Catastrophe and impoverishment in paying for health care: with applications to Vietnam 1993–1998

TLDR

In Vietnam, 80% of health spending was paid out‑of‑pocket in 1998, underscoring the study’s relevance. The study aims to develop and compare two threshold‑based indices for measuring catastrophic health payments and their poverty impact in Vietnam. The authors construct indices for catastrophic payments and poverty impact, then apply them to Vietnam’s 1993 and 1998 out‑of‑pocket payment data. Between 1993 and 1998, Vietnam experienced a decline in both the incidence and intensity of catastrophic payments and their poverty impact, with reductions less concentrated among the poor and driven mainly by worsening poverty among existing poor rather than new poor households or inpatient costs.

Abstract

This paper presents and compares two threshold approaches to measuring the fairness of health care payments, one requiring that payments do not exceed a pre-specified proportion of pre-payment income, the other that they do not drive households into poverty. We develop indices for 'catastrophe' that capture the intensity of catastrophe as well as its incidence and also allow the analyst to capture the degree to which catastrophic payments occur disproportionately among poor households. Measures of poverty impact capturing both intensity and incidence are also developed. The arguments and methods are empirically illustrated with data on out-of-pocket payments from Vietnam in 1993 and 1998. This is not an uninteresting application given that 80% of health spending in that country was paid out-of-pocket in 1998. We find that the incidence and intensity of 'catastrophic' payments - both in terms of pre-payment income as well as ability to pay - were reduced between 1993 and 1998, and that both incidence and intensity of 'catastrophe' became less concentrated among the poor. We also find that the incidence and intensity of the poverty impact of out-of-pocket payments diminished over the period in question. Finally, we find that the poverty impact of out-of-pocket payments is primarily due to poor people becoming even poorer rather than the non-poor being made poor, and that it was not expenses associated with inpatient care that increased poverty but rather non-hospital expenditures.