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Improving the Measurement of Financial Protection in Health Systems

Learn about improving financial protection measurement in health systems by examining household living standards, catastrophic spending, impoverishing spending, and tools like Data Envelopment Analysis (DEA) to assess efficiency. Enhance conventional FP indicators, explore new metrics, and address financial barriers for sound health policy decisions.

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Improving the Measurement of Financial Protection in Health Systems

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  1. Improving the Measurement of Financial Protection in Health Systems Dr Rodrigo Moreno-Serra Centre for Health Policy, Imperial College London r.moreno-serra@imperial.ac.uk PCPH, Imperial College London, 5th October 2011

  2. Background • Financial protection (FP): extent to which people are protected from the financial consequences of illness • Key objective of health care (HC) systems, multidimensional • Financial hardship and lack of access to HC due to costs still widespread (WHR 2010) • FP may suffer in a context of economic downturn • Monitoring FP is crucial for sound health policy

  3. FP measurement: where are we? • Focus on households’ living standards before and after direct payments for health (OOPs) • OOPs reported in household surveys Catastrophic spending • OOPs cross set threshold in terms of share of disposable income Impoverishing spending • OOPs push household income below a chosen poverty line

  4. FP metrics: criticisms • Measurement of capacity to pay, effects of lost income etc... • Effect of financial barriers to access: the elephant in the room • Ability to pay may deter access to necessary HC • Linked to equity but indicator of FP extent • Sole focus on incurred spending may provide misleading picture of FP

  5. Catastrophic spending incidence and DTP3 immunization coverage among 1 year-olds, 87 countries (various years) Source: Immunization data from WHO. Catastrophic spending incidence data from Xu et al. (2007). Financial catastrophe is defined as OOPs for health reaching at least 40% of a household’s non-subsistence income.

  6. Financial barriers to access in high-income countries with low incidence of financial catastrophe Source: IHPS, Commonwealth Fund (Schoen et al. 2010).

  7. Financial Protection Measures: Suggested Areas for Development

  8. I. Complementing conventional FP indicators • Coverage indicators • WHR 2010 • Generally feasible route • But often limited information available • Role of various other determinants of coverage levels • Access surveys • E.g., IHPS (Commonwealth Fund), World Health Surveys (WHO), LSMS (World Bank) • Need implementation on routine and comparable basis

  9. II. Improving conventional FP indicators • ‘Need-adjusted’ FP metrics • Estimate expected utilization and OOPs according to ‘medical need’ characteristics • Adjust catastrophic and impoverishing spending incidence (expected incidence) • May yield very different policy conclusions from conventional analysis (e.g., Pradhan and Prescott 2002) • But methodologically challenging

  10. III. An exploratory tool: Data Envelopment Analysis (DEA) • Based on economic concept of production frontier • Through linear programming, find units that achieve same (or better) outputs at lower use of inputs • Efficiency = actual/optimal performance (OQA/OQ1) • Can examine efficiency based on multiple outputs (e.g., FP indicators) and inputs

  11. DEA applied to FP assessment • Question: How do developing countries compare concerning efficiency in ‘producing’ FP given available resources (constraints)? • Criteria for efficiency analysis: FP indicators relative to total health spending (THE) per capita (input orientation) • Gets at the issue of achievable FP performance

  12. DEA applied to FP assessment

  13. DEA applied to FP assessment

  14. Concluding remarks • Financial barriers: distorting effects on conventional FP assessments • Despite recent progress, we need better FP metrics for: • Policy guidance • International performance comparisons • Huge potential gains from a health policy perspective

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