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8th January, 2015

Decoding health expenditure indicators


Topic
Health Care Financing


Want to learn more about health financing? Can’t tell your OOPS from your GGHE? Forgot whether public funds for health includes donor funding? Let us teach you here.
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Want to learn more about health financing? Can’t tell your OOPS from your GGHE? Forgot whether public funds for health includes donor funding? Let us teach you here.

National health spending is often reported according to a standardised set of indicators. You can access them for countries across Africa from the Global Health Expenditure Database, from African Health Stats (where you can also map spending against health indicators), or directly from System of Health Account reports in-country. However these indicators can be extremely confusing to understand…

The first thing that is useful to know is that health spending can be categorised in many different ways. We might want to know the distribution of health spending according to where that money came from, who spent it, what disease it was spent on, or through what level of the health system.

Here we concentrate on the first two types of categorisation: where the money came from, i.e. “financing sources”, and who spent the money, i.e. “financing agents”. For example, when donors channel their money through government and government uses that money to buy drugs and pay doctors, donors are the financing source but government is the financing agent.

Core indicators that frequently come up include: total health expenditure, public funds, external resources for health, general government expenditure on health, private expenditure on health, and out-of-pocket expenditure. Each of these indicators can best be understood as being either a type of “financing source”, or a type of “financing agent”. So what do they really mean?

Total health expenditure is the total amount of money spent on health in a country, regardless of where they money came from or who spent it – types of financing sources or financing agents are therefore often expressed as a % of total health expenditure: e.g. private health expenditure as a % of total health expenditure.

In terms of financing agents (who directly spends money on health goods and services?), standard indicators include the pithy “general government health expenditure” (GGHE), “private expenditure on health”, and “out-of-pocket expenditure”.

As the name implies, GGHE includes all money spent directly by government, no matter what the original source was (e.g. including some insurance funding and some donor funding). This will be an indicator that many health budget advocates will have an interest in, to figure out whether the government is spending enough on health. Private expenditure on health includes spending by households, corporations, or NGOs. Government expenditure and private expenditure should add up to total health expenditure.

Out-of-pocket spending, also called OOPS (great acronym!), is part of private expenditure and describes the money that households spent directly on health, i.e. without insurance. It is a good measure of whether the health care system causes financial hardship for households. Want to find out more? We think the best source is the WHO’s Indicator Compendium

The first thing that is useful to know is that health spending can be categorised in many different ways