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A Global Strategy For Reducing Catastrophic Health-care Payments (p 111)

July 09, 2003

Public-health experts highlight in this week's issue of THE LANCET how the reduction of out-of-pocket health expenditure to below 15% of the total cost of health services could substantially increase access to health-care systems across different parts of the world.

Accessing health services in different countries across the world can lead to individuals having to pay large proportions of the costs-known as catastrophic expenditure-from their available income; such expenditure can push many households into poverty. The potential impact of how health systems are financed on the wellbeing of households, particularly poor households, has affected the design of health systems and insurance mechanisms in countries as diverse as the USA, Australia, India, and Indonesia. The protection of people from catastrophic payments is widely accepted as a desirable objective of health policy. Catastrophic health expenditure is not always a reflection of high health-care costs. A large bill for surgery, for example, might not be catastrophic if a household does not bear the full cost because the service is provided free or at a subsidised price, or is covered by third-party insurance. Conversely, small costs for common treatments can be financially disastrous for poor households with no insurance cover.

Christopher Murray, Ke Xu, and colleagues from WHO, Geneva, Switzerland used data from household surveys in 59 countries to explore variables associated with catastrophic health expenditure. Catastrophic expenditure was defined as a household's financial contributions to the health system in excess of 40% of household income remaining after subsistence needs had been met.

The proportion of households facing catastrophic payments from out-of-pocket health expenses varied widely between countries, from less than 0.01% in Czech Republic and Slovakia to 10.5% in Vietnam. Most developed countries have advanced social institutions such as social insurance or tax-funded health systems that protect households from catastrophic spending. Among these countries, only Portugal, Greece, Switzerland, and the USA had more than 0.5% of households facing catastrophic health spending. Among less-developed countries, the lower limit was less than 0.5% in Namibia and Djibouti.

Ke Xu comments: "National health systems can be financed in ways that protect households from catastrophic spending and provide access to needed services. The most straightforward approach is to reduce out-of-pocket spending through funding from general taxes, the development of social insurance or other prepayment schemes. The relation we noted between catastrophic expenditure and the share of out-of-pocket payment in total health expenditure suggests that, if out-of-pocket spending could be reduced to levels lower than 15% of total health spending, few households would be affected by catastrophic payments. The cross-country variation, however, shows that other more complex strategies can protect households against catastrophic spending, such as progressive fee schedules, highly subsidised or free hospital services, and the provision of certain health services to the poor."

Lancet