Financing of health care from households’ out-of-pocket payments, voluntary payment schemes and external resources

Private health expenditure refers to the health spending from non-public agents, and it is often divided between out-of-pocket expenditure (OOP), voluntary payment schemes and external sources. OOP expenditure refers to payments made to pay directly for health care, while voluntary payment schemes refers to payment of private insurance premiums, which grant coverage for services from private providers. External resources covers the funds for health received from different donors or similar sources.

On average, the share of health spending paid out of-pocket is 34% in the LAC region, well above the OECD average of almost 21% (Figure 6.8). The highest presence of OOP is observed in Venezuela (63%) followed by Guatemala (54%) and Grenada (52%), the three countries above 50% in the region. At the other end, only five countries stand below 20%: Cuba (10%), Argentina (15%), Colombia (16%), Jamaica (17%) and Uruguay (17%).

The OOP as a share of health expenditure has fallen by 1.5 percentage points from 2010 to 2017 in LAC (Figure 6.8). The decrease was greatest in Nicaragua (-11.8) and St Lucia (-12.1). However, 11 countries experienced increases in OOP, being led by Venezuela (+20.07) and Antigua and Barbuda (+10.71). OOP expenditure above 20% of current health expenditure is considered problematic as it indicates high vulnerability to catastrophic health expenditure in the event of a health emergency. The section about “Financial Protection” in the present chapter examines the extent to which people in LAC is at risk of falling into poverty due to catastrophic health expenditures.

Figure 6.9 shows that health expenditure by voluntary payment schemes represented – on average – 8% of current expenditure on health in LAC, above the OECD average of 5.5%. This share increased in most countries from 2010-17, particularly in Antigua and Barbuda where it increased by 12.5 percentage points. On the other hand, in Uruguay and Jamaica it decreased by more than 7 percentage points. Less than 1% of current health expenditure was from voluntary payment schemes in Dominica, while it was the highest in Brazil (30%), Bahamas (25%) and Venezuela (21%), the only three countries above 20%. Private health insurance is an important source of secondary coverage in most countries, either supplementing coverage of goods and services not included in the basic benefit package, complementing coverage by covering costs or duplicating coverage for those patients looking for private care.

The share of health expenditure coming from external sources is low across the region (under 1% in 19 out of 30 countries with data). However, it is a very significant source of financing in Haiti (over 43%), illustrating the reliance on external resources from a variety of donors in this country (Figure 6.10).

Disclaimer

This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein are solely those of the authors and do not necessarily reflect the official views of the OECD, its member countries, the World Bank, its Board of Executive Directors, or of the governments they represent.

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

The names of countries and territories used in this joint publication follow the practice of the OECD.

Photo credits: Cover © Tati Nova photo Mexico/Shutterstock.com.

Corrigenda to publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.

© OECD/The International Bank for Reconstruction and Development/The World Bank 2020

This Work is licensed under the Creative Commons Attribution Non-Commercial No Derivatives 3.0 IGO license (CC BY-NC-ND 3.0 IGO).