Background
Globally, health systems are called upon to ensure universal access to health care for their populations [
1]. This requires that they ensure the availability of adequate and quality health services for everyone in need of them while consequently protecting them from the accompanying financial burden [
2]. The reliance on out-of-pocket payments for health care is a major cause of financial hardship in families. The World Health Report 2010 notes that over 100 million people are pushed into poverty while over 150 million people incur excessive out-of-pocket health payments that place a heavy drain on their living standards [
1]. Despite the call for health systems to adopt sustainable health financing mechanisms as a path to universal coverage, most health systems in low income countries, particularly in sub-Saharan Africa, are still heavily dependent on out-of-pocket payments [
3,
4].
In Uganda, user fees were introduced in 1993 as part of a package of economic reforms recommended by the World Bank to reduce the level of debt and macroeconomic stagnation [
5]. The rationale for these restructurings was based on a theoretical argument related to the price inelastic demand for health care. It was hoped that the health sector would be able to raise its own revenue so as to improve the quality of its services [
5,
6]. However, the implementation of the user fee policy not only failed to achieve these objectives, it also resulted in decreased health care utilisation consequently increasing morbidity and mortality [
7,
8]. In response, user fees were abolished in 2001. The abolition was expected not only to increase access to health care but to reduce the financial burden on households.
Indeed, public health care utilisation increased particularly among the poor after the removal of user fees [
9-
12]. However, among the rich, utilisation decreased to a rate even lower than before the elimination of the fees [
12]. This is attributed to perceived differences in quality between the public and private sectors. Studies have revealed that the private health sector is the preferred provider for both the rich and the poor in Uganda [
13-
16]. The preference for private facilities which mainly rely on out-of-pocket payments has kept those payments high [
17]. A further factor attributed to the high out-of-pocket payments is the presence of informal payments in the public health facilities [
12]. It has been demonstrated that out-of-pocket payments as a percentage of private health expenditure in Uganda increased from 56.7% in 2000 to 64.8% in 2011 [
18]. The most recent national health accounts exercise indicates that household contribution through out-of-pocket payments is the dominant source of health expenditure contributing about 50% of total health expenditure in the fiscal year 2009/10 [
19].
Since illness is unpredictable, the consequent out-of-pocket payments incurred are likely to impose a financial burden on families. This is due to the impact of these payments on the allocation of the household’s disposable income. For instance, the outlay compromises the consumption of other household necessities such as food, clothing education and housing [
20]. These payments may also lead to a decrease in welfare leading to an increase in the level of poverty [
21,
22]. It has been argued, therefore, that in a fair and equitable health system, households should not pay more than a certain proportion of their total income for health out-of-pocket [
23,
24]. Exceeding such a threshold would make such payments catastrophic. These payments should also not push families into poverty or exacerbate their existing state of poverty [
23]. These arguments form the basis for the methodologies used in measuring financial protection in a health system.
Various earlier studies have investigated aspects of the financial burden of illness in Uganda [
12,
17,
19,
25-
27]. A review of the literature indicates that these published studies did not quantify the overall impoverishing impact of out-of-pocket health care payments. Furthermore, in this paper, financial catastrophe is assessed using a recent and generalised methodology developed by Ataguba [
24] that is able to demonstrate more concern for poorer socio-economic groups in society.
Discussion
The results indicate a lack of financial protection in Uganda’s health system. A very high percentage of Ugandan households incur financial catastrophe irrespective of the threshold considered and these out-of-pocket payments impoverish about 4% of Ugandans representing over 17% relative raise in poverty in the country. Since out-of-pocket health care payments account for a substantial share of household budget, they are likely to compromise the consumption of other basic necessities [
20,
34].
The results relating to financial catastrophe in this paper follow similar patterns to those of previous studies around the financial burden of out-of-pocket payments in Uganda and elsewhere [
12,
24,
27,
35,
36]. Although, to the knowledge of the authors, no previous studies in Uganda have analysed the impoverishment effect, the findings in this paper are similar to those reported in multi-country and other related studies [
25,
37-
40]. Higher levels of impoverishment have been reported in other African countries especially those which, like Uganda, depend heavily on private health financing through out-of-pocket payments [
41-
44].
It is possible that the impact of such payments in terms of both financial catastrophe and impoverishment reported in this paper is understated. This is because the poor may be too poor to even afford falling ill and therefore modify their perception of illness so as to avoid incurring payments [
22]. It may also be argued that since the poor utilise more free public facilities than the rich [
12], their exposure to out-of-pocket payments is decreased. In that case, the impact is not understated. However, since the demand for public sector facilities is lower than that for private sector facilities as indicated by the preference for the latter [
13,
15,
16], it is only those who can afford to pay for the private sector services that utilise them.
The lack of financial protection as revealed in this paper has important implications for the population. There is, therefore, a need for the country to limit direct payments that impose burdens on households. Based on the international literature [
1], this may take the form of moving towards prepayment (particularly mandatory) for health care as a means of attaining universal coverage. In low and middle income countries, mandatory prepayment has been shown to increase the level of financial protection [
45-
49]. For the private facilities where fee for service is the dominant provider payment mechanism, high out-of-pocket payments can be reduced by adopting a provider payment mechanism that does not increase household out-of-pocket expenditures.
This study has some limitations. The adjustment for vertical equity and diminishing marginal utility in the measurement of catastrophic payments as presented in this paper uses the inequality aversion parameter. The choice of the value of this parameter is still subjective [
24]. Ideally, this parameter should be guided by the community’s weighted preferences representing how compassionate a society is toward the poor [
24]. It is still the case that the use of variable thresholds provides an indication of the manner in which societies view consideration of equity and fairness, as a small out-of-pocket payment by the very poor could be far more financially catastrophic. Furthermore, the study does not identify household characteristics that increase the likelihood of incurring both catastrophic payments and impoverishment. These are some of the areas on which, particularly in Uganda, further research on financial risk protection in a health system should focus.
Conclusion
The absence of financial protection in Uganda’s health system calls for concerted action aimed at reducing the large proportion of out-of-pocket payments currently present in total health financing. The results indicate that Uganda, like many other African countries, is far from attaining the kind of universal health coverage which would emphasise protection of the poor especially. There is a need to put in place pooled prepayment systems so as to place the country on the road to achieving universal health coverage where people do not face financial difficulties in accessing the necessary health services.
Competing interests
The authors declare that they have no competing interests.
Authors’ contributions
All the authors made substantial contribution to the publication of this work. BK, CMZ and JEA were involved in the conception of the study, acquisition of the data and analysis. All the authors were involved in the drafting of the manuscript and they have all given final approval of the version to be published.
BK is a researcher at HealthNet Consult, Uganda. This manuscript was prepared while BK was completing his Master’s degree in health economics at the University of Cape Town, South Africa. CMZ is a senior consultant at HealthNet Consult (Uganda) while JEA is a senior lecturer at the Health Economics Unit, University of Cape Town, South Africa.