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Indicator Name, Target and Goal

Indicator 3.8.2: Proportion of population with large household expenditures on health as a share of total household expenditure or income

Target 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all

Goal 3: Ensure healthy lives and promote well-being for all at all ages

Definition and Rationale

Definition:

This indicator is defined as the proportion of population that spends a large portion of the total household income or expenditure on health-related expenditures. Two thresholds are used to define “large household expenditures on health” – (1) greater than 10%; and (2) greater than 25% of total household expenditure or income. 

Concepts:

Health-related expenditure is defined as any expenditure incurred at the time of service use to get any type of care (promotive, preventive, curative, rehabilitative, palliative or long-term care) including all medicines, vaccines and other pharmaceutical preparations as well as all health products, from any type of provider and for all members of the household. These health expenditures are characterized by a direct payment that are financed by a household’s income (including remittances), savings or loans but do not include any third-party payer reimbursement. Direct health care payments are labelled Out-Of-Pocket (OOP) payments in the classification of health care financing schemes (HF) of the international Classification for Health Accounts (ICHA). OOP health expenditures are the most unequitable source of funding for the health system because directly related to the underlying severity of the health condition (the sicker spend more), based solely on the ability to pay of the household (no pooling is possible), lead to service delivery only if the individual pays. 

The components of a household’s health care consumption expenditure so defined should be consistent with division 06 of the UN Classification of Individual Consumption According to Purpose (COICOP 2018) and include expenditures on medicines and medical products (06.1), outpatient care services (06.2), inpatient care services (06.3) and other health services (06.4). 

Expenditure on household consumption is a monetary welfare measure. It is generally defined as the sum of the monetary values of all items (goods and services) consumed by the household during a reference period. It includes the imputed values of goods and services that are not purchased but procured otherwise for consumption.

Household income is also a monetary welfare measure. The most relevant measure of income is disposable income as it is close to the maximum available to the household for consumption expenditure during the accounting period. Disposable income is defined as total income less direct taxes (net of refunds), compulsory fees and fines. Total income is generally composed of income from employment, property income, income from household production of services for own consumption, transfers received in cash and goods, transfers received as services.

Expenditure on household consumption is the recommended monetary welfare measure.

Rationale and Interpretation:

The target of this indicator calls for granting access to healthcare based on health needs and not the household’s capacity to pull together all its financial resources to meet the health needs of its members. Therefore, this indicator attempts to identify those people who need to devote a substantial share of their total household expenditure or income (budget) to health care. Some direct payments might be needed to access healthcare but no one, at whatever income level, should have to choose between spending on health and spending on other basic goods and services such as education tuitions, food necessities, housing and utilities. This is then a way to assess the extent to which health systems lead to financial hardship. 

Data Sources and Collection Method

The recommended data sources for the monitoring of this indicator are household surveys with information on both household consumption expenditure on health and total household consumption expenditures, which are routinely conducted by national statistical offices (NSOs). Household budget surveys (HBS) and household income and expenditure surveys (HIES) typically collect these as they are primarily conducted to provide inputs to the calculation of consumer price indices or the compilation of national accounts. 

Another potential source of information is socio-economic or living standards surveys; however, some of these surveys may not collect information on total household consumption expenditures – for example, when a country measures poverty using income as the welfare measure. The most important criterion for selecting a data source to measure this indicator is the availability of both household consumption expenditure on health and total household consumption expenditures. 

Income is more difficult to measure accurately due to its greater variability over time. Consumption is less variable over time and easier to measure. It is therefore recommended that whenever there is information on both household consumption and income the former is used.

Method of Computation and Other Methodological Considerations

Computation Method:

The following formula can be used for calculating the population weighted average number of people with large household expenditure on health as a share of total household expenditure or income:

 

where i denotes a household, 1() is the indicator function that takes on the value 1 if the bracketed expression is true, and 0 otherwise, mi corresponds to the number of household members of i,  corresponds to the sampling weight of household i, is a threshold identifying large household expenditure on health as a share of total household consumption or income (i.e. 10% and 25%). 

Comments and limitations:

This indicator attempts to identify financial hardship that individuals face when using their income, savings or taking loans to pay for health care. However, most household surveys fail to identify the source of funding used by a household who is reporting health expenditure. In countries where there is no retrospective reimbursement of household spending on health this is not a problem. But in those countries where there is retrospective reimbursement – for example, via a contributory health insurance scheme - the amount reported by a household on health expenditures might be totally or partially reimbursed at some later point, perhaps outside the recall period of the household survey. 

This indicator relies on a single cut-off point to identify what constitutes ‘large health expenditure as a share of total household expenditure or income’. People just below or above such thresholds are not taken into account, which is always the problem with measures based on cut-offs. By plotting the cumulative distribution function of the health expenditure ratio, it is possible to identify the proportion of the population that is devoting any share of its household’s budget to health for any threshold. 

Low values of this indicators can be driven by people’s inability to spend anything on heatlh which, at least for the services that are included in 3.8.1, should result in low levels of coverage. This is why both indicators 3.8.1 and 3.8.2 should be monitored jointly. 

This indicator can experience measurement errors due to both sampling and non-sampling errors. The definition of this indicators suggests that the monetary welfare measure can be based on an income approach or a consumption expenditure one. But recent evidence suggests that this choice has implications for the measurement of inequalities. Income-based measures show a greater concentration of the proportion of the population with large household expenditure on health among the more worse-off than expenditure-based measures. 

Proxy, alternative and additional indicators: N/A

Data Disaggregation

This indicator can be disaggregated by gender and age of the head of the household, geographical location (rural/urban), and quintiles of the household welfare measures (total household expenditure or income). 

References

Official SDG Metadata URL
https://unstats.un.org/sdgs/metadata/files/Metadata-03-08-02.pdf 

Internationally agreed methodology and guideline URL
http://www.who.int/health_financing/topics/financial-protection/monitoring-sdg/en/; http://datatopics.worldbank.org/universal-health-coverage/  

Other references:
“Tracking universal health coverage: 2017 global monitoring report”, World Health Organization and International Bank for Reconstruction and Development/  The World Bank; 2017. Available at: http://www.who.int/healthinfo/universal_health_coverage/report/2017/en/http://www.worldbank.org/en/topic/universalhealthcoverage/publication/tracking-universal-health-coverage-2017-global-monitoring-report

Wagstaff, A., Flores, G., Hsu J., Smitz, M-F., Chepynoga, K., Buisman, L.R., van Wilgenburg, K.  and Eozenou, P.,  (2018), “Progress on catastrophic health spending in 133 countries: a retrospective observational study”, the Lancet Global Health, volume 6, issue 2, e169-e179.  Available at:     http://dx.doi.org/10.1016/S2214-109X(17)30429-1

World Bank (2008). Analyzing health equity using household survey data. Chapter 18. Washington, D.C. Available at: http://www.worldbank.org/en/topic/health/publication/analyzing-health-equity-using-household-survey-data 

OECD (2011). A System of Health Accounts. Paris. Available at: http://www.oecd-ilibrary.org/social-issues-migration-health/a-system-of-health-accounts/classification-of-health-care-financing-schemes-icha-hf_9789264116016-9-en

UN Statistics Division. Division 06 of the UN Classification of Individual Consumption According to Purpose (COICOP-2018). New York. Internet site: https://unstats.un.org/unsd/class/revisions/coicop_revision.asp

Information on other measures of financial protection available at: Global level ; WHO-regional office for Europe; WHO-regional office for the Eastern Mediterranean ; WHO-regional office for the South East Asia

Country examples
N/A

International Organization(s) for Global Monitoring

This document was prepared based on inputs from World Health Organization (WHO).

For focal point information for this indicator, please visit https://unstats.un.org/sdgs/dataContacts/

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