Financial risk protection – how do the informally employed pay for medical treatment? 3 FINANCIAL RISK PROTECTION – HOW DO THE INFORMALLY EMPLOYED PAY FOR MEDICAL TREATMENT? Rudolf Traub-Merz Financial risk protection is a key component of universal health coverage(UHC). It is defined as providing access to quality health services for all without suffering financial hardship.»Financial protection is achieved when direct pay­ments made to obtain health services do not expose people to financial hardship and do not threaten living standards« (WHO). Government transfers, insurance contributions, foreign donations and out-of-pocket payments(OOPs) are the four main sources for financing health costs. High direct pay­ments for health treatment can cause households to incur costs beyond their means and push them into poverty. Tax transfers to reduce health costs or finance free health and extended health insurance coverage are key strategies to reduce out-of-pocket payments at a time of sickness and are the main strategies to protect the poor from financial risks and keep them out of a vicious health–poverty circle. or payments are made though other sources, such as health insurance. If households have to pay directly, three main op­tions are available: people may settle bills by using(part or all of) their savings. If own funds are not available, they may sell some of their possessions, such as cattle, tools, advance sales before the harvest, jewellery, household equipment, means of transport. Alternatively, they could approach friends, relatives, neighbours, money lenders, banks, or others to obtain a loan. A further but less important option is to seek monetary assistance in the form of a donation. One may question the wisdom of combining access to tradi­tional forms of solidarity with mobilising funds from market economy operators. But traditional forms of solidarity are based on reciprocity and while they may allow more leeway in pay-back procedures than market operators provide, pres­sure to»return the favour« is nevertheless at work and such debts have to be settled when the need arises for others. 3.1 SOURCES OF FINANCING MEDICAL CARE The various ways of paying health bills are presented in Figure 3.1 Long travel distances, unavailability of qualified staff or medicine or services that cannot be afforded due to their high cost may be the major reason why people refrain from visiting medical facilities. But what happens if they do go for medical treatment? If health services are provided free of charge, there are still incidental costs, such as payments for transportation, time of absence from home, out-of-pocket payments for food and other factors, and other things. If health services have to be paid directly by users themselves, however, the availability of sufficient funding may become a major concern. To obtain an understanding of how burdensome the costs of medical treatment may become we asked heads of house­holds»How did you or your family find the money to pay for this treatment?«. We did not ask for the exact amount and thus are not able to relate private health expenditures to household income. Identifying the source of funding allows us to draw conclusions about the financial hardship people have to cope with when going for treatment, however. We classified the ways of paying health bills in terms of various sources. Patients may enjoy health services without directly paying for them, either because no costs are charged Patients in Zambia appear to be in a»privileged« situation when falling sick. Nearly half of them receive medical care without having to worry about the costs. A further 26 per cent can mobilize savings, while some 12 per cent are»less privileged« in that they have to obtain cash by either selling some of their assets or taking a loan to be able to pay for treatment(Figure 3.1). Senegal is positioned at the other end of the scale. A mere two per cent are provided free health services, while 41.5 per cent use savings. This leaves a whopping 47.9 per cent – or nearly every second patient – who is forced to sell property or go into debt. Kenya, Ethiopia and Côte d’Ivoire hardly fare better. A fifth of patients or less enjoy access to health care free of charge, while between 34 per cent(Kenya) and 57 per cent(Ethiopia) use savings. This leaves between 27.1 per cent(Côte d’Ivoire) and 42.7 per cent(Ethiopia) to search for»external« funds by borrowing or selling assets. Our findings are supported by WHO figures for out-of­pocket payments(OOP), which group Zambia and Senegal at the positive and negative ends of the ranking order(see Table 3.1). 19