In most low-income countries, people pay a high proportion of their health costs directly to health care providers out of their own pockets. In 47 countries, out-of-pocket payments represent more than half of total health expenditures.
In most of the world’s wealthiest countries, individuals pay little out of pocket. In Germany, for example, where the GDP is $32,860 per capita, 11.3 percent of all medical expenses nationwide are borne by households and the rest by social health insurance or by the government. In the Democratic Republic of the Congo, by contrast, where GDP per capita is only $120, about 90% of the money spent on the health system is paid directly by households to providers.
High out-of-pocket payments for health care can have a variety of harmful effects. Some people are deterred from using health services or from continuing treatment because they cannot afford to pay. People who use services may need to cut spending on basic needs such as food, clothing, housing and children's education to meet health costs. Each year, approximately 150 million people experience financial catastrophe, meaning they are obliged to spend on health care more than 40 percent of the income available to them after meeting their basic needs. An additional 100 million people are driven below the poverty line.
The best approach is to develop a system through which people contribute to the health system before they are ill - through taxes, some form of insurance or some mix - then draw on services funded by these sources when they are ill rather than paying out of pocket for them. In general, the greater the extent of prepayment in overall health financing, the more are houseolds protected from financial catastrophe and impoverishment.
Estimates of how much is required to provide a basic package of health services vary from somewhere around $30 per person per year, up to $50. A recent paper suggested that low- and middle-income countries, governments and individuals would have to jointly contribute US$ 341 per person per year for essential preventive and curative services. US$ 11 to $25 would have to come from international donors.
WHO works with countries to help identify ways of moving away from a heavy reliance on out-of-pocket payments to prepayment. It provides information on best practices and technical support to countries engaged in this process. It also works with the international community to encourage help for recipient countries in developing and strengthening financial insitutions and capacities that will allow prepayment mechanisms to be successful.
1 Macroeconomics and Health: Investing in Health for Economic Development, World Health Organization 2001