Health systems provide adequate financial protection when payments for healthcare do not cause people financial hardship. A lack of financial protection can reduce access to healthcare, undermine health status, deepen poverty, and exacerbate health and socio‑economic inequalities. Poorer households and those who must pay for long-term treatment – such as medicines for chronic conditions – are particularly vulnerable. Whilst out-of-pocket (OOP) payments for healthcare often have a significant role in financing health systems, financial protection is weakened if a health system is over-reliant on OOP payments. On average across OECD countries, just under one‑fifth of all spending on healthcare comes directly from patients through OOP payments (see section on “Health expenditure by type of financing” in Chapter 7).
The share of household consumption spent on healthcare provides an aggregate assessment of the financial burden of OOP expenditure. Across OECD countries in 2023, 3.2% of total household spending was on healthcare goods and services. The share was less than 2% in Poland, Luxembourg, Colombia and Türkiye, but stood above 5% in Switzerland, Korea and Chile (Figure 5.8).
Health systems in OECD countries differ in the degree of coverage for different health goods and services (see section on “Extent of healthcare coverage”). Pharmaceuticals and other medical goods are the main driver of household spending, accounting for 41% of OOP spending on health on average in 2023 (Figure 5.9). In Mexico, the Slovak Republic and Poland, pharmaceuticals accounted for over 60% of OOP spending. Outpatient care accounted for 22% of household spending on healthcare on average, but was especially high in Belgium (43%), Italy (48%) and Portugal (52%) where cost-sharing arrangements for outpatient care are common. Dental care represented 16% of OOP spending on health, and long-term care made up 13% in 2023. Inpatient care played only a minor role (8%) in the composition of OOP spending in OECD countries, except in Greece (34%), which reflects outlays for privately provided hospital services.
The indicator most widely used to measure financial hardship associated with OOP payments for households is the incidence of catastrophic spending on health (Cylus, Thomson and Evetovits, 2018[1]). This varies considerably across OECD countries, from fewer than 2% of households experiencing catastrophic health spending in Sweden, Slovenia, the United Kingdom, Ireland and the Netherlands, to over 10% of households in Lithuania, Latvia and Hungary (Figure 5.10). Across all countries, the poorest households (those in the lowest consumption quintile) are most likely to experience catastrophic health spending, even though many countries have put in place policies to safeguard financial protection.
The incidence of catastrophic spending is closely connected to a health system’s reliance on OOP payments. Countries can reduce their reliance on OOP payments by increasing public spending on health; however, policy choices around coverage are also important. Population entitlement to publicly financed healthcare is a prerequisite for financial protection, but not a guarantee of it. Countries with a low incidence of catastrophic spending on health mitigate the negative impact of user charges through better copayment policies, for example via exemptions for people on low incomes and annual caps on payments. Moreover, ensuring that primary care is part of the benefits package is also likely to reduce financial hardship (WHO Regional Office for Europe, 2023[2]). For example, in Portugal the elimination of flat rate charges for primary care and publicly prescribed services may have contributed to the reduction of the incidence of catastrophic health spending in recent years.
