Moreover, the proportion of the world’s population, which spent more than 10% of its household income on medical care, increased from 9.4% in 2000 to 12.7% in 2015, amounting to about US$927 million. Many studies have described out-of-pocket expenditure on health as catastrophic when it surpasses a certain threshold of a household’s consumption or income. According to World Health Statistics, out-of-pocket health expenses can create financial hardship by forcing people to choose between health expenses and other necessities. In developing countries, health care resources are inadequate to guarantee that all individuals have equal access to necessary health needs. Generally, improving health care systems through tolerable levels of out-of-pocket health expenditure is an inevitable step toward better health coverage and poverty reduction in many developing countries.Īs stated in the World Health Organization’s sustainable development goal 3.8, reaching universal health coverage and financial risk protection are important indicators to guarantee better healthy lives and higher well-being. Further, the sampled countries were divided into regions, according to the World Health Organization. For the lower-income groups, below the threshold for out-of-pocket health expenditure, it had a positive or insignificant effect on poverty reduction, while it led to higher poverty above the threshold. When heterogeneity was controlled for in the sample, using the World Bank income classification, the findings showed variations in the estimated threshold, with higher values for the low- and lower-middle-income groups, as compared to the high-income group. The results showed the validity of the estimated threshold models, indicating that only beyond the turning point, which was about 29 percent, that out-of-pocket health spending led to increased poverty. At the same time, out-of-pocket health expenditure was measured as a percentage of total health expenditure. Three indicators were adopted as poverty measures, namely the poverty headcount ratio, the poverty gap index, and the poverty gap squared index. The dynamic panel threshold method, which allows for the endogeneity of the threshold regressor (out-of-pocket health expenditure), was used. In particular, it was examined whether the relationship between out-of-pocket health expenditure and poverty was contingent on a certain threshold level of out-of-pocket health spending. The current study investigated the association between out-of-pocket health expenditure and poverty using macroeconomic data from a sample of 145 countries from 2000 to 2017.
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