Equity Healthcare Financing in Ethiopia: Measuring the Burden of out-of-pocket Payments
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Date
2025-03-15
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AAU
Abstract
Paying out-of-pocket (OOP) continues to be a major obstacle to accessing healthcare in Ethiopia.
While the government aims to provide universal health coverage, high direct costs continue im-
pose severe financial hardship on households. This study evaluated the impact of OOP payments
on healthcare access, using data from the general household survey collected in 2019/20, to esti-
mate the incidence of both catastrophic health expenditure and impoverishing health expenditure
due to OOP health payments.
The study estimated the incidence of catastrophic health expenditure (CHE) at 10% and 25% of
total expenditure and 40% of non-food expenditures. It also calculated the incidence of impov-
erishing health expenditures using Ethiopia’s national poverty line of Birr 10,053 annually per
adult. The findings indicate that a notable percentage of households, 8.5%, encountered CHE at
the 10% threshold, with 0.7% falling below the poverty line as a result of healthcare expenses.
Under the 10% total expenditure threshold, the regions exhibiting the highest incidence of CHE
are Somalia (12.2%), SNNPR (11.5%) and Gambela (9.3%). The incidence of impoverishing health
expenditure was also high in regions such as Benishangul-Gumuz (1.4%), SNNPR (1%), and So-
malia (1%). The low-income and rural households were found to be the most vulnerable. In sum-
mary, OOP payments undermine healthcare access and impoverish Ethiopian households. There
is a need to strengthen financial risk protection mechanisms and improve equity in healthcare
financing, especially in the regions most affected by the catastrophic and impoverishing effects
of out-of-pocket health expenditures. Expanding prepayment mechanisms like social health in-
surance and subsidies could help promote equitable access in line with universal health coverage
goals. Strengthening financial risk protection is critical to reducing disparities across Ethiopia.