There is no coherent pattern of the socioeconomic distribution of health expenditure within developing countries. Makinen et al. (2000) published a review of household survey data from eight developing countries and countries in transition. They found that there was no clear pattern among countries concerning health expenditure as a proportion of income by income quintiles. In Burkina Faso, Paraguay and Thailand, regressive trends have been found (i.e. the wealthier quintiles spend a lower percentage of their total consumption on health care than poorer quintiles) whereas in Guatemala and South Africa, progressive trends have been identified. Moreover, wealthier households were found to be more likely to seek health care when they need it than poorer households. In other words, an upward trend by quintile in health care use was observed in all countries included in the analysis with the exception of Kyrgyzstan. It might be the case that poor households may fail to seek health care when they need it since they believe that they cannot afford it. As Pradhan and Prescott (2002) state, in this case, these poor families who need financial protection are excluded from the measurement. Therefore, it is important to investigate the differences in the health seeking behaviour of households.
There are also some limitations of Makinen et al. (2000)’s study; firstly, there are important differences in the household surveys across countries. For example, the sample sizes are different and some of the surveys are not nationally representative; secondly, the information about health seeking behaviour or spending on health care obtained from the surveys is arguably not comparable since the surveys were conducted independently and the questions in those surveys were not asked in the same way. In a similar vein, Xu et al. (2003) used household survey data from 59 countries to investigate the levels and determinants of catastrophic health expenditure. The percentage of households that incurred catastrophic health expenditure was calculated using the threshold of 40% of non-food expenditure. The findings indicated a range of different patterns of catastrophic health expenditure across countries. In countries with advanced social protection systems such as Canada, Czech Republic, Denmark, the UK, Germany and France, the proportion of households incurring catastrophic health expenditure is less than 0.1%. However, catastrophic health expenditure is found to be common in some countries in transition, middle-income countries, in certain Latin
35
American countries and several low-income countries with over 10% in Vietnam and Brazil and over 5% in Azerbaijan and Colombia.9 They also investigated the factors that are likely to be associated with the risk of catastrophic health expenditure and found that there is a strong positive relationship between the proportion of households with catastrophic health expenditure and the share of out-of-pocket payments in total national health expenditure. Moreover, it was found that the proportion of households experiencing catastrophic health expenditure is positively related with the share of total health expenditure in GDP and the percentage of households living below the estimated poverty line. Generally, lower income groups are more likely to incur catastrophic health expenditure as compared to higher income groups. However, the interesting finding of this study is that the highest rate of catastrophic health expenditure was not observed in the lowest income group. This finding can be attributed to the health care seeking behaviour of households. They may choose not to seek heath care due to its high cost and, hence, report zero or low health expenditure.
In the Xu et al. (2003) study, the threshold levels and poverty definitions were changed to check the robustness of the results and the results stayed the same across all threshold levels and poverty definitions. However, there were many important limitations to their analysis. First, it is clear that there are country-specific factors that affect the health system’s organisation and financing system but these factors were not included in the analysis. Second, the study provided no information on household-level correlates of catastrophic health expenditure. Third, non-medical and indirect costs of care seeking such as transport, food and accommodation costs or lost working time and earnings were not included so the effect of out-of-pocket health expenditure was potentially underestimated. Most household surveys, however, do not include any information regarding non-medical or indirect costs of care seeking and they only include direct costs10. Fourth, the household surveys of countries used in the study were not representative of the world population. Therefore, generalisations made from these results can be misleading. Fifth, since information on household expenditure was obtained by different methods across countries such as recall of expenditure in household interviews or recording of expenditure in diaries, it can be argued that there
9
Turkey was not included in the analysis. This could be because the Household Budget Surveys have been conducted since 2002 and, hence, they were not available until recently.
10
Since the Turkish Household Budget Surveys do not include such information, this study presented in this chapter cannot take into account non-medical and indirect costs of care seeking.
36
was potentially a high level of measurement error in each of the predictor and outcome variables. Hence, comparisons of the countries in terms of the proportion of households with catastrophic health expenditure are potentially problematic (Hatt, 2006). Finally, as they stated in the study, many poor households may delay their medical needs due to high health care costs so the effect of out-of-pocket expenditure is not completely captured by only examining the levels of catastrophic health expenditure.
Wagstaff and van Doorslaer (2003) developed two alternative approaches for the definition and measurement of catastrophic health expenditure based on a binary indicator. The first approach can be defined as out-of-pocket health expenditure that is more than a pre-specified threshold level of household income or expenditure (catastrophic health expenditure). The second approach measures whether a household is forced into poverty by out-of-pocket health expenditure or the poverty status of the household has been exacerbated as a result of this expenditure (impoverishment). They developed indices for the measurement of intensity and incidence of catastrophic health expenditure and for the measurement of poverty-impact incidence (i.e. crossing the poverty line) and intensity (i.e. how far out-of-pocket health expenditure pushes the household below the poverty line). These methods were used to investigate the incidence and socioeconomic distribution of catastrophic health expenditure in Vietnam using out-of-pocket health expenditure data for 1993 and 1998. Their findings indicated that the proportion of households spending more than 5% of their income on health care was 38% in 1993 and this rate had decreased to 33% in 1998 and became less concentrated among the poor households. Out-of-pocket health expenditure increased the normalised poverty gap (i.e. poverty gaps are divided through by the poverty line) by 1.4 percentage points in 1993 and by 0.8 percentage points in 1998. In both years, nearly three quarters of the addition to the poverty gap was from previously poor people becoming even poorer and only one quarter resulted from previously non-poor people being pushed below the poverty line by out-of-pocket health expenditure. In other words, they emphasised that most of the ‘poverty impact’ resulting from catastrophic health expenditure was due to the poor becoming even poorer rather than the non-poor becoming poor.
Wagstaff and van Doorslaer’s (2003) study is arguably one of the pioneer studies of the socioeconomic distribution of catastrophic health expenditure. However, it has been criticised for assuming a fixed household income (Hatt, 2006). The definition used by
37
Wagstaff and Doorslaer (2003) is insensitive to how these expenditures are financed. This approach ignores financing coping strategies such as spending savings, selling assets or borrowing money from friends or relatives. It is possible that households might protect consumption of other goods at least in the short term (Flores et al., 2008; Sauerborn et al., 1996).