Economic Research Forum (ERF)

Protecting households from catastrophic health costs: evidence from Sudan

330
Out-of-pocket’ (OOP) healthcare expenditure is a heavy burden on household resources in developing countries like Sudan where poverty and illness are widespread. This column proposes a package of practical actions to protect households from becoming victims of OOP expenditure – and to reduce the impoverishment when such expenditure becomes catastrophic.

In a nutshell

Many policy actions could protect households in Sudan from catastrophic ‘out-of-pocket’ healthcare expenditure.

Potential policy actions include lowering illness rates, reducing patients’ transport costs and expanding the availability of health insurance for poorer households.

Policy-makers in public health should initiate health awareness campaigns to promote people’s acceptance and use of preventive measures against illness, using public lectures, brochures and papers.

 

The absence of universal health insurance in Sudan means that ‘out-of-pocket’ (OOP) healthcare expenditure consumes a high portion of households’ incomes, forcing them to cut the share of their budgets allocated to education, food and other items. Cutting spending on such necessary items pushes huge numbers of households into extreme poverty with all its undesirable consequences.

Our research analyses data from Sudan’s National Baseline Household Survey to show what factors affect households’ OOP expenditure (Ebaidalla and Mustafa, 2017). We then propose a package of practical actions to protect households from becoming victims of OOP expenditure – and to reduce the impoverishment when such expenditure becomes catastrophic.

Lowering illness rates

Our evidence shows that higher illness rates are one of the causes of catastrophic OOP expenditure for Sudanese households. Illnesses can be reduced using precautionary strategies to stop episodes of chronic diseases (hypertension, diabetic, asthma, cardiac, cancer and psychiatric) and acute diseases (malaria, respiratory, diarrheal, minor injury and typhoid fever).

Malaria, for example, which constitutes 4.4% of total acute illness in the country can be easily prevented if stagnant waters and sewerage are managed in a way that breaks the progression of malaria-carrying parasites. Similarly, people can be educated about standard preventive measures, such as adopting healthy diets and taking exercise.

Policy-makers in public health should initiate health awareness campaigns to promote people’s acceptance and use of preventive measures. These campaigns must be delivered in languages that can be digested by the average citizen. In areas with particular cultural characteristics, campaign programmes should be conducted in local languages.

Reducing transport costs

Our evidence shows that greater distance between healthcare providers and households raises OOP expenditure. The problem is that Sudan’s low population density means that it is not technically or economically feasible to provide healthcare above primary levels in many places. The reality is that 70% of total healthcare cadres are concentrated in the capital city of Khartoum, serving only 20% of the country’s population.

Hence, a large portion of households are exposing to catastrophic OOP expenditure not simply because of direct payments on healthcare items, but also due to the costs associated with transport to places in which appropriate healthcare facilities are available. To reduce these negative effects, rural regions and remote areas should be equipped with modern networks of ambulance services as well as advanced health technologies and equipment. Adopting such measures would help to protect poor households from financial risk resulting from transport costs.

Expanding health insurance

According to the Public Health Institute, out of the informal poor population for which insurance is non-mandatory, only 35% are insured. To boost the use of healthcare facilities and, at the same time, to diminish households’ OOP expenditure, health insurance must be expanded to include the poorest groups in society, particularly those in rural areas and informal workers. This can be done via the following channels.

Employing banks’ facilities to pay health insurance subscription fees

Financing health insurance subscription can be facilitated by drawing funds from banks. The specialised banks (the Farmers’ Commercial Bank, the Sudanese Agricultural Bank, the Animal Resources Bank and the Workers’ National Bank), which are mostly run by the government, can become involved in protecting farmers and workers from financial risks arising from OOP expenditure.

These banks are designed to serve farmers and informal workers, either by giving them loans and technical guidance to conduct income-generating activities or by intervening in agricultural product markets as buyers to protect them from declining prices. Since these banks aim to protect part of the population from market fluctuations and harmful work conditions, their mission can be extended to offer funds for farmers and workers to cover flat rate insurance payments.

Encouraging NGOs to pay health insurance subscription for disadvantaged groups

A number of voluntary and charitable NGOs work to alleviate poverty by providing in-kind and cash assistance to disadvantaged communities, particularly in areas of conflict. These organisations’ missions in combating poverty can be reinforced by encouraging them to provide direct and indirect healthcare to these communities. Directly, these charitable bodies can implement healthcare programmes that include diagnosis, advice and early medical intervention for those who in need.

NGOs and charities might also be involved in spreading understanding of the importance of preventive measures against illness, using public lectures, brochures and papers. This would contribute significantly to improve health by preventing diseases that result from unhealthy practices (such as early marriage and Pharaonic circumcision, an unhygienic environment and reliance on traditional healers).

Indirectly, charitable NGOs can help to reduce poverty by paying fees for health insurance subscriptions for poorer individuals. Taking such steps would be much better than provision of in-kind and cash assistance. This is because health insurance would prevent households from cutting expenditure on other items such as food and education, protect them from poverty and thereby keep them in better health.

Directing health insurance to cover catastrophic medical expenses

Healthcare policy-makers should list illnesses that push households to undertake catastrophic OOP expenditure among the items covered by health insurance coverage.

Further reading

Ebaidalla, Ebaidalla Mahjoub, and Mohammed Elhaj Mustafa Ali (2017) ‘Determinants and Impact of Household’s Out-of-Pocket Healthcare Expenditure in Sudan: Evidence from Urban and Rural Population’, ERF Working Paper No. 1170.

This article is based on ERF Policy Brief – Measures to Protect Poor Sudanese Households from the Risks of Catastrophic Health Expenditures.

 

Most read

Fair competition is needed to empower women economically in the Arab world

The participation rates of women in the labour market in Arab countries are the lowest in the world. This column argues that remedying the under-representation of women in the labour force is a social and economic imperative for the region. There are three dimensions for action to realise the potential of Arab women: amending laws and regulations; instilling fair competition in markets; and promoting the digital economy.

Arab countries are caught in an inequality trap

Conventional wisdom, based mainly on surveyed household income distribution statistics, suggests that inequality is generally low in Arab countries. At the same time, little attention has been devoted to social inequalities, whether in terms of outcomes or opportunities. This column introduces a forthcoming report, which offers a different narrative: based on the largest research project on the subject to date and covering 12 Arab countries, the authors argue that the region is caught in an inequality trap.

Recession without impact: why Lebanese elites delay reform

The survival of Lebanon’s political elites is highly dependent on the wellbeing of the economy. Why then do they delay necessary reform to avoid crisis? This column examines the role of politically connected firms in delaying much-needed economic stabilisation policies.

Competition laws: a key role for economic growth in MENA

Competition policy lacks the attention it deserves in the countries of the Middle East and North Africa (MENA), a region characterised by monopolies and lack of market contestability. As this column explains, there are many questions about the extent of anti-competitive barriers facing new market entrants in the region. What’s more, MENA’s weak overall performance on competition is likely to be hindering economic growth and the path towards structural transformation.

The Egyptian economy is still not creating good jobs

Growth in Egypt has recovered substantially since the downturn following the global financial crisis and the political instability following the 2011 revolution – but what has happened to jobs? This column reports the results on employment conditions from just released data in the 2018 wave of the Egypt Labor Market Panel Survey.

How Egyptian households cope with shocks: new evidence

Managing risks and reducing vulnerability to economic, social, environmental and health shocks enhances the wellbeing of households and encourages investment in human capital. This column explores the nature of shocks experienced by Egyptian households as well as the coping mechanisms that they use. It also examines the relationship between such risks and job formality and health status.

The future of Egypt’s population: opportunities and challenges

Egypt’s potential labour supply depends on the growth and changing composition of its working-age population. This column reports the latest data on labour supply and fertility rates, concluding that the country has a window of opportunity with reduced demographic pressures to try to address longstanding structural challenges for the labour market.

Egypt’s labour market: facts and prospects

An ERF policy conference on the Egyptian labour market in late October 2019 focused on gender and economic vulnerability. This column summarises the key takeaways from the event.

Domestic demand and competition: a new development paradigm for MENA

A lack of competition in domestic and regional markets is holding back development in the Middle East and North Africa. This column argues that the region and the international community must ensure that barriers to market entry and exit are eliminated, and that independent regulatory bodies at the national and regional levels help to promote domestic demand as the main engine for sustainable and inclusive growth.

Gender discrimination in small business lending: evidence from Turkey

Discrimination in access to financial services can prevent women from exploiting their entrepreneurial potential. This column reports on a ‘lab-in-the-field’ experiment to test for the presence of gender discrimination in small business lending in Turkey.