Impoverishing health spending

Definition: the share of households who are impoverished or further impoverished after out-of-pocket payments measured using a relative poverty line reflecting basic needs (food, housing, utilities).

Source: national household budget surveys for all countries except Denmark in 2010, 2015; Netherland in 2015; Sweden in 2006, 2007, 2008, 2009, 2012 for which Eurostat is the source.

Method of estimation: the share of households with impoverishing health spending corresponds to the sum of the share of households impoverished after out-of-pocket payments and the share of households further impoverished after out-of-pocket payments. A household is considered to be impoverished if its per adult equivalent consumption is above the poverty line before spending out of pocket and below it after spending out of pocket. A household can also experience impoverishing health spending if its consumption before spending out of pocket was already below the poverty line; it is further impoverished after spending out of pocket. Out-of-pocket payments are defined according to the International Classification for Health Accounts as formal and informal payments made at the time of using any health care good or service provided by any type of provider; including user charges (co-payments) for covered services and direct payments for non-covered services; and excluding any pre-payment in the form of taxes, contributions or insurance premiums and any reimbursement by a third party such as the government, a health insurance fund or a private insurance company. The poverty line is a country-specific relative poverty line (basic needs line) based on household spending to meet basic needs (food, housing and utilities). It is calculated as the average amount spent on food, housing (rent) and utilities (water, electricity and fuel used for cooking and heating) by households between the 25th and 35th percentiles of the household consumption distribution who report any spending on each item, respectively, adjusted for household size and composition using OECD equivalence scales. These households are selected based on the assumption that they are able to meet, but not necessarily exceed, basic needs for food, housing and utilities. Financial protection is measured at the level of the health system rather than at the level of different types of health care, diseases or patient groups. To fully understand progress towards universal health coverage, indicators of financial protection should be monitored jointly with indicators of service coverage and access to health services (where available).