We’ve looked at the figures. Their meaning is clear – and alarming: healthcare is set to increase poverty. On current trends, the proportion of people spending at least 10% of household income on catastrophic out-of-pocket health payments will rise from 12.7% in 2015 to 15% of the global population – or 1.2 billion people – in 2030.
Out-of-pocket spending has a disastrous effect on the lives of the world’s poorest people. For a household on or below the poverty line, unexpected or recurrent healthcare payments can force them into – or deeper into – poverty, to accumulate unpayable debt, or simply not to seek lifesaving services at all.
In 2030, 1.2 billion people will undergo the hardship of spending at least 10% of household income on healthcare; for 282 million of them, healthcare will account for an impoverishing 25% of their income. Income that will inevitably be taken from other necessities, such as food.
Rates of catastrophic payments are greater in lower-middle income countries than low-income countries. In 2015, 7.3% of people in low-income countries experienced catastrophic payments at the 10% threshold, whereas in lower-middle income countries the rate was double at 14.2%. Our research (see methodology below) suggests that while both groups of countries will see increases, they will be greater in lower-middle-income countries.
There are two main reasons. First, in the poorest countries, many who need to access healthcare will not even attempt to do so, due to the cash fees they would have to pay. The second reason is the make-up of spending in health systems. Where government spending on the health sector is low – less than 80% of total health sector spending – catastrophic payments dramatically increase because out-of-pocket spending must fill the gap.
When aid is included, government spending in low-income countries makes up a greater proportion of total health spending than in lower-middle income countries, though the amounts remain inadequate for health outcomes.
As the most regressive form of health sector funding, out-of-pocket spending inevitably hits the poorest hardest. Worryingly, it is set to rise significantly.
“The way we finance global health is broken… If we are serious about achieving universal health coverage (UHC) by 2030, we need to completely revamp the global health financing system, starting at the country level.” Dr Jim Kim, World Bank President, UHC Forum 2017
Financing for health and nutrition needs to change dramatically. As Dr Kim stated, this includes changes by heads of states, health and finance ministers, but also international donors. All must work together to improve domestic resource mobilisation, aiming for governments’ health spending to amount to at least 5% of gross domestic product – the minimum needed to provide a basic package of essential services for all. This is the only sustainable way to deliver universal health coverage.
The international community must invest in mechanisms like The Global Financing Facility, which aims to support countries to generate more of their own health finances, pushing to find more catalytic and innovative finance opportunities to fill financing gaps, as well as empowering countries to decide what their health systems need and having subsequent responsibility to deliver. This approach to development aid should be embraced by both aid recipient countries and donors.
Our Senior Research Adviser, Alexis Le Nestour, used data from Wagstaff et al. (2017) to estimate the trends of catastrophic health expenditures, measured as health spending exceeding 10% (or 25%) of household consumption. Using data on GDP per capita; levels of public, pooled and out-of-pocket health expenditures per capita; and Gini coefficients, we fitted a country random-effect model explaining the determinants of catastrophic health expenditures.
The predictions of this model were used to input values for missing years and reconstruct trends of catastrophic health expenditures from 2000 to 2015. Data for missing countries were imputed using the predictions of an ordinary least square model controlling for the same variables and regions of the world. We then used projections of health spending from the Institute for Health Metrics and Evaluation and projections of GDP per capita using assumptions from the International Monetary Fund and Organization for Economic Cooperation and Development to predict future rates of catastrophic health expenditures in all countries up to 2030, using the parameters of our estimated models. UN population figures were used to compute the number of affected people from actual and projected rates, and sensitivity analyses were performed to estimate the contribution of different factors to future trends.