Financial Risk in a Health System: The Impact of Direct Out-of-Pocket Spending on Households in Uganda

Abstract

Out-of-pocket payments for healthcare not only limit access to healthcare but also negatively affect household welfare. It has been argued that assessment of health system performance with regards to protecting households from financial risk due to out-of-pocket payments should not only address equity concerns that arise with regards to quantifying financial risk but should also identify households that are most vulnerable to that risk. This study assesses the extent and intensity of financial risk due to out-of-pocket payments in Uganda and also identifies households that are most vulnerable to that risk.Results indicate that households in Uganda generally lack financial protection. For instance, 22.8% of all households spend over 10% of their total household consumption expenditure paying out-of-pocket for health care. The mean excess payment above the 10% threshold for those that exceed it is equal to 11% of that threshold. Furthermore, 4.3% Ugandans are impoverished due to out-of-pocket health payments representing a 17.6% rise in poverty headcount (from 24.5% to 28.7%). Households with a member aged above 65 years or a member aged below five years were found to have a higher likelihood of incurring both catastrophic payments and impoverishment. While the utilisation of both public and private health facilities were both associated with a high likelihood of financial risk, this risk was higher among households that used private facilities.There is a need for concerted efforts aimed at reducing the level of out-of-pocket payments for health care in Uganda. This is achievable by adopting mandatory prepayment mechanism to finance health care. Initiatives for reducing out-of-pocket payments should target the most vulnerable households as identified in the study.