Impact of universal health coverage on catastrophic health expenditure: Evidence from Ghana

Abstract

Key messages:Universal health coverage significantly protects households against the financial risk of incurring catastrophic out-of-pocket health expenditure when using needed health services.The protective effect of health insurance is greater for households living outside a 1-hour radius to the nearest hospital, revealing the urgency of providing effective protection in remote areas.Financial risk protection from catastrophic health spending is a major limitation to accessing needed health services in developing countries and a strategic global health priority. Although Ghana was the first Sub-Saharan African country to introduce a National Health Insurance Scheme (NHIS), there is paucity of evidence on the extent of protection that health insurance affords enrollees. This study examines the effect of insurance on financial risk protection from catastrophic health expenditure in Ghana. We use data from the Ghana Living Standards Survey collected in 2012-2013 and investigate the effect of interest via fixed-effects probit analyses disaggregated by geographical proximity to care. We use two measures of catastrophic payments: those that absorb more than 40% of discretionary consumption and those that leave a household’s nonmedical consumption below 150% of the poverty line. We instrument participation in the NHIS via cluster insurance rate and construct matched datasets using propensity score methods. Our findings show that health insurance protects against the risk of incurring catastrophic health expenditure. Households are significantly less likely to incur catastrophic expenditure when insured (-0.21, α = 0.012). The protective effect of insurance is larger among households living outside a 1-hour radius to the nearest hospital (-0.33, α = 0.023). Moreover, poorest households have higher probability of incurring catastrophic expenditure (1.16, α < 0.001) compared to the richest (-2.35, α < 0.001). Our study offers evidence that the NHIS has sharply reduced catastrophic spending among the insured. Despite impressive progress, we reveal the urgency of providing effective protection against catastrophic health expenditure in remote areas and ensuring that the poorest benefit equally from the NHIS. Our findings support the universal health coverage objective of the NHIS and are relevant to countries seeking to lessen reliance on out-of-pocket payments.