Limitations of methods for measuring out-of-pocket and catastrophic private health expenditures

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Abstract
To investigate the effect of survey design, specifically the number of items and recall period, on estimates of household out-of-pocket and catastrophic expenditure on health. We used results from two surveys – the World Health Survey and the Living Standards Measurement Study – that asked the same respondents about health expenditures in different ways. Data from the World Health Survey were used to compare estimates of average annual out-of-pocket spending on health care derived from a single-item and from an eight-item measure. This was done by calculating the ratio of the average obtained with the single-item measure to that obtained with the eight-item measure. Estimates of catastrophic spending from the two measures were also compared. Data from the Living Standards Measurement Study from three countries (Bulgaria, Jamaica and Nepal) with different recall periods and varying numbers of items in different modules were used to compare estimates of average annual out-of-pocket spending derived using various methods. In most countries, a lower level of disaggregation (i.e. fewer items) gave a lower estimate for average health spending, and a shorter recall period yielded a larger estimate. However, when the effects of aggregation and recall period are combined, it is difficult to predict which of the two has the greater influence. The magnitude of both out-of-pocket and catastrophic spending on health is affected by the choice of recall period and the number of items. Thus, it is crucial to establish a method to generate valid, reliable and comparable information on private health spending.