A distributional analysis of household health expenditure in nigeria

Project Abstract

This research project aims to conduct a distributional analysis of household health expenditure in Nigeria. The study will utilize data from the Nigeria Living Standards Survey (NLSS) to examine the patterns of health expenditure across different income groups within the Nigerian population. By employing various statistical techniques such as concentration curves and indices, the research will investigate the level of equity in the distribution of health spending among households in Nigeria. The analysis will focus on identifying the extent to which health expenditure disproportionately impacts lower-income households compared to higher-income households. Additionally, the research will explore the factors influencing the distribution of health spending, including income levels, education, geographic location, and household size. By understanding the determinants of health expenditure distribution, policymakers can develop targeted interventions to improve access to healthcare services for vulnerable populations. Furthermore, the study will assess the implications of out-of-pocket health expenditure on household welfare and financial risk protection. High levels of out-of-pocket spending on health can lead to catastrophic health expenditures, pushing households into poverty. By examining the distribution of health expenditure, this research aims to provide insights into the financial burden of healthcare costs on different income groups in Nigeria. The findings of this study are expected to contribute to the existing literature on health financing and equity in Nigeria. Understanding how health spending is distributed among households with varying income levels can inform policy decisions aimed at achieving universal health coverage and reducing financial barriers to healthcare access. By promoting a more equitable distribution of health expenditure, policymakers can work towards improving health outcomes and reducing disparities in healthcare utilization across different socioeconomic groups in Nigeria. Overall, this research project seeks to shed light on the distributional aspects of household health expenditure in Nigeria and provide evidence-based recommendations for improving the equity and efficiency of health financing in the country. By addressing the challenges associated with unequal health spending patterns, policymakers can move closer to ensuring that all Nigerians have access to affordable and quality healthcare services, regardless of their income level or socioeconomic status.

Project Overview

<p> Out-of-pocket expenditure at point of seeking healthcare services is the major means of financing healthcare in Nigeria, among other financing mechanisms. This is because most households (over 95%) are excluded from the financial risk protection of health insurance. The decision to utilize health services by households implies the decision to pay for them. This has resulted into a situation where households have to sale assets, borrow money or sometimes, forgo the consumption of other essential commodities necessary for their wellbeing, in order to seek healthcare services when they need them. This is especially so, for poorer households and those in the rural areas. This study examined the distribution of out-of-pocket expenditure across socioeconomic groups employing data from the Harmonized Nigerian Living Standard Survey 2008/2009. Using concentration index, Gini index and Kakwani index for the analysis, and also the Lorenz curve and concentration curve were combined to show inequality in health payment across socioeconomic groups in Nigeria. It was found, contrary to most studies in literature, that out-of-pocket payment was a progressive healthcare financing mechanism across income quintile and across geopolitical zones in Nigeria. This implies that poorer households’ share of health expenditure was less than their share of income and vice versa for richer households. The result also revealed that female headed households spent 8% more, on health as a percentage of total income than male headed households. The rural areas were observed to spend approximately 5% more, on health as a percentage of total income than the urban areas. These imposed financial catastrophe on these households as over 40% of their non-subsistence expenditure was devoted rto healthcare. This implies that these households will have to go into debts or sell assets to seek healthcare, thereby jeopardizing households’ livelihood. It is possible that a healthcare system with excessive reliance on out-of-pocket expenditure for financing healthcare at point of seeking health services, will have out-of-pocket expenditure progressive, as found in this study instead of being regressive (where poorer households’ share of total health expenditure exceeds their share of total income). It was therefore concluded that, it is possible that the Nigerian health system is excluding significant proportions of her population from the use of healthcare services on the basis of their not been able to afford the costs of treatments. Hence, the progressivity of out-of-pocket expenditure may have been achieved at great opportunity costs. It is also possible that poorer households seeks low quality care or rather embark on self medication which may require small portion of their income. It was therefore recommended that there is need to move away from out-of-pocket payment mechanism to health insurance or a subsidized healthcare system. The National Health Insurance Scheme should be enhanced to improve on coverage, with preference given to the poor, rural areas and female headed households. <br></p>