Opinion – Pablo Acosta: Catastrophic health expenditures weigh on families’ budgets

Brazil has the largest universal health system in the world. The importance of SUS became evident during the recent Covid-19 pandemic, which generated more demands for its strengthening. One of the very highlighted points is related to its financing.

Although the level of total health expenditure in Brazil (almost 10% of gross domestic product) is comparable to that of European countries such as Denmark, the Netherlands and the United Kingdom, or Argentina, Chile and Uruguay, in Latin America a smaller proportion of this total expenditure financed by the public sector: just under 41% in Brazil, versus 62% in Argentina, 67% in Uruguay, 72% in Colombia, and over 80% in Denmark and the United Kingdom.

This means that most health financing in Brazil is carried out by the private sector, and an important part of this expenditure is the direct payment of families: almost 15% of health expenditure in Brazil is made by Brazilian families. In Colombia, this proportion is around 4%.

The main problem with this expenditure by families is its inequity: its weight falls disproportionately on the poorest and most vulnerable groups. And the main driver of these individual expenses is concentrated in one category: pharmaceuticals.

Medical needs can be unexpected, and the consequences sometimes go far beyond health impacts. Absence from work, expenses with doctors, exams and medicines can strain families’ budgets and even lead to poverty.

Although public health is free in Brazil, more recent data from the Family Budget Survey show that Brazilian families spend, on average, 13% of their budget on health, being the fourth consumption group, behind housing, transport and food. The problem is that this is the average expense, and some families spend much more, which can even compromise their ability to buy food and pay the monthly bills.

High health spending is so worrisome that the economic literature often calls it catastrophic spending. The WHO (World Health Organization) works with different lines of reference of what is considered a high expense, including a value above 10% of the family budget. A recent World Bank study showed that 37% of households spent more than 10% of their budget on health. Among the poorest, these health expenditures reach almost 40% of the family budget.

The study identifies the most vulnerable groups: households headed by women, those located in rural areas, with less schooling and, in particular, households with elderly people. The growth of the elderly population in Brazil is one of the fastest in the world, with a forecast to increase from 11% of the working-age population in 2005 to 49% in 2050, which indicates that the concern of families with health expenditures tends to increase. .

On average, medicines represent 46% of Brazilian families’ health expenditure, but this proportion varies greatly depending on the income bracket. For the poorest, 84% of health expenditure goes to medicines, against 29% in the richest families, almost three times less.

These data clearly show the importance of the debate that is taking place at the moment about the need to improve the access of Brazilians, especially the poorest, to medicines. It is necessary to deepen this discussion and inform the development of pharmaceutical policies that lead to more equitable access to medicines and reduce the negative impact of health expenditures on the most vulnerable Brazilians.

This column was written in collaboration with my colleagues at the World Bank: Roberto Iunes, Senior Economist, Courtney Ivins, Health Specialist, and Bernardo Coelho, Consultant.