The absent or poorly functioning risk pooling mechanisms and high
amounts of out-of-pocket payments for health care expose households to
financial risks associated with major illnesses or accidents. The aim of
this paper is to analyse the extent to which out-of-pocket health
spending impoverish the households in Albania. The study augments the
existing evidence by analysing the dynamics of such payments over
different years and the weight that informal payments have in the total
out-of-pocket health spending.
The data used in this study come from Albania Living Standard Measurement Survey (ALSMS) for 2002, 2005 and 2008. We measure headcount catastrophic payments using different thresholds and the decomposition of indicators by expenditure quintiles to understand better their effects. We find that out-of-pocket and informal payments have increased in real value throughout the years. Even though their catastrophic effect has gone down (due also to declining trends in absolute poverty), the effect for the poorest expenditure quintiles remains high. Out-of-pocket payments deepen the poverty headcount and also enlarge the poverty gap and again the effect is larger for the poorest quintiles. Future policy interventions should provide better protection mechanisms for the poor by providing exemption criteria or subsidised transport and should seek to address the widespread informal payments in the country.
Keywords: catastrophic payments, out-of-pocket payments, impoverishment, Albania LSMS