above the National Poverty Lines calculated in local currency (LCU) by the World Bank Poverty Assessment team (and henceforth referred to as the PA poverty line). To facilitate cross-country comparisons, the Appendix (Tables A3 and A4) also reports results using the single international PPP-based poverty lines of $2.15/day in LCU/day/person)<sup>8</sup> .

# _3.3 Methodology_

This paper has three main analytical sections. It commences by examining economic disparities in health status and healthcare utilization, using both descriptive statistics and a probit model (Section 4). Then, the magnitude of, and disparities in, out-of-pocket payments for healthcare (including informal payments) are explored, together with the impact of these payments on household economic status and poverty (Section 5). With respect to the latter, two different methodologies are used to assess the impact of health spending on poverty: (i) the incidence and intensity of catastrophic healthcare payments, and (ii) the effect of out-of-pocket payments on poverty headcount and poverty gap measures. Finally, a set of country-specific probit regressions are used to model the relationship between health status, healthcare utilization and poverty (Section 6).

# **4. Disparities in health status, healthcare utilization and health insurance coverage**

There is substantial cross-country variation in self-reported morbidity, including both chronic and acute illness. Table 1 shows that while only 6% of Montenegrins report a chronic health condition, about 14% of Albanians, 22% of Serbians, and 25% of people living in Bosnia and Herzegovina do. For those countries for which data are available, the pattern of acute morbidity reveals a similar ranking, with the lowest incidence of acute illness in Montenegro (7%), followed by Albania (8%) and Serbia (14%).

There is substantial variation in the proportion of the population that sought any type of health care in the four weeks prior to the survey. As few as 9% of the population of Montenegro sought any type of health care in the four weeks prior to the survey, but the figure rises to 14% in Albania, hovers around a fifth of the population in Kosovo and Serbia, and reaches almost a third of the population in Bosnia and Herzegovina<sup>9</sup> . Around 4-5% of people in each country reported being hospitalized in the previous year. Healthcare utilization appears to be higher in countries with a higher incidence of illness, but since morbidity data is self-reported the causality could lie in either direction. Again, rates vary by age and gender, with women more likely to seek medical care than men, but gender differentials in health-seeking behavior disappear once differential morbidity is controlled for.

As many as 95% of Montenegrin households are covered by health insurance. The figures are much lower in Bosnia and Herzegovina (60%) and especially in Albania (37%), despite social health insurance schemes.

# _4.1 Demographic and geographic disparities_

Health status varies by age and gender in each country. Not surprisingly, both chronic and acute morbidity increase with age. Women generally report higher levels of chronic disease and acute

> 8 This measure is not available for Kosovo.

> 9 Part of the reason why the figure for Montenegro may be lower than for other countries is that the survey was

> conducted only in May, and may be biased downwards by seasonal variations in the incidence of illness.

6