Determinants of out-of-pocket health expenditure: cross-country evidence across World Bank income groups.

Abstract

Background: Out-of-pocket (OOP) health expenditure remains a major barrier to achieving Universal Health Coverage, yet limited evidence exists on whether its determinants differ systematically across World Bank income groups. This study examines the macroeconomic and health financing determinants of OOP health expenditure across 123 countries during 2000-2021.

Research design and methods: Panel data from the World Bank and the World Health Organization were analyzed using the Instrumental Variables Two-Stage Least Squares (IV-2SLS) estimator to address endogeneity and unobserved heterogeneity. A dummy interaction approach captured income-specific effects across low-, middle-, and high-income economies.

Results: The findings reveal substantial heterogeneity. Economic growth reduces OOP expenditure in low-income countries but increases it in middle- and high-income economies, reflecting a shift from essential healthcare utilization to discretionary healthcare consumption. Government health expenditure consistently lowers OOP expenditure, with stronger effects in higher-income countries, whereas private health expenditure shows mixed effects. Higher HIV prevalence significantly increases OOP expenditure, particularly in low-income countries.

Conclusions: The determinants of OOP health expenditure differ markedly across income groups, indicating that uniform health financing policies may be ineffective. Income-sensitive strategies that strengthen public financing, promote inclusive economic growth, and improve financial protection are essential for reducing OOP expenditure and advancing UHC.