Catastrophic health spending, fourth quintile

Definition: the share of households with out-of-pocket payments greater than 40% of capacity to pay for health care. Capacity to pay for health care is defined as total household consumption minus a standard amount to cover basic needs (food, housing and 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.

Measure note: catastrophic health spending occurs when the amount a household pays out of pocket exceeds a predefined share of its capacity to pay for health care. This may mean the household can no longer afford to meet other basic needs (for example, food, housing, water, electricity and fuel for cooking and heating) or cannot afford to meet basic needs without drawing on savings, selling assets or borrowing. Capacity to pay for health care can be defined in different ways (see information under Denominator).

Numerator: out-of-pocket payments, 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.

Denominator: using this metric, a household’s capacity to pay for health care is defined as per adult equivalent total household consumption minus a standard amount to cover basic needs. The standard amount 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. This standard amount is also used as a poverty line (basic needs line) to measure impoverishing health spending.

Disaggregation: results are disaggregated into household quintiles by consumption per person using OECD equivalence scales. 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).