Economic Burden of Chronic Ill Health and Injuries for Households in Low- and Middle-Income Countries

The World Health Report 2000: Health Systems: Improving Performance (WHO 2000); the World Health Organization (WHO) resolution on sustainable health financing, universal health coverage, and social health insurance (WHO 2005); and the World Health Report: Health Systems Financing: The Path to Universal Coverage (WHO 2010) all highlighted the substantial economic burden faced by individuals with no access to affordable, high-quality health care. These reports placed the need to address the economic effect of illness—in particular, catastrophic and impoverishing health expenditure—on the global health policy agenda.

Financial protection—a core element of universal health coverage—aims to ensure that people receive the health care services they require without facing financial ruin (WHO 2010). Devising strategies to protect populations from financial risk has become a major focus of global health policy development (WHO and World Bank 2014).

Affordable access to high-quality health care is now considered a basic human right and a critical step to the achievement of sustainable economic and social development and the elimination of poverty (Sustainable Development Solutions Network 2014; WHO 2015). This imperative is reflected in the third Sustainable Development Goal, which sets a target for achieving universal health coverage, including financial risk protection; access to high-quality essential health care services; and access to safe, effective, high-quality, and affordable essential medicines and vaccines for all (UN General Assembly 2015). This commitment is echoed in the World Bank’s recent call to eradicate impoverishment owing to health care expenditures by 2030 (Kim 2014).

A lack of both prepayment mechanisms and the means and resources to pool risks has limited the capacity of many health care systems to provide access to high-quality health care services. As a result, for decades, many health systems, particularly in low- and middle-income countries (LMICs), have relied heavily on private payments in the form of out-of-pocket costs to fund health care. In 2014, 18 percent of total health expenditure globally came from out-of-pocket payments (WHO 2014). The burden is even greater in LMICs. In 2014, out-of-pocket payments equaled approximately 39 percent of total health expenditure for low-income countries, 56 percent for lower-middle-income countries, and 30 percent for upper-middle-income countries (WHO 2016).

Relying on out-of-pocket costs to finance health care is both inefficient and inequitable and places a major financial strain on individuals and households (WHO 2010). Out-of-pocket costs can perpetuate poverty and lead many individuals to delay or forgo necessary care (Peters and others 2008; van Doorslaer and others 2006). This link, where the household’s investment in health further impoverishes that household, can lead to a continuous cycle of poor health and poverty (Knaul, Wong, and Arreola-Ornelas 2012).

This burden is of particular concern for persons with chronic diseases, for whom repeated and lifelong costs are associated with the management and treatment of illness (Kankeu and others 2013). For example, in some countries, a household may have to pay as much as eight days’ worth of wages to purchase one month’s supply of only one of the multiple medicines required for the optimal treatment of cardiovascular disease (CVD) or diabetes (Cameron and others 2009; Gelders and others 2006). In more extreme cases, the costs of treatment for chronic and long-term conditions such as human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and surgery for some cancers have kept patients confined to hospitals indefinitely pending payment to the hospitals or forced them to stop treatment altogether (Human Rights Watch 2006). Although households, even those that are already impoverished, may be able to manage a one-time shock and recover in the short run (for example, over a period of a week or a month), they may not be able to withstand the ongoing costs of treatment for chronic diseases.

Furthermore, LMICs are undergoing a protracted epidemiological transition (Frenk and others 1989). Underfunded and weak health systems continue to face a backlog of acute diseases and conditions associated with poverty, together with the onslaught of costly and chronic noncommunicable diseases (NCDs), conditions that affect the entire population at all income levels. This situation inevitably results in competing priorities about which services to include in essential packages of care and which to cover through national insurance funds (Beaglehole and others 2011). However, evidence is lacking on the household-level economic burden associated with certain categories of disease, particularly chronic diseases. Such evidence would inform global health policy development by highlighting where the greatest gains in financial protection might be realized (Shrime and others 2015) and help governments prioritize the measures needed to move toward universal health coverage.

This chapter estimates the burden of catastrophic health expenditure (CHE) associated with chronic ill health and injuries in LMICs and describes the broader economic effects on households. It is organized as follows. We begin by estimating the population-level burden of CHE—the most common indicator of the household economic burden of health expenditure—and draw on empirical research of specific chronic diseases and injuries to estimate the prevalence of CHE associated with seven categories of conditions: cancers, CVDs, chronic infectious diseases, endocrine diseases, injuries, renal diseases, and respiratory diseases. We then draw on a review of NCDs in LMICs to describe the broader household economic effects associated with ill health, including impoverishing health expenditure, productivity effects, distressed financing, and treatment discontinuation. We discuss implications of the results for improving financial protection and offer directions for future research.