveys are not health specific as they collect a broad range of information hence do not go into details to collect a more disaggregated out-of-pocket payments (SIDA 2007; Heijink, Xu et al. 2011). 

NHA preparation requires disaggregated information on out-of-pocket payments by providers, diseases, age, gender, and functions. Such information is normally not well captured in national general surveys. Further, the way data is collected does not allow comparability across countries and/or over time analyses due to heterogeneity in the way out-of-pocket payments variables are collected. There are substantial variations in recall periods in the surveys tools across countries, some survey using one week others one month and others a one year recall period (Heijink, Xu et al. 2011). There are also variations in the number of OOPs expenditure items included in surveys and the way the health questions are structured (Heijink, Xu et al. 2011). The interval or time period between national surveys is usually long (5 years in the case of the LSMS and DHS). It is also very difficult to validate out-of-pocket data collected through these national surveys as there is no agreed gold standard approach. This raises the necessity of developing and evaluating a standardized instrument that would enhance disease specific measurement of NHA across countries using longitudinal data that is disaggregated by income or wealth quintiles, districts, urban/rural location, and relevant demographic and socioeconomic factors[2] 

Financial protection is considered to be one of the key UHC indicators that will be used to track countries’ progress particularly post 2015 MDG (World Health Organisation 2010). This highlights the necessity of assessing how countries make effort to reduce dependency on out-of-pocket payments and their catastrophic and impoverishment effect and increase government subsidies to the poorest as a strategy to improve financial protection and guarantee access to needed services. 

[1] http://www.who.int/health-accounts/Out_of_pocket_expenditures.pdf?ua=1 
[2] http://www.cpc.unc.edu/measure/prh/rh_indicators/crosscutting/hss/the-ratio-of-household-out-of-pocket-payments-for