What are the economic consequences for households of illness and of paying for health care in low- and middle-income country contexts?
Introduction
There has been recent interest in the household level economic impacts of illness and out-of-pocket expenditure on health care in low- and middle-income countries (LMICs). This is related to the growing empirical evidence that user fees at public facilities, and a growing reliance on private for-profit providers for whose services there are frequently direct payments, constitute a major financial burden on households. When combined with the costs of being unable to carry out normal activities due to ill-health, there can be catastrophic consequences for families, which may include falling into poverty or being pushed into deeper poverty. This is contributing to a critical re-evaluation of the health sector reforms that prevailed in LMICs over the past two decades.
There has been recent ‘backtracking’ on user fee reforms, with even the arch protagonist of user fees in the 1980s and 1990s, the World Bank, acknowledging that “Out-of-pocket payments for health services—especially hospital care—can make the difference between a household being poor or not” (Claeson et al., 2001) and indicating that alternative financing mechanisms such as insurance may be preferable. Another institution that has historically supported user fees, the US government, took a stand against donor imposition of fees when in its 2001 Foreign Appropriations Bill Report it required the US Congress to oppose any World Bank, IMF or other multilateral development bank loan which includes user fees for basic health or education services, and to report to Congress within 10 days if any loan or other agreement is approved which includes such fees (US Network for Global Economic Justice, 2003). There is also increasing international advocacy for the removal of fees, particularly at the primary health care level. For example, the British government's foreign aid organisation, the Department for International Development (DfID) is negotiating with governments in various African countries to abolish fees for primary health care while Save the Children has embarked on an advocacy initiative calling for free access to quality basic health services for all.
Despite this about-turn in donor prescriptions, or possibly even because they remain ‘one size fits all’ prescriptions by outsiders wishing to impose their will on indebted nations, many LMICs are resisting fee removal. There is a need both to coherently document the reasons underlying the call for a move away from out-of-pocket payment mechanisms, not only in the form of user fees at public sector facilities but also ‘forced’ use of private providers due to poor quality of publicly funded services such as unavailability of essential medicines, and to rigorously evaluate alternative health care financing mechanisms that can address the ‘resource gap’ in a sustainable way. This article attempts to contribute to the first issue by reviewing evidence on the household level impact of out-of-pocket payments, and indirect costs of illness.
While the focus in the literature reviewed has been on LMICs, these issues are of broader relevance as the older high-income countries are also starting to experience reforms of a similar nature. These include efforts to increase the role of the private health sector and to reduce government funding for social security systems, and a growth in out-of-pocket payments through increasing co-payments by members of health insurance schemes.
This paper is based on the findings of a detailed literature review on these issues, as part of the ‘Affordability Ladder Programme’ (ALPS). The overarching aim of the multi-country ALPS initiative is to develop and refine a policy analysis approach focusing on economic access to affordable and appropriate health care.
Section snippets
Methods
The aim of this review was to identify and assess, using an analytic framework, literature relating to the economic consequences of illness and payments for health care at the household level and household responses to these potential consequences.
Comprehensive searches of electronic databases were conducted on Medline; Social Science, Science and Humanities Citation Indices; Science Direct; Citation Index for Nursing and Allied Health Literature (Cinahl); and Social Science Abstracts. A range
Analytic framework
The framework presented in Fig. 1 was used to guide this critical review of LMICs’ emerging experience of the economic consequences of illness and paying for health care, whether in the form of user fees at public sector facilities or out-of-pocket payments to private providers. Given this focus, the preliminary stages in this figure, of illness experience and treatment seeking behaviour, are not considered here. However, it should be noted that these two issues are critically important in
Economic consequences
Direct and indirect cost estimates vary widely across different LMICs and, as indicated above, according to the methodology used for quantifying these costs in each study. Despite these variations, some key issues can be distilled from the review of this literature.
The total economic cost of illness for households was frequently above 10% of household income. For example, total household costs of malaria per year were as much as 18% of annual income in Kenya and 13% in Nigeria (Leighton &
Conclusions
LMIC experience overwhelmingly demonstrates that a health care financing strategy that places considerable emphasis on out-of-pocket payments, whether to public or private health service providers, can have serious economic consequences for households. There is growing evidence of households in LMICs being pushed into poverty when faced with substantial medical expenses, particularly when this is combined with a loss of income due to ill-health.
There is mounting international recognition that
Acknowledgements
The authors are grateful to Jane Chuma and to Vimbayi Mutyambizi for their assistance in locating many of the studies reviewed in this paper. All four authors were funded from a Rockefeller Foundation Grant as part of the ALPS on equity and health sector reforms in developing and developed countries. All researchers are independent of the funders.
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