Who Pays More: Household Health Expenditure in Malaysia
Posted: 28 Jun 2007
Abstract
Rationale: One component of household health expenditure is that of direct out of pocket health spending by households on medical goods and services. These health expenditures in Malaysia include user fees paid for utilizing i) medical and dental services, or ii) hospital services and treatment, and over the counter (OTC) payments to purchase iii) medical and pharmaceutical products, or iv) therapeutic appliances and equipment. One policy objective of health care financing is to finance health care according to Ability To Pay (ATP), which suggests that the rich should pay more than the poor. Malaysia has a two tier health care system provided by both public and private health facilities, which are likely to influence the user fees paid by households. Additionally, the pharmaceutical market offers a wide range of medical goods which determine the OTC payments. These variations in household health expenditure, in turn, are somewhat reflected by households' ATP.
Objective: This study aims to investigate the financial burden of health expenditure on households in Malaysia. It focuses on health spending incurred directly by households. Households are represented by ten ATP (consumption as the proxy) deciles.
Methods: The Household Expenditure Survey Malaysia 1998/99 dataset is used to undertake analyses. Analyses, employed at the population level, included i) descriptive analyses to reveal the magnitude of payers versus non payers; ii) logistic regression to examine the probability of incurring health expenditure (become payers), depending on ATP. Additionally, analyses were conducted on the subpopulation of payers only, which included iii) descriptive analysis to examine the distribution across ATP deciles and iv) ordinary least square (OLS) regression to investigate the relationship between the magnitude of health expenditure and ATP.
Results: Results showed that more than half (57.5%) of the population incurred health expenditure directly. The logistic regression estimated that there was an increased likelihood (odds ratio= 1.261, standard error= 0.039) of incurring health expenditure with log ATP. The odds of incurring health expenditure were 1.3 times higher for each RM 2.7 increase in ATP. For the subpopulation of payers (57.5% of the whole population), the payers spent a mean amount of RM 16.3 per month to purchase medical goods and services. Among the payers, a higher proportion of the richest decile (65.8% versus 48.2%) spent a higher proportion (3.5% versus 2.2%) of their ATP on health expenditure, compared to the poorest decile. OLS regression showed that there was a significant relationship between log health expenditure and log ATP. A 1% increase in ATP increased health expenditure by 0.9%, in which ATP explained about 21.9% of the variance in health expenditure.
Conclusions: The Malaysian experience has shown that households' ATP influenced their behaviour in seeking health services or purchasing medical goods, and as such, determined households' health expenditure. Policies of user fees can be implemented discriminately to prevent disproportionate financial burden on the vulnerable, whilst the diversity of the market for medical goods caters for consumers of different ATP.
Keywords: Health expenditure, ability to pay, user fees, over the counter payments
Suggested Citation: Suggested Citation