Health financing for universal coverage

Distribution of health payments and catastrophic expenditures: methodology

Discussion paper, Number 2/2005

World Health Organization

Publication details

Number of pages: 10
Publication date: 2005
Languages: English, French, Spanish
WHO reference number: EIP/HSF/DP.05.2



Health systems deliver health services, preventive and curative, that can make a substantial difference to peoples’ health. However, accessing these services can lead to individuals having to expend catastrophic proportions of their available income, and some households are pushed into poverty as a result. Furthermore, because of these negative impacts some households forgo health services and suffer ill health.

The fairness of health financing is a subset of the three main goals of health systems; good health, responsiveness, and fairness of financial contribution. Fairness in financial contribution and protection against financial risk is based on the notion that every household should pay a fair share. What constitutes a fair share depends on people’s normative expectations as to how health systems are financed.

Nevertheless, in all countries, fairness in financial contribution embraces two critical aspects; that of risk pooling between the healthy and the sick and risk sharing across wealth and income levels. Risk pooling denotes the premise that the contributions for those that are healthy pay for the care of those that are sick, so that individuals who become sick are not struck by a double burden of sickness and financial costs of health care.

Over the life span, each individual is likely to benefit from the financial security of risk pooling when she or he becomes sick. Risk sharing, while similar, refers to the premise that fairness does not mean equal contributions from all, regardless of income or wealth, but that contributions are greater from those who have more financial resources. In practical terms, embedding these notions of fairness in financing is a step towards preventing the catastrophic expenditure of households when one of the members becomes ill.

Health policy makers have long been concerned with protecting people from the possibility that ill health will lead to catastrophic financial payments and subsequent impoverishment.

This report will address the following questions:

  • Who uses what type of health services?
  • Who pays how much and for what kinds of health services?
  • How do these payments impact on a household’s financial situation?
  • What kinds of households are more likely to face catastrophic expenditure?