Reham Rizk - British university in Egypt Hala Abou-Ali - Cairo University ERF Workshop on The Economics of Healthcare in the ERF Region Cairo, Egypt - May 23, 2016 www.erf.org.eg

1. Out of Health expenditure and
household budget: Evidence from
Egypt , Jordan and Palestine
Reham Rizk
Department of Economics, British university in Egypt
Hala Abou-Ali
Department of Economics, Cairo University
May 21, 2016
ERF, Cairo

2. Outline
• Motivation
• Health care structure in Jordan , Egypt
and Palestine
• Survey of the exiting literature
• Data and Methods
• Stylized facts
• Estimation results
• Conclusion

3. Motivation (1/5)
 The proportion of out-of-pocket health expenditure is
45.6% of total private health expenditure in MENA
(WDI, 2013).
 Moreover, public health expenditure in the MENA
region accounts about 50% of total health expenditure
which constitute about 6% of GDP- it is higher compared
to Europe and East Asia and pacific (WDI, 2013).
The main reasons of the presence of high large financial
flow of OOP health payment:
First: Medical insurance
Second :Poor Public health facilities

4. Motivation (2/5)
The consequences of higher OOP health spending :
 Catastrophic health expenditure
 Impoverishment
 This is an indication :
 lack of social protection for households.
 reflects social injustice in the public health care system

5. Motivation(3/5)
Out pocket health expenditure as % of GDP and as % of total health
expenditure WHO(2010 )
0
10
20
30
40
50
60
70
Egypt Sudan Tunisia Jordan MENA
2.9 4.4 2.9 2.8 3.1
59.2
64.8
35
24.8
48.1
percentagepoints
HE, private (% of GDP)
OOPHE (% of total exp
on health)

6. Motivation (4/5)
Public health expenditure as %of GDP and as % of total
health expenditure (WHO,2010 )
0
10
20
30
40
50
60
70
Egypt Sudan Tunisia Jordan MENA
1.9 2.1 3.8
5.9
2.7
39.4
32.1
57.1
67.6
46.7
PercentagepointsHE public (% of GDP)
HE, public (% of total health
expenditure)

7. Motivation(5/5)
• The purpose of this research paper is two-fold. First, to
assesses the prevalence of out-of-pocket catastrophic
health expenditure and pinpoint the factors associated
with its risk in Egypt, Jordan, and Palestine.
• Second, to further investigate the poverty impact of out-
of –pocket health expenditure in three Arab countries
and identify the socio-economic indicators associated
with impoverishment.

8. Health care structure (1/3)
Egypt
1. MOH the main provider of health
medical services are subsidized or provided to a large
proportion of population free.
funded from the ministry of finance
3.Private sector
as religion clinics and
pharmacies
(Ministry of social affaires)
2.Parastatal
it includes the health insurance
organization, curative care
organization and teaching
hospital and institutes.
( ministry of education and other ministries)

9. Health care structure (2/3)
Jordan
MOH and
Royal
Medical care
Private
sector
Donors
(UNRWA)

10. Health care structure (3/3)
Palestine
Ministry of health
Primary health services
Budget state , health insurance and cooperative operations
Private sector
Tertiary health
care
NGO’s and UNRWA
(Int’l organizations
and donors

11. Theories and evidence of CHE and
impoverishment (1/2)
 Very few studies examine the determinants of the
catastrophic and impoverishment impact of out-of-pocket
health expenditure in Arab countries.
 They also differ from the scope of the proposed study.
 Some studies examine the relationship between the size of
public health spending and the prevalence of
impoverishment (Rashad, 2014) .
 Others studies examined the impact of income on the
outpatient and inpatient of health care service (Elgazzar,
2007).
 Moreover, there are number of studies addressing the
distribution impact that out-pocket health payment has on
household’s well-being at different thresholds of household
income (Abou-Ali, 2007).

12. Theories and evidence of CHE
and impoverishment (2/2)
 There are contradicting findings with respect to socio-
economic determinants of out-of-pocket health
expenditure in developing countries.
 Some studies argue that wealthier quintiles spends less
compared to poorest quintiles as a percentage of total
consumption on health care whereas others showed
progressive trend (Makinen et al., 2000; Xu et al. 2003;
Minh, et al., 2013; Brown, Hole, & Kilic, 2014; Wagstaff &
Doorslaer, 2003).

13. Data and Methods (1/2)
 Data used in this study are obtained from ERF
harmonized household budgets survey.
 The ERF database involves 2010/2011 round of the
Household Budget survey of three Arab countries -
Egypt, Jordan, Palestine.
 Catastrophic health expenditure (CHE) is defined at five
threshold levels, 10%, 20%, 30%, 40% of total household
expenditure and capacity to pay for Egypt and Palestine.
 The threshold has been changed for Jordan to three
threshold levels, 5%, 10%,15% of total household
expenditure and capacity to pay.

14. Data and Methods (2/2)
 The choice of both the definition of catastrophic health
expenditure (CHE) and the threshold levels are based on
the exiting literature to allow to provide a
comprehensive picture of catastrophic health
expenditure and the degree of sensitivity of the results.
 Probit regression analysis is used to investigate the
determinants of CHE and impoverishment in Arab
countries.

15. Stylized facts (1/2)
Table (1): Percentage of households with Catastrophic health expenditure as % of total HE and capacity
to pay
Threshold Egypt 2010
% of total household expenditure % of capacity to pay
10% 19% 26%
20% 5% 11%
30% 2% 5%
40% 1% 6%
Impoverishment 64%
Table (2): Percentage of households with Catastrophic health expenditure as % of total HE and capacity
to pay
Threshold Palestine 2010
% of total household expenditure % of capacity to pay
10% 10% 16%
20% 3.14% 4%
30% 1.10% 2%
40% 1% 3%
Impoverishment 54%
Table (3): Percentage of households with Catastrophic health expenditure as % of total HE and capacity
to pay
Threshold Jordan 2010
% of total household expenditure % of capacity to pay
5% 14.9% 14.9%
10% 5.4% 5.4%
15% 4.3% 7.6%
Impoverishment 58%

16. Estimation results (1/2)
 The determinants of impoverishment
omitted group :First quintile Egypt 2010 Jordan 2010 Palestine 2010
2nd quintile 0.372*** 0.141*** 0.160***
-0.01 -0.03 -0.03
3rd quintile 0.491*** 0.215*** 0.301***
-0.01 -0.03 -0.02
4th quintile 0.566*** 0.328*** 0.419***
-0.01 -0.03 -0.02
5th quintile 0.606*** 0.455*** 0.517***
-0.01 -0.02 -0.02
children less than 14 years 0.022*** -0.011 0.039***
-0.01 -0.01 -0.01
Elderly :65+ years 0.060*** 0.057*** -0.015
-0.02 -0.02 -0.02
Household size 0.021*** 0.038*** 0.074***
-0.01 -0.01 -0.01
omitted group: Primary or
less
Secondary 0.091*** 0.073** -0.036
-0.02 -0.03 -0.03
Higher education 0.098*** 0.176*** 0.007
-0.02 -0.03 -0.03
Omitted group : female
male -0.014 0.068* 0.023
-0.02 -0.04 -0.04
Omitted group : rural
urban -0.095*** -0.053** 0.001
-0.02 -0.02 -0.02
Number of Obs. 7627 2784 2796

17. Estimation results (2/2)
The Determinants of CHE
 The findings indicate that households belonged to highest income
quintiles are more likely to incur catastrophic health expenditure
compared to households belong to the first income quintile.
 Households with elderly members in the household are more likely
to incur catastrophic health expenditure.
 Households whose heads are with higher educational level and
located in urban areas are less likely to incur catastrophic health
expenditure compared to those with primary education or less.
 Besides, there is a negative correlation between household size and
catastrophic health expenditure.
 household with employed heads are less likely to incur catastrophic
health expenditure compared to unemployed head

18. Conclusions (1/2)
• Our analysis showed that out of pocket health payment
is the highest for Egypt among the MENA countries.
According to WHO, the out of pocket health payment
for Egypt is about 59% of total health expenditure while,
it is 25% for Jordan.
• In comparing between countries with respect to the
prevalence of catastrophic health expenditure and
impoverishment, Egypt has higher rates of
impoverishment compared to Jordan and Palestine.

19. Conclusion (2/2)
 Our results suggest that the poor households are less likely to incur
catastrophic health expenditure compared to the non poor
households across the selected countries. This result highlighted the
vulnerability of the disadvantaged group in terms of demanding
health services.
 Special attention should be given to the poor in health care reforms
in the selected countries whether in terms of improving the quality
of health care provided by the public sector or increasing their
financial protection.
 Households located in rural areas are more likely to incur
catastrophic health expenditure compared to urban areas
particularly for both Jordan and Egypt.
 This implies special attention for health care policies for rural areas
in both Jordan and Egypt in terms of both quality and quantity of
the health service as well as the social protection.

20. Questions?
20