CATA Meets IMPOV: A Unified Approach to Measuring Financial Protection in Health

41 Pages Posted: 20 Apr 2016

See all articles by Adam Wagstaff

Adam Wagstaff

World Bank - Development Research Group (DECRG)

Patrick Hoang-Vu Eozenou

World Bank - Health, Nutrition and Population

Date Written: May 1, 2014

Abstract

Up to now catastrophic and impoverishing payments have been seen as two alternative approaches to measuring financial protection in health. Building on the previous literature, the authors propose a unified methodology in which impoverishing and catastrophic payments are mutually exclusive outcomes. They achieve this by expressing out-of-pocket payments as a ratio of' discretionary' consumption, defined as the amount by which total consumption (gross of out-of-pocket payments) exceeds the poverty line. This allows the authors to identify both households who are impoverished by out-of-pocket payments (their ratio exceeds one) and households who are pushed even further into poverty by out-of-pocket payments (their ratio is negative); the authors call such payments' immiserizing'. Households experiencing' catastrophic' payments are a subset of those who incur out-of-pocket payments but who are neither impoverished nor immiserized by them. Two alternative definitions of catastrophic payments are offered: those that absorb more than a pre-specified fraction of discretionary consumption; and those that leave a household's nonmedical consumption (total consumption net of out-of-pocket spending) below a pre-specified multiple of the poverty line. The authors also offer a simple financial protection index that reflects the percentages of households incurring immiserizing, impoverishing, catastrophic, non-catastrophic, and zero out-of-pocket payments. They illustrate their unified approach with data from the World Health Survey, using international poverty lines and a catastrophic payment threshold of 40 percent.

Keywords: Regional Economic Development, Rural Poverty Reduction, Economic Theory & Research, Consumption, Health Systems Development & Reform

Suggested Citation

Wagstaff, Adam and Eozenou, Patrick, CATA Meets IMPOV: A Unified Approach to Measuring Financial Protection in Health (May 1, 2014). World Bank Policy Research Working Paper No. 6861. Available at SSRN: https://ssrn.com/abstract=2434346

Adam Wagstaff

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/awagstaff

Patrick Eozenou

World Bank - Health, Nutrition and Population ( email )

United States

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