Health Systems and Policy Research

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Catastrophic Health Expenditure among Developing Countries

Sharifa Ezat Wan Puteh, Yasmin Almualm

Catastrophic health expenditure (CHE) occurs when medical cost is equal or exceeding 40% of a household’s non-Poverty and poor health are common consequences of CHE and vice versa. CHE occurs in the form of out of pocket spending on healthcare. Poverty, type of illness, lack of health insurance all contribute to CHE. Health financing mechanisms are the mainstay to appropriate use of healthcare services and to reduce the overdependence on out of pocket payment. When there are no financial barriers to access healthcare then CHE can be prevented and universal coverage can be achieved. In order to do that, governments should implement prepayment mechanisms in the form of social health insurance to pool risk across the population. Unlike private health insurance, enrollment in social health insurance is compulsory and contributions are based on a person’s income and not his health status.