Overview of the main methods used for estimating catastrophic health expenditure

Abstract

Out-of-pocket payments are expenditures borne directly by an individual/household for health services that are not reimbursed by any third-party. Households can experience financial hardship when the burden of such out-of-pocket payments is significant. This financial hardship is commonly measured using the “catastrophic health expenditure” (CHE) metric. CHE has been applied as an indicator in several health sectors and health policies. However, despite its importance, the methods used to measure the incidence of CHE vary across different studies and the terminology used can be inconsistent. In this paper, we introduce and raise awareness of the main approaches used to calculate CHE and discuss critical areas of methodological variation in a global health context. We outline the key features, foundation and differences between the two main methods used for estimating CHE: the budget share and the capacity-to-pay approach. We discuss key sources of variation within CHE calculation and using data from Ethiopia as a case study, illustrate how different approaches can lead to notably different CHE estimates. This variation could lead to challenges when decisionmakers and policymakers need to compare different studies' CHE estimates. This overview is intended to better understand how to interpret and compare CHE estimates and the potential variation across different studies.

The economic burden of zoonoticPlasmodium knowlesimalaria on households in Sabah, Malaysia compared to malaria from human-onlyPlasmodiumspecies

“…Alternatively, households may deplete savings, take funding for schooling, sell cash crops or animals or incur other forms of significant debt, collectively contributing to a possible long-term detrimental household debt-cycle [1]. Many of these factors may be further exacerbated if occurring in conjunction with a limited household savings buffer, including a lack of cash flow for those reliant on subsistence farming, for which selling assets such as land or changing agricultural practices to prioritize growing of higher risk cash crops may therefore further jeopardize future household earning potential or stability [27,44]. Households with lower socio-economic status have been found to be at a higher risk of having malaria, [24] indicating the inequitable these households bear.…”

Financial hardship among patients suffering from neglected tropical diseases: A systematic review and meta-analysis of global literature

“…Although there is no consensus regarding the estimation approach and thresholds in quantifying CHS, it is important to note that these differences can significantly impact the findings and consequently impact the applications and implications of the findings [ 6 , 28 ]. We found that CHS was variedly defined across studies in terms of estimation approach, types of costs, thresholds, timeframe, household resources, and perspective.…”

“…However, some studies considered certain types of direct non-medical costs (e.g., transportation, food, and accommodation costs) and indirect costs (e.g., productivity and income losses) when quantifying financial hardship. Some studies also included informal care costs, such as traditional medicine, as OOP costs [ 6 ]. Thus, our systematic review categorized costs extracted from the eligible studies as direct costs (OOP costs) and indirect costs.…”

“…CHS is the proportion of households with OOP costs incurred by a specific disease that exceed a specific threshold of the total household income or expenditure (budget share approach) or non-subsistent household expenditure (capacity-to-pay approach). Impoverishment is when the OOP costs push households below the poverty line [ 4 – 6 ]. CHS and impoverishment are well-established indicators for the financial risk protection of the healthcare system, which was an essential dimension of the UHC as indicated under the SDG 3.8.2 indicators [ 1 , 7 ].…”

An analysis of financial protection and financing incidence of out-of-pocket health expenditures in Kazakhstan from 2018 to 2021

“…The two main methods used to measure the incidence of CHE are the budget share approach and the ability to pay approach. Our study used the Budget Share Approach (or baseline approach) used by World Bank researchers 18 . CHE were defined as occurring when OOP exceed a share of 10% and 25% of the total household income.…”