OBJECTIVES: Out-of-pocket (OOP) payment is a major health financing mechanisms across developing nations such as Pakistan. Total health care expenditures made by the Government of Pakistan is almost 33%, while private expenditures are estimated to be 66%, out of which 91% are OOP made by the Households (NHA, 2015-16). Such unpredictable health care expenditures cause households to face financial risk resulting in poverty.This study aims to estimate incidence of catastrophic health expenditures and impoverishment and further to evaluate their determinants.

METHODS: We used the data from the Household Integrated Economics Survey, 2015-16 and 2018-19, carried out by Pakistan Bureau of Statistics. Methodology developed by Wagstaff and van Doorslaer, (2002) and Xu et al. (2005) is employed by this study for estimating incidence and impoverishment effect of catastrophic health spending. Whereas, logistic regression is employed for identifying the determinants.

RESULTS: It is found that at 10% threshold, catastrophic health payments out of total consumption expenditures is incurred by 4.51% and 1.35% households for 2015-16 and 2018-19, respectively. Moreover, taking health payments out of non-food expenditure and changing the threshold to 40%, this percentage declines to 0.45% and 0.22%. Poverty headcount was 23.28% and 20.19% gross of health payments, whereas it turns out to be 24.68% and 21.32% net of health payments representing an increase of 1.4% and 1.13% for both the HIES data. It is more likely catastrophic health payments are borne to be by better-off households than poor.

CONCLUSIONS: OOP health payments exert pressure on household’s capacity to pay and push them into poverty. This paper recommends the burden of OOP health expenditures should be reduced in order to prevent households falling into poverty. The policies should focus not only on increasing public healthcare spending but also provision on social health protection plan against OOP health payments.