Direct payments for healthcare in Uganda's health system: Effects on household welfare.
Kagarura, Willy Rwamparagi
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Uganda heavily relies on Out-of-Pocket payments to finance its healthcare yet evidence from literature indicates that at high proportions of gross household expenditure this negatively affects household welfare. The study aimed at analysing the effect of Out-of-Pocket payment on household welfare in Uganda in general. Specifically the study was to establish the extent and distribution of catastrophic expenditure among different income groups, the main determinants of catastrophic health expenditure, the household coping mechanisms and the effect of Out-of-Pocket on welfare using poverty as a proxy. It was hypothesised that catastrophic Out-of-Pocket was more concentrated among the poor and rural households, depends on household socioeconomic characteristics and type of health facility used, displaces other household expenditures and leads to an increase in household poverty. The study utilised the Uganda national Household Survey data of 2005/6 and STATA to estimate the probability of incurring catastrophic health expenditure for the whole data set and for different socioeconomic groups. Further, determinants were analysed by the multinomial representation of spending less than 10%, more than 10% and did not spend on health; against social economic characteristics of the households and type of facility used. The principle of the Engel curve was used to establish the effect of catastrophic expenditure on other household expenditures with the main hypothesis that food is always protected from health expenditure but others like education and housing negatively affected. Finally, the effect of health expenditure on welfare was estimated using the differences in the poverty headcount ratios with and without health expenditure. The national catastrophic headcount ratio was found to be 19.33% (28.08% after adjusting for zero expenditure) and to exist among all socioeconomic groups though at varying degrees but was more among rural households and the non-poor. Main determinants include income levels, income grouping, nature of health facility, household size, transport costs, education levels, age, marital status and gender of household head. The household expenditure on food is protected while education, housing and other expenditures reduce with catastrophic health expenditure. Finally, health expenditure increases household poverty by 5.81% or reduces welfare by the same percentage. The poverty gap was increased by 432 Shillings on average and this was 7,146 Shillings at the maximum representing more than 10% increases in some instances. The study recommends that government institutes plans to protect the population against catastrophic expenditure through providing free universal healthcare for all or at worst facilitate the establishment of prepaid schemes at all levels. Full facilitation of health facilities in the country was recommended in addition to instituting programmes that can increase household income so as to raise their capacity to pay for healthcare. The proposal to establish the National Social Health Insurance Scheme should be effected without further delay or community based prepaid schemes could set a stage to the national health insurance drive in the country. Other proposals like rural development, family planning and control and education for all are recommended for review and reinvigoration. Finally, the methodology for computing poverty numbers should be adjusted to take care of health expenditure that may understate the poverty situation and misinform policy. The study will be valuable to health planners and other policy makers in designing social health insurance and other prepaid schemes that aim to protect the population against the effects direct out-of-pocket health expenditure. Poverty analysts will also use the findings to decide on computation methodologies.