Out-Of-Pocket Payment for Healthcare and Its Effects on Household Welfare in Rural and Urban Areas of Kenya
Rono, Gladys Jelagat
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Good health plays an important role in boosting economic growth, poverty reduction and the realization of social goals. However, the Survey of Health Care Utilisation and Expenditure of 2013 found that the high cost of health care was one of the major reason cited by households for not seeking health care. Moreover, out-of-pocket (OOP) payment for healthcare is the main source of health care financing in Kenya. OOP spending on outpatient care and inpatient services accounted for approximately 78 percent (KShs 48.4 billion) and 22 percent (KShs 13.7 billion) respectively of total household health expenditures. The consequences of OOP are regressive: they lead to catastrophic financial payment and impoverishment, especially among the poor and are a barrier to health care utilization. Regional differences in the incidence of poverty exist in Kenya, where 50.5 and 33.5 percent of rural and urban areas are poor. The objectives of this study were: to investigate the incidence of OOP payment for health care among different economic groupings; establish the level of inequity of OOP health expenditure among different economic groupings; examine the determinants of catastrophic OOP, establish the effect of catastrophic OOP payments for healthcare to households’; find out the households coping mechanism to OOP payments for healthcare. Household Survey data of Health Care Utilisation and Expenditure of 2013 was utilized by the study. Logit regression was estimated to predict the probability of catastrophic health expenditure in respect to the selected background indicators. This included social, economic and demographic indicators. To measure impoverishment due to OOP, two methods were adopted: poverty headcount and poverty gap. Engel curves were estimated to analyze the coping mechanisms to catastrophic health care expenditure. The results of the study showed that the poorest households in the rural and urban areas had the highest number of households experiencing catastrophic health expenditures than urban households. However, the burden of OOP payment for healthcare fell more on the rich. The results also showed that household size, income, mission hospital, and age of household member below 5 years, accidents/injuries, sex of household head, age of above 50, chronic illness, malaria, disease of respiratory, type of hospital, insurance status, and income were the factors determining catastrophic health care expenditure. The effect of OOP payment for healthcare on poverty head count was higher in urban areas than in rural areas. In addition, the average amount by which people go below poverty line because of OOP payment for healthcare, increased more in the urban areas compared to rural areas. Lastly, the results of the study showed that households were not able to smoothen their non-medical consumption in an event of catastrophic health care expenditure. From the findings of the study, there is need for the governments at both national and county levels to design health financing system that will protect poor households from catastrophic health payment. One way is to provide health insurance for the poor households.