Financial protection

Financial protection is at the core of universal health coverage (UHC) and is one of the final coverage goals of health financing policies. It is achieved when direct payments made to obtain health services do not expose people to financial hardship and do not threaten living standards. The key to protecting people is to ensure prepayment and pooling of resources for health rather than relying on people paying for health services out-of-pocket (OOP) at the time of use.

Catastrophic out-of-pocket health spending, defined as exceeding 10% of a household budget, continues to rise. More than one billion people, about 14% of the global population, experienced such large out-of-pocket payments relative to their budgets. But even small expenditures in absolute terms can be devastating for low-income families; approximately 1.3 billion individuals were pushed or further pushed into poverty by such payments, including 300 million people who were already living in extreme poverty. For more information, please see the reports here and visit the UHC fact sheet.

In-depth, context-specific analysis and evaluations of health financing policies are needed to understand the drivers of trends.

Financial protection is undermined by heavy reliance on out-of-pocket (OOP) health spending in all countries at all income levels. OOP health spending undermines efforts to eradicate poverty, which can be avoided by minimizing OOP health spending for people living close to poverty, and eliminating such payments for people living in poverty.

Financial protection is not guaranteed by participation in a health coverage scheme. There are different ways of financing health systems to ensure a population is financially protected, however, evidence shows that more significant prepaid, pooled, compulsory payments are needed.

Public health funding must increase further and be used more efficiently and equitably.  Different revenue sources must be pooled or their utilization better coordinated.  The size of compulsory prepaid funds must be sufficiently large; prepaid funds must be redistributed; and coverage for medicines must beextended.

OOP spending on health must be limited to low, fixed, and capped co-payments, and removed completely for the poor and most vulnerable. Removing financial barriers to care reduces forgone care, thereby improving service coverage and financial protection.