Crunching health expenditure numbers: important but treacherous terrain
Authors: Barbara I McPake
Journal: The Lancet Global Health (2018)

In two new reports in The Lancet Global Health, Adam Wagstaff and colleagues1Wagstaff A Flores G Hsu J et al.Progress on catastrophic health spending in 133 countries: a retrospective observational study.Lancet Glob Health. 2018; 6: e169-e179Summary Full Text Full Text PDF PubMed Scopus (256) Google Scholar, 2Wagstaff A Flores G Smitz M-F Hsu J Chepynoga K Eozenou P Progress on impoverishing health spending in 122 countries: a retrospective observational study.Lancet Glob Health. 2018; 6: e180-e192Summary Full Text Full Text PDF PubMed Scopus (108) Google Scholar make important contributions to the effort to monitor countries' progress towards universal health coverage (UHC). UHC requires that "all people have access to needed promotive, preventive, curative and rehabilitative health services, of sufficient quality to be effective, while also ensuring that people do not suffer financial hardship when paying for these services".3WHO, Universal health coverage. http://www.who.int/healthsystems/universal_health_coverage/en/ (accessed Dec 28, 2017).Google Scholar A substantial reliance of a health system on financing through patients' own out-of-pocket payments is an important constraint to this objective. Out-of-pocket payments can absorb high proportions of income, reaching thresholds that are considered catastrophic1Wagstaff A Flores G Hsu J et al.Progress on catastrophic health spending in 133 countries: a retrospective observational study.Lancet Glob Health. 2018; 6: e169-e179Summary Full Text Full Text PDF PubMed Scopus (256) Google Scholar and can impoverish some households and deepen the extent of poverty of others.2Wagstaff A Flores G Smitz M-F Hsu J Chepynoga K Eozenou P Progress on impoverishing health spending in 122 countries: a retrospective observational study.Lancet Glob Health. 2018; 6: e180-e192Summary Full Text Full Text PDF PubMed Scopus (108) Google Scholar Thus, moving from a greater to a lesser reliance on out-of-pocket payments is an important indicator of progress towards UHC. Wagstaff and colleagues reach a series of important conclusions about current trends. There has not been progress in relation to catastrophic health expenditure,1Wagstaff A Flores G Hsu J et al.Progress on catastrophic health spending in 133 countries: a retrospective observational study.Lancet Glob Health. 2018; 6: e169-e179Summary Full Text Full Text PDF PubMed Scopus (256) Google Scholar which has been increasing by all measures in aggregate and in most countries for two of three measures. The analysis of impoverishing health expenditure is more ambiguous.2Wagstaff A Flores G Smitz M-F Hsu J Chepynoga K Eozenou P Progress on impoverishing health spending in 122 countries: a retrospective observational study.Lancet Glob Health. 2018; 6: e180-e192Summary Full Text Full Text PDF PubMed Scopus (108) Google Scholar Health expenditures that cause households to fall below the most extreme poverty line at US$1·90 per day decreased between 2000 and 2010 but have increased for the higher poverty line estimate of $3·10 per day. These results reflect population distributions in relation to living standards around the two thresholds and between the two dates as much as changes in the levels of health expenditure, so they are difficult to interpret with respect to UHC. In both reports, Wagstaff and colleagues reach important conclusions about the drivers of both catastrophic and impoverishing health expenditure. Higher proportions of health expenditure channelled through social security and other government financial protection arrangements are protective against both problems, whereas other kinds of expenditure, including voluntary prepayment, are not. This result requires the attention of those who continue to advocate for extra-governmental health financing strategies or for private sector service provision that can only rely on out-of-pocket or voluntary prepayment under existing financing arrangements. Nevertheless, as Wagstaff and colleagues acknowledge, any analysis of out-of-pocket payment is a partial analysis of the state of UHC in a country, measuring only the last clause in the definition offered at the outset of this Comment. Considered in isolation, such analysis can be misleading. The comparison of indicators between the five countries described in the table illustrates the point. Malawi and the Solomon Islands have similar profiles. Their present levels of health expenditure, relatively high as shares of gross domestic product, are substantially supported by external contributions. Out-of-pocket payments are small and predict a low incidence of impoverishing and catastrophic expenditures. However, the countries cannot be considered closer to the achievement of UHC than Cambodia and Peru if the UHC service coverage index, recently proposed by Hogan and colleagues,4Hogan DR Stevens GA Hosseinpoor AR Boerma T Monitoring universal health coverage within the Sustainable Development Goals: development and baseline data for an index of essential health services.Lancet Glob Health. 2018; 6: e152-e168Summary Full Text Full Text PDF PubMed Scopus (188) Google Scholar is considered. Low levels of out-of-pocket expenditure arise in the context of lack of access to essential services, and it is arguable whether low access to services and low catastrophic and impoverishing health expenditures are preferred or not by the populations of countries at different points on these spectra.TableHealth financing indicators for selected countries, 2015UHC service coverage index*Source: Hogan et al (2017).4 (score out of 100)GDP per capita, US$†Source: Global Health Expenditure database http://who.int/health-accounts/ghed/en/ (accessed Dec 21, 2017).CHE as percentage of GDP per capita†Source: Global Health Expenditure database http://who.int/health-accounts/ghed/en/ (accessed Dec 21, 2017).CHE per capita, US$External share of CHE†Source: Global Health Expenditure database http://who.int/health-accounts/ghed/en/ (accessed Dec 21, 2017).Out-of-pocket payment as percentage of CHE†Source: Global Health Expenditure database http://who.int/health-accounts/ghed/en/ (accessed Dec 21, 2017).Malawi444849%3454%11%Solomon Islands5014458%15235%3%Cambodia5510256%7019%59%Peru7860385%323031%New Zealand>8036 2789%355400UHC=universal health coverage. GDP=gross domestic product. CHE=current health expenditure.* Source: Hogan et al (2017).4Hogan DR Stevens GA Hosseinpoor AR Boerma T Monitoring universal health coverage within the Sustainable Development Goals: development and baseline data for an index of essential health services.Lancet Glob Health. 2018; 6: e152-e168Summary Full Text Full Text PDF PubMed Scopus (188) Google Scholar† Source: Global Health Expenditure database http://who.int/health-accounts/ghed/en/ (accessed Dec 21, 2017). Open table in a new tab UHC=universal health coverage. GDP=gross domestic product. CHE=current health expenditure. The development of a private market for health care differentiates Malawi and the Solomon Islands from Cambodia, Peru, and New Zealand, whereas the development of effective financial protection against the costs of accessing both public and private health care differentiates Cambodia, Peru, and New Zealand from each other. These developments might typically be sequenced in that order, although a careful analysis of the range of global databases and increased depth now available across the two sets of indicators would be necessary to establish that. Similar contrasts are yet to be measured within and between countries. Patterns of service availability, the development of private markets for health care, and the effective coverage of financial protection mechanisms are also likely to differ between rural and urban areas and in regions of different levels of economic development. Different stages in those processes predict different directions of change in service availability, financial protection, and catastrophic and impoverishing expenditures that are difficult to interpret at the level of the global average. Is the world on the path to UHC or to growing burdens of ill health and health-related debt, bankruptcy, and impoverishment? The available data appear insufficient to provide a clear answer, but the importance of effective, government-managed, financial protection in avoiding the second path is unarguable. I declare no competing interests. Progress on catastrophic health spending in 133 countries: a retrospective observational studyThe proportion of the population that is supposed to be covered by health insurance schemes or by national or subnational health services is a poor indicator of financial protection. Increasing the share of GDP spent on health is not sufficient to reduce catastrophic payment incidence; rather, what is required is increasing the share of total health expenditure that is prepaid, particularly through taxes and mandatory contributions. Full-Text PDF Open AccessProgress on impoverishing health spending in 122 countries: a retrospective observational studyOut-of-pocket spending on health can add to the poverty head count and the depth of poverty by diverting household spending from non-health budget items. The scale of such impoverishment varies between countries and depends on the poverty line but might in some low-income countries account for as much as four percentage points of the poverty head count. Increasing the share of total health expenditure that is prepaid, especially through taxes and mandatory contributions, can help reduce impoverishment. Full-Text PDF Open Access