REVISION OF CONVENTIONAL METRICS
At the time of our observations, the conventional paradigm of catastrophic spending was based on two primary metrics, catastrophic and impoverished spending. Both methods measure percentage of out-of-pocket health spending in households’ overall spending, differing in how medical spending is deemed problematic: catastrophic spending is above a threshold percentage, impoverishing spending pushes a household below the poverty line.
We conducted a study focusing on revision of these metrics –(i) assessing out-of-pocket spending among those with chronic illnesses; (ii) estimating out-of-pocket spending burden ratio using household equivalent income from the Organization for Economic Co-operation and Development Equivalence Scale; (iii) protection inadequacies for lower income individuals; and (iii) measures of illness vulnerability, such as the number of chronic conditions.
We found that lower income groups paid disproportionately more of their incomes on out-of-pocket health care spending compared with higher income groups. We also found that low-income individuals with multiple
chronic conditions were particularly vulnerable.
This study, along with our earlier studies of differences in health care utilization by ability to pay, of different degrees of financial protection and coverage, namely under-insurance and un-insurance, and our Lancet critique of the conventional approach for failing to capture cost barriers to access increased our understanding of the problem.
Limitations of conventional metrics include: (i) failure to capture cost barriers to access; (ii) differences in health care utilization by ability to pay; (iii) protection inadequacies for lower income individuals; (iv) measures of illness vulnerability; (v) different degrees of financial protection and coverage (underinsurance); (vi) informal treatment payments; (vii) debt financing of health spending; (viii) reduced consumption of other household necessities (e.g., food, education, housing, utilities); (ix) indirect costs of illness (income loss due to risk of or actual poor health); and (x) coping strategies. These factors are included in the financial protection profile we developed.
Conventional methodologies, even in their revised versions, remain too narrow and unidimensional to fully capture the breadth of health costs or the detrimental financial consequences of health needs. Thus, we developed an alternative financial protective framework.