Estimating Catastrophic Health Expenditures from Household Surveys: Evidence from Living Standard Measurement Surveys (LSMS)-Integrated Surveys on Agriculture (ISA) from Sub-Saharan Africa

BACKGROUND: Out of pocket (OOP) payments for healthcare remain a significant health financing challenge in sub-Saharan Africa (SSA). Understanding the drivers and impacts of this financial health burden is both an economic and a public health priority. OBJECTIVE: This study examines how the burden of OOP health expenditures varies with different thresholds for financial catastrophe. METHODS: The analysis is based on Livings Standards Measurement Surveys (LSMS)-Integrated Surveys on Agriculture (ISA) for five SSA countries—Ethiopia, Malawi, Nigeria, Tanzania, and Uganda. We estimate the degree by which OOP payments as share of total household non-food expenditures exceed either the 15 or 25% threshold. RESULTS: For the countries considered, the severity of OOP payments is substantial—the average positive overshoot (beyond the 25% threshold) is above 10%, except for Nigeria. This reflects a higher percentage of OOP in total household health expenditures—compared to taxes and contributions—especially among the poor in these specific countries. Regarding sensitivity of distribution of catastrophic health expenditures, we find that households with low non-food expenditures are more likely to incur catastrophic payments with the exception for Uganda where catastrophic payments increase with the increase of non-food household expenditures. CONCLUSION: The burden of catastrophic health expenditures remains large. In order to reduce this burden, public health expenditures need to be expanded as an alternative. This calls for renewed attention to expand public revenues as the most sustainable methods of financing health expenditures in Africa.