Catastrophic and Impoverishing Health Spending and Financial Protection: Evidence from Mexico

Abstract

In many middle-income countries financial protection for health is segmented and fragmented, and hence inefficient and inequitable. These countries are also experiencing epidemiological and demographic transitions that place escalating pressures on health care finance -for both families and systems. An obvious symptom is that families face economic ruin and impoverishment from financing their health care through out of pocket payment.

To address these challenges, the 2003 structural reform of the Mexican health system extends financial protection by offering subsidized, publicly-provided health insurance - Popular Health Insurance -- to the 50-million Mexicans who lack social security and are concentrated among the poor. One of the key expected outcomes of the reform is a reduction in out-of-pocket, and especially catastrophic and impoverishing,health spending.

The first part of the anlaysis focuses on trends, spanning more than a decade, in the evolution of catastrophic and impoverishing health spending and the poverty gap from health spending. The econometric analysis considers differences among families with and without insurance coverage, including family composition, remittances, level of education, place of residence and insurance status. This part of the research is based on multiple rounds of the Mexican National Household Income and Expenditure Surveys spanning 1992 to 2005.

The second part of the research focusses on measurement issues by analyzing limitations in existing indicators of catastrophic and impoverishing health spending, and particularly differences across surveys. Using a one-year, longitudinal survey of a city, the study compares several over-time measures of household health spending.

The results highlight opportunities and challenges for health systems to reduce impoverishment and protect households during periods of individual and collective financial crisis. The work also suggests directions for future studies, many of which can be applied in the context of new, regional research iniatives.

Keywords: health spending, financial protection in health, health systems, health reform, Mexico

JEL Classification: I18, I32