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PPPs for policy making: a visual guide to using data from the ICP - Chapter 6: Health

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Health expenditures

Strengthening health financing is an objective of Sustainable Development Goal (SDG) target 3.c and policy makers directing initiatives to reduce both inequalities in health care and the impact of health care costs on the most vulnerable can access PPP-based measures of health expenditures. The levels and trends of health expenditure data identify weaknesses and strengths in health systems as well as areas that need investment such as additional health facilities, better health information systems, or better trained human resources. These indicators allow health administrators to learn from past expenditure outcomes and improve planning and allocation of resources throughout the system, thereby increasing efficiency and accountability. Countries can track changes in policy priorities and compare their performance with other countries and regions. The World Health Organization (WHO) publishes many PPP-based indicators including per capita data on domestic government and private health expenditures and on expenditures from external sources encompassing financial inflows into the national health system from outside the country (figure 6.1).

The ICP calculates PPPs for health-related goods and services and provides indicators on the price levels and expenditures for health, covering household expenditure on pharmaceuticals; medical products, appliances, and equipment; outpatient services; and hospital services plus expenditure of nonprofit institutions serving households (NPISHs) on health plus general government expenditure on health benefits and reimbursements, and the production of health services (figure 6.2). Using these ICP indicators to explore health spending can provide policy makers with a better understanding of what drives the cross-country differences and what responses can be put in place to increase value for money and target better health outcomes for their citizens.

Health financing is also critical for enabling people to obtain quality health services without suffering financial hardship. SDG target 3.8 looks to achieve universal health coverage, including financial risk protection, access to quality essential health-care services, and access to safe, effective, quality, and affordable essential medicines and vaccines for all. SDG target 3.8.2 attempts to measure whether all people and communities receive the quality health services they need (including medicines and other health products), without financial hardship, and looks at the proportion of the population with large household expenditures on health. The World Bank’s Health Equity and Financial Protection Indicators (HEFPI) dataset holds many detailed indicators including the average household out-of-pocket expenditure on health, expressed in 2011 PPP dollars (map 6.1).

The effects of these out-of-pocket expenditures on households also vary and figure 6.3 shows the proportion of households within a region for which these are a large part of their household income, as well as consequences of these expenditures when they are impoverishing and push people below a poverty line threshold.