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cover page image Paying out-of-pocket for health care in Asia: Catastrophic and poverty impact.

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van Doorslaer, Eddy, Owen O’Donnell, Ravi P. Rannan-Eliya, Aparnaa Somanathan et al.
1 May 2005 | 51 pages

Abstract:Out-of-pocket (OOP) payments are the principal means of financing health care throughout much of Asia. We describe the magnitude and distribution of OOP payments for health care in fourteen countries and territories accounting for 81% of the Asian population. We focus on expenditures that may be considered catastrophic, in the sense that they absorb a large fraction of household resources, and on the impoverishing effect of payments. Catastrophic impact is measured by the prevalence and intensity of high shares of OOP in total spending and in non-food expenditure. Impoverishment is measured by comparing poverty headcounts and gaps before and after OOP health payments. We present the first cross-country comparisons of the impoverishing effect of OOP payments measured against the international poverty standards of $1 and $2 per person per day.
Bangladesh, China, India and Vietnam stand out in relying heavily on OOP financing, having a high prevalence of catastrophic payments and a large poverty impact of these payments. Sri Lanka is striking as a low-income country that manages to keep the OOP share of financing below 50% and still further because the catastrophic and poverty impact of these payments are modest. Thailand has pushed the OOP share even lower and, through a health entitlement card and now a minimal flat rate charge, has successfully limited the impact of health care payments on household living standards. At a still higher level of national income, Malaysia has been even more successful in limiting the catastrophic and impoverishing effects of OOP payments.
In most low/middle-income countries, the better-off that are more likely to spend a large fraction of total household resources on health care. This reflects the inability of the poorest of the poor to divert resources from basic needs. It also seems to reflect the protection of the poor from user charges in some countries. In China, Kyrgyz and Vietnam, where there are no exemptions of the poor from charges, the poor are as likely, or even more likely, to incur catastrophic payments. Despite the concentration of catastrophic payments on the better-off in the majority of low-income countries, OOP payments still push many Asians (further into) poverty. Seventy-eight million people in the eleven low/middle-income countries included in this study, or 2.7% of the total population, are pushed below the very low threshold of $1 per day due to payments for health care.