The effect of health insurance on out-of-pocket payments, catastrophic expenditures and healthcare utilization in Ghana: case of Ga South Municipality.

Author:Aidam, Patricia W.
  1. Introduction

    In developing countries, ill health is one of the most frequent causes of poverty. The link between health and poverty is mutually reinforcing (Hormansdorfer, 2009). Moreover, more than 150 million individuals in 44 million households face catastrophic expenditure every year as a direct result of having to pay for healthcare. Besides, about 25 million households or more than 100 million individuals are pushed into poverty due to out-of-pocket payments (GTZ-ILO-WHO-Consortium, 2007).

    According to Xu et al. (2007), catastrophic expenditure occurs when out-of-pocket payments (OPPs) constitute more than 40% of the household's non-food expenditure or households lack the capacity to pay for health expenses. Social health insurance is thus a medium for removing financial barriers to access to healthcare and protecting people from the impoverishing effects of medical expenditures (Aji et al, 2013; Hormansdorfer, 2009). In Ghana, several health protection mechanisms have been implemented to mitigate the effect of healthcare costs on the population. These include the National Health Insurance Scheme and free maternal and antenatal care services. Notwithstanding, there is evidence of the pervasiveness of out-of-pocket payments (OPPs) for healthcare services, thus limiting access to healthcare among the poor (Akazili et al., 2012; Lagomarsino et al., 2012)

    The World Health Organization (WHO, 2005) indicates that when people have to pay fees or resort to co-payments for health care, the amount can be so high in relation to income that it results in "catastrophic expenditure" for the individual or the household. Such relatively high expenditures could potentially dislodge household's expenditures on necessities such as food and clothing in addition to rendering them unable to pay for their children's education inter alia.

    It is against this backdrop that healthcare financing strategies have recently been given greater priority in international health policy debates and research (McIntyre, 2007). There is thus a greater emphasis on the need for developing countries to move towards universal health coverage through pre-payment financing mechanisms, given that user-fees and other direct payments have negative effects, particularly on poor individuals and households (Yates, 2009). In response to this, Ghana's National Health Insurance Scheme (NHIS) was established by the National Health Insurance Act (Act 650) and National Health Insurance Regulations (L.I. 1809). The scheme is designed to promote social health protection through risk equalization, cross subsidization, solidarity, equity and quality care (Gobah and Liang, 2011).

    Funding for the scheme is achieved through a two-pronged approach namely a National Health Insurance Levy (NHIL) of 2.5% tax on selected goods and services that is added to the standard rate of VAT which accounts for about 75% of the NHIS funding and a payroll tax of 2.5% on formal sector workers who contribute to the Social Security and National Insurance Trust (SSNIT). Other forms of funding which forms 5% of the funding mix comes from premiums from the informal sector and government budget allocations (Gobah and Liang, 2011). Therefore, no coinsurance, copayment, or deductible is required when utilizing health services. Furthermore, the scheme has exemption packages for certain categories namely children under 18 years (49.44%), adults above 70 years (6.67%), SSNIT contributors (6.10%), pregnant women (5.54%), indigents (2.32%) and SSNIT pensioners (0.53%). Total non-paying members accounted for about 65% (NHIA, 2010). In all, over 95% of the most common disease conditions reported in healthcare facilities in Ghana are covered under the scheme and is accessible at both public and private healthcare providers at all levels of the health system, subject to their accreditation by the NHIA.

    The importance of social health protection mechanisms in mitigating the risk of medical costs is well documented in the literature. Nguyen et al. (2011) evaluated the impact of Ghana's National Health Insurance Scheme on households' out-of-pocket spending and catastrophic health expenditure and found that although the benefit package of insurance is generous, insured people still incurred out-of-pocket payment for care from informal sources and for uncovered drugs and tests at health facilities. Nevertheless, they paid significantly less than the uninsured. The paper concludes that insurance has a protective effect against the financial burden of healthcare, reducing significantly the likelihood of incurring catastrophic payment. The effect was particularly remarkable among the poorest quintile of the sample, indicating that health insurance has pro-poor welfare implications. Investigating the impact of membership of health insurance on utilization and OPP in South Africa, Ataguba and Goudge (2012) found that insurance coverage increased the use of private health services as would be expected, but there was no significant effect on the use of public services. Further, such coverage did not result in lower OPP for scheme members compared to non-members. In another study, Hwang et al. (2001) reported that chronically ill persons who are uninsured have higher out-of-pocket medical spending and are five times less likely to see a physician than their insured counterparts. Their results show that mean out-of-pocket spending increased with the number of chronic conditions. It also varied by age and insurance coverage among other characteristics. Furthermore, Gobbah and Liang (2011) found that health insurance has a positive effect on health seeking behavior and utilization of health care services by removing significant financial barriers to access.

    Moghadam et al. (2011) explored the percentage of Iranian households exposed to catastrophic health expenditures and also examined its determinants. Of the 39,088 households included in their study, 2.8% of households were exposed to catastrophic health expenditures. Influential factors that predicted catastrophic healthcare expenditures were utilization of ambulatory, hospital, and drug addiction cessation services as well as consumption of pharmaceuticals. Socio-economic characteristics such as health insurance coverage, household size, and economic status were other determinants of exposure to catastrophic healthcare expenditures. Furthermore, Su et al. (2006) reported that of the 800 households studied in Burkina Faso, 6%-15% incurred catastrophic payments even with very low levels of healthcare utilization and moderate amount of expenditure. The key determinants of catastrophic payments were economic status, household healthcare utilization, illness episodes in an adult, and presence of a member with chronic illness. Therefore, it is expected that a household is more likely to be exposed to catastrophic payments when the economic status is low (has low capacity to pay), and has relatively high utilization.

    It is also evident that the degree of risk sharing within a country's health financing system impacts positively on the attainment of the overall health system goals (Carrin et al., 2001). Studies from Kenya, Senegal, and South Africa show that where patient fees exist, the insured use more outpatient services than the non-insured (Scheil-Adlung, et al., 2007). Other countries such as Uganda, Zambia, and Burundi have increased utilization of health services by replacing user fees with increased public funding of healthcare (Hormansdorfer, 2009).

    In another study, Dalinjong and Laar (2012) examined the perceptions and experiences with NHIS card bearers in two districts in Ghana. They found that there was increased utilization of services among insured clients than uninsured counterparts. Other studies have also reported that user charges have had adverse effects on service utilization (Dhillon, 2011). In particularly, Xu et al. (2005) found that though elimination of user fees increased service utilization, it did not protect against catastrophic expenditure since patients had to buy drugs from private pharmacies and also make informal payments to offset lost revenue from fees.

    These findings point to the multidimensional nature of analyzing the impact of social health protection strategies on out-of-pocket payment, service utilization and exposure to catastrophic payments. Moreover, the evidence of such protection from developing countries has been inconsistent. This paper argues that the protective nature of health insurance cannot be inferred in isolation since it is mediated by the household's capacity to pay as well as illness episodes which ultimately determine the likelihood of exposure to catastrophic expenditure. Also, because health care is an essential commodity, we argue further that utilization of health services is not solely a function of membership of health insurance but also ability to pay.

    Most of the studies reviewed indicated that predisposing factors such as age, sex, and marital status are not significant predictors of hospital utilization. The enabling factors, such as income, insurance and social support, have also been shown to affect healthcare utilization, though characteristics of the hospitals could also have an effect. However, need factors such as disease severity, symptom severity and complications adversely affected health care utilization among the chronically ill, while disease duration and comorbidity do not have such an effect.

    Therefore, the impact of health status on the utilization of health services is very clear. However, the relationship seems to be nonlinear. Whereas chronically ill persons are more likely to utilize health care goods and services, the extent of use is moderated by their insurance status. Thus, when a household has a member who suffers from chronic illness, it is expected that utilization will be high; however, given the insurance status, utilization should be higher for the...

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