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This indicator captures the impact of health spending (spending on healthcare) paid “out-of-pocket” on household’s budget which could imply for some families choosing between health and other essentials like food, and education.

This indicator is defined as the proportion of population with large household expenditures on health as a share of total household expenditure or income.  Two thresholds are used to define “large household expenditure on health”: greater than 10% and greater than 25% of total household expenditure or income. In effect it is based on a ratio exceeding a threshold. The two main concepts of interest behind this ratio are household expenditure on health (numerator) and total household consumption expenditure or, when unavailable, income (denominator).

Ministry of Health

Ministry of Health

Annual

Health expenditure Ratio

Indicator 3.8.1 is for health service coverage and indicator 3.8.2 focuses on health expenditures in relation to a household’s budget to identify financial hardship caused by direct health care payments. Taken together, indicators 3.8.1 and 3.8.2 are meant to capture the service coverage and financial protection dimensions, respectively, of target 3.8. These two indicators should be always monitored jointly.

Indicator 3.8.2 is about identifying people that need to devote a substantial share of their total household expenditure or income to health care. The focus is on payments made at the point of use to get any type of treatment, from any type of provider, for any type of disease or health problem, net of any reimbursements to the individual who made the payment but excluding pre-payments for health services; for example, in the form of taxes or specific insurance premiums or contributions.

Indicator 3.8.2 is defined as the “Proportion of the population with large household expenditure on health as a share of total household expenditure or income”. It is based on a ratio exceeding a threshold. The two main concepts of interest behind this ratio are household expenditure on health (numerator) and total household consumption expenditure or, when unavailable, income (denominator).

Numerator

Household expenditure on health is defined as any expenditure incurred at the time of service use to get any type of care (promotive, preventive, curative, rehabilitative, palliative or long-term care) including all medicines, vaccines and other pharmaceutical preparations as well as all health products, from any type of provider and for all members of the household. These health expenditures are characterized by a direct payment that are financed by a household’s income (including remittances), savings or loans but do not include any third-party payer reimbursement. They are labelled Out-Of-Pocket (OOP) payments in the classification of health care financing schemes (HF) of the international Classification for Health Accounts (ICHA)

Denominator

Expenditure on household consumption and household income are both monetary welfare measures. Household consumption is a function of permanent income, which is a measure of a household’s long-term economic resources that determine living standards. Consumption is generally defined as the sum of the monetary values of all items (goods and services) consumed by the household on domestic account during a reference period. It includes the imputed values of goods and services that are not purchased but procured otherwise for consumption.

The following disaggregation is possible in so far as the survey has been designed to provide representative estimates at such level:

• Gender and age of the head of the household;
• Geographic location (rural/urban);
• Quintiles of the household welfare measures (total household expenditure or income)

Population weighted average number of people with large household expenditure on health as a share of total household expenditure or income.

where i denotes a household, 1() is the indicator function that takes on the value 1 if the bracketed expression is true, and 0 otherwise, mi corresponds to the number of household members of i, corresponds to the sampling weight of household i,  is a threshold identifying large household expenditure on health as a share of total household consumption or income (i.e. 10% and 25%).

Policy-makers need to rely on accurate and reliable out-of-pocket expenditure estimates. Household expenditure surveys were originally designed to measure consumer price index, living standards and household consumption for the national accounts, but not to measure out-of-pocket expenditure.  Ministry of Health could use this indicator to help track the flow of funds at selected validation sites, as is done for the Medical Expenditure Panel Survey of the United States of America. This exercise would capture expenditure outflows from households to all health-care platforms in the community, including hospitals, clinics and pharmacies, and would provide a “gold standard” estimate of out-of-pocket expenditure that could then be used to adjust existing household survey.

• Indicator 3.8.2 suffers from challenges of timeliness, frequency, data quality and comparability of surveys.
• Indicator 3.8.2 attempts to identify financial hardship that individuals face when using their income, savings or taking loans to pay for health care. However, most household surveys fail to identify the source of funding used by a household who is reporting health expenditure.
• Indicator 3.8.2 relies on a single cut-off point to identify what constitutes ‘large health expenditure as a share of total household expenditure or income’. People just below such threshold are not taken into account, which is always the problem with measures based on cut-offs.
• Indicator 3.8.2 is based on measures of ex-post spending on health care. Low levels of spending could be driven by measurement errors due to both non-sampling errors such as a very short recall period that does not allow the collection of information on health care requiring an overnight stay; or sampling errors such as over-sample of areas with a particularly low burden of disease. No spending could also be due to people not being able to spend anything on healthcare.

All the metadata shown in this document was gathered from United Nation Statistics Division. The metadata was extracted from https://unstats.un.org/sdgs/metadata/.