Introduction
Households are subjected to out-of-pocket (OOP) health spending when they use or receive any health care services. These include promotive, preventive, curative, rehabilitative, palliative (or long-term), or laboratory services [
1]. OOP payments for healthcare services can potentially lead to adverse consequences on the patients and their families, especially in the absence of health protection mechanisms. High OOP health spending is often associated with increased poverty and mental health problems such as depression, anxiety and stress [
2,
3]. Without adequate cash in hand, people are constrained to various methods to finance healthcare, such as selling assets, borrowing, reducing foods consumption, withdrawing children from schools, and even foregoing or delaying seeking medical care. [
4,
5].
A distress or hardship health financing occurs when someone turns to either borrowing or selling assets to finance their healthcare expenses [
6]. High OOP health expenditure, low insurance coverage as well as limited government expenditure on health are some of the causes of distress financing [
7]. Studies among low- and middle-income countries found that borrowing or selling assets occurs at an average of 22% and 10%, respectively [
8]. In desperate situations, people can resort to borrowing with or without interest taking into consideration their socio-economic status, repayment period, and the nature of the loan [
9]. According to several studies done in the low- and middle-income countries, familiar sources of distress financing can be in the form of borrowing with or without interest, either from a financial institution, friends, or family members, selling assets such as crops and livestock as well as mortgaging assets [
10,
11]. Out of these, borrowing with interest tends to cause tremendous economic hardship than borrowing without interest due to the large sum of money they need to repay. [
12]. Prior studies conducted in Argentina, India, Tanzania and rural China found that distress financing was unequally distributed and mainly affected the poor [
9,
13].
Apart from poor socio-economic status, indebtedness may also have detrimental effects on physical and mental health. This frequently leads to worsening financial problems, thus creating a vicious cycle of health demands and indebtedness. The reason could conceivably be the additional healthcare needs as well as the inability to work and gain income. Studies found that indebtedness and the failure to repay loans can lead to depression, stress, and poor health [
14‐
16]. Stress was found to influence health-related behaviours and cause psychological changes, which are significant in various disease processes, such as cardiovascular and metabolic diseases [
17,
18]. High-interest borrowing and debt can also have a multiplier effect on health, especially among those unable to repay their debt [
15].
Studies on the determinants of distress health financing were relatively limited. Past studies found that distress financing is determined by the household’s socio-economic status, household size, and the use of inpatient and outpatient care, especially in the private health sectors [
19]. Households in the lower socio-economic group tend to resort to borrowing and often end up unable to pay off their debt [
19]. Besides, borrowing was also common among those with bigger household sizes and higher health expenses [
8]. Distress financing also was more common among those admitted to the hospital, having to care for their elderly parent, seeking maternity care, using private health care facilities, and having family members with non-communicable diseases (NCDs) [
6,
20]. Studies also found that those living in urban areas tend to have minimal risk of financial distress due to the widely available healthcare services [
21]. In addition, the availability of medical protection plans and initiatives such as private insurance, government guarantee letters, panel clinics, and others seem to reduce the incidence of distress financing among households [
22].
World Health Organization (WHO) has highlighted the importance of the country’s healthcare systems to provide essential health services to all without financial hardship through Universal Health Coverage (UHC) [
23]. Nevertheless, many countries still opted for the least sustainable option to finance healthcare through the OOP mechanism [
23]. This was made worse by the never-ending issue of equity in health service delivery [
24]. This includes the issue of inequality in distress health financing among households, which could also hinder the country’s effort in achieving UHC. The term ‘inequalities’ often describes the variation of health status among different socio-economic statuses, geographic locations, employment status, gender and ethnicity [
25]. The health financing system of a country among others would set the provision of health service delivery and thus, become the main factor in making sure equality in population health status. There are various methods for measuring inequalities such as concentration curve, concentration index, Gini coefficients, and others. The concentration index measures horizontal health inequalities based on socio-economic status and is calculated from the concentration curve by quantifying the disparity of one variable against the distribution of another selected variable [
26]. It is one of the common measures of socio-economic health-related inequalities [
27,
28].
The issue of inequality is not limited to one but all countries including Malaysia. The two-tier healthcare system in Malaysia is provided by both the highly subsidised public sector and pay-for-service in the private service sector. The Ministry of Health only recouped 2–3% of the total patient charges. While the health services such as hospital admission in the public sector only require patients to bear the minimal cost, it acts as the safety net by ensuring minimal possible financial risk to access health services [
29]. Hence, patients who could not afford private healthcare charges will opt for public healthcare services. Overall, the high utilization of health services in Malaysia was equally distributed across socio-economic groups. Studies found that the use of private health services in Malaysia increases with household income, while the use of public health services is more pro-poor [
30]. The latest data showed that outpatient healthcare services in Malaysia are composed of 64.3% public and 35.7% private sector [
31]. Whereas, public health sectors contribute about 75.5% and 79.5% to inpatient and oral health care, respectively [
31]. Medical private insurance in Malaysia is voluntary and only covers health expenses in private health sectors. Other medical protection programmes include, but are not limited to; (1) Social Security Organisation (SOCSO) and Employee Provident Funds (EPF), which are two social security funds in Malaysia that provide health coverage for employees working in the private sector; (2) employer insurance scheme, which is provided by some employers in private sectors to their employees; and (3) guarantee letters for the government servants, which allows free health provision among the government servants [
32]. Other health financing initiatives provided by the governments for accessing healthcare services include those catered for the bottom 40% of population (B40) groups such as
Skim Peduli Kesihatan for the B40 (PeKa B40) and mySalam [
33].
Despite this, the Malaysia National Health Account (MNHA) reported that Malaysia’s OOP expenditure remains high at around 30–40% of total health expenditure [
34]. This is well beyond WHO’s suggestion of 15–20% [
35,
36]. This is also comparatively higher than most OECD countries [
37]. However, high OOP expenses are more prevalent among households in high socio-economic groups [
37]. While the OOP expenditure did not show a reduction trend albeit higher cost of care over the years, concerns were raised about the sustainability of the government to continue with the current health financing system and the need for healthcare reforms [
34]. Despite that, the incidence of catastrophic health expenditure (CHE) in Malaysia was relatively low. The Malaysia Health Care Demand Analysis using 2009/10 data reported that the incidence of households spending more than 10% of the total household expenditure was around 1.44% [
38]. In comparison, the incidence of households spending more than 25% of household expenditure was around 0.16%. This is relatively low compared to the neighbouring countries such as Thailand, Vietnam, Indonesia and others. Overall, the financial risk protection in Malaysia has improved over the last decades with the prevalence dropping more than 50% [
38].
It is also suggested that 5–6% of Gross Domestic Product (GDP) is required to provide UHC assuming a single public financing health system [
39,
40]. Hence, Malaysia’s government spending at around 2% of GDP provides additional challenges to achieving equal access to healthcare services. Nevertheless, a report showed that the Kakwani’s progressivity index for the tax-financed system in Malaysia was slightly progressive with an index value of 0.186. The progressive finance sources include direct taxes, private insurance, OOP and contributions to EPF and SOCSO [
41].
Given this backdrop, the present study contributes to two dimensions. First, to the policymakers and stakeholders by providing guides on the current achievement of UHC and a piece of evidence on the effectiveness of financing health systems in Malaysia. Secondly, this study also contributes to the literature on OOP expenditure by extending the current knowledge on the determinants of household distress financing and their level of inequalities in middle-income countries, especially in Malaysia.
There are relatively no documented studies exploring distress health financing in terms of the determinants and inequality in Malaysia. This kind of study is beneficial to the decision-makers as a guide to improving the health financing systems in Malaysia. Hence, this study aims to identify inequalities and determinants of distress financing among the households in Malaysia to provide a better understanding especially to the policymakers for a better improvement of UHC in Malaysia.
Discussions
The present study revealed that the prevalence of borrowing without interest was the highest among various sources of financing at 13.86%, which includes borrowing from friends and family members. Compared to other sources of distress financing, borrowing without interest is considered low risk. Studies also found that selling assets are less common than borrowing since it could push household into poverty [
6,
12,
55]. Borrowing is a much more common source of healthcare financing among low- and middle-income countries. However, the prevalence shown in this study was relatively low compared to other countries such as India and Cambodia, of which the prevalence was around 42.2% and 22.5% respectively [
19,
48]. The low prevalence of distress financing in Malaysia is aligned with the healthcare financing system in Malaysia, which is mainly tax-based. By subsidising healthcare delivery, the government of Malaysia has provided relatively cheap and universal access to health. The latest analysis showed that Malaysia has a UHC effective coverage index higher than the neighbouring countries such as Indonesia, Myanmar and others [
56]. Few initiatives were also implemented to reduce the financial barrier to healthcare such as the PeKa B40, mySalam,
Bantuan Sara Hidup (BSH) programme, and others which are directly and indirectly cater to the needs of the population to seek healthcare [
33].
It is no surprise that the results of the current study showed that the prevalence of distress financing is more concentrated among poor households. This finding is similar to other studies done in Vietnam, Indonesia, India, Myanmar, Nepal, and Ethiopia [
11,
57‐
60]. This current study also found that borrowing without interest was more common among the poor (25.5%) while borrowing with interest was more prevalent among the middle to richest socio-economic groups (1.4–1.6%). The concentration curves and the concentration indices for all sources of financing further explain the differences and unequal distribution of various methods of financing among different socio-economic groups.
Past studies found that households with higher income had a higher level of debt due to confidence in taking a loan [
61,
62]. Since access to borrowing without interest greatly depends on social trust, it is more likely to occur among the poor, with the option to borrow with interest being limited [
63]. For example, in Southeast India, the ability of a poor household to access borrowing with a low-interest rate depends on their social networks [
64]. Notwithstanding the above, the prevalence of borrowing without interest at 13.86% in this current study is almost similar to Cambodia, with 20.8% and 10.9% in 2009 and 2014, respectively [
19]. However, the prevalence of borrowing with interest in this current study (1.03%) is much lower compared to Cambodia (69.9%) [
19]. Hence, explains the occurrence of inequality among those who borrow with interest. Nevertheless, the prevalence of selling assets was distributed almost equally among the poor and the rich. This is probably due to the low prevalence of selling assets among the households in Malaysia; plus, having no reasons to do so since they have an option to go to public health sectors, which act as the safety net for healthcare delivery in Malaysia. [
38].
The presence of family members aged 65 years and older were also associated with the occurrence of distress financing among households. This result is comparable to other studies done in China, India, Cambodia, and Vietnam [
65‐
71]. The presence of the elderly among household members increases the health financial dependency since they are prone to suffer from illnesses and disabilities [
72,
73]. Studies have shown that even in high-income countries, the elderly tend to develop distress financing and CHE due to chronic diseases such as diabetes mellitus and cardiovascular diseases [
71,
74]. According to NMHS 2019, the elderly contributes to 40.0% of outpatient care and 16.6% of inpatient care utilisation in Malaysia [
75].
Analysis of different socio-economic groups revealed that households in the poor socio-economic group were prone to distress financing due to insufficient resources. The socio-economically vulnerable groups, especially the poor, would rely on financing sources such as borrowing and selling assets to get medical treatment [
6,
76]. Hence, forcing them to be placed in a very disadvantageous situation and trapped in the vicious cycle of poverty, health, and indebtedness [
6].
Spending nights in hospitals can also result in households resorting to distressed sources of financing. This is seemingly related to the increased cost of illness during hospital stays [
77]. For example, any illness among family members such as injuries or NCDs, that requires admission will incur an additional economic burden to the respective household, especially when the family’s sole breadwinner is the one affected. This leaves them with limited choices to finance their healthcare costs by either borrowing or selling their assets [
78]. Inpatient care is known to cost more to the patient and their family than outpatient care inconsequential either in private or public healthcare facilities [
19].
This study also found that the presence of a child aged less than five years old was less likely to results in the household opting for distressed sources of financing. In most countries, maternity and child health services would incur higher costs to the family compared to those who received free-of-charge health services [
79]. Perhaps, this additional cost is not significant for a newly formed family especially when both are working parents. Besides, the decreasing trend of mortality and morbidity among children in Malaysia may suggest lower financial demand to care for them [
80].
This is the first study looking into the inequality and determinants of households’ financial distress in Malaysia. While determinants of financial distress were the main focus of this study, equality analysis of financial distress and their various sources of financing gives a better understanding of the current financial distress and UHC situation in Malaysia. Rather than using binomial logistic regression, this study adopted Modified Poisson regression to estimate the relative risk. It is the preferable choice of analysis for binomial outcomes in providing unbiased estimates of relative risk when dealing with model misspecification [
52]. The causes of model misspecification may include omission of important explanatory (or independent) variables, exclusion of non-linear components or critical interaction terms, or measurement errors [
52]. Hence, adopting modified Poisson regression could avoid biased estimates and misleading conclusions. This study also used national household survey data, providing a better representation of the overall financial distress situation among households in Malaysia. The results of this study can be used as a guide to better improve healthcare delivery in Malaysia. While this study revealed that borrowing with interest and selling assets is very low in Malaysia, the prevalence of borrowing without interest was relatively high, especially among the poor socio-economic group and those living in rural areas. Despite the government subsidising the public healthcare sector and providing almost free healthcare services to all citizens, it only covers the costs of treatment and management in hospitals and clinics [
24]. Hence, the direct non-medical costs such as transportation costs are still incurred by the patients and their family members. A unique financial initiative such as PeKa B40 which covers the costs of transportation is a good start to improve the situation, but the provision is only limited to the lowest 40% of the income group and the uptake rate was still debatable [
81]. Expansion of the programme will ultimately improve the financial distress situation in Malaysia. Particular attention should be given to the elderly, those admitted to the hospitals, and the poor socio-economic group. Since the poor socio-economic groups are more prone to health morbidities, it is imperative that they are being protected financially. Financial distress among the poor would create unequal access to healthcare and subsequently affect their health status. Thus, removing the financial distress could potentially improve their health status and remove the inequalities gap, which is the core to achieving UHC.
Nevertheless, this study is not without limitations. Since this study used cross-sectional data, the results could not provide a causal relationship between independent variables and distress financing. In addition, the trend of financial distress over the years also could not be examined. Changes in financial distress trends are a good indicator to measure the progression of the country’s healthcare systems towards achieving UHC. Using secondary data also limits the analysis to data availability. Variables that are important and necessary but not available could not be incorporated into the analysis [
82‐
84]. Future studies of distress health financing trends will provide a better understanding of the UHC progression in Malaysia and a sustainability gauge for the current healthcare financing systems. In addition, the future study also should explore in-depth reasons and factors behind patients or households resorting to distress financing.
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.