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Box 3.1

Out-of-pocket payments

What are out-of-pocket payments (OOP)s?

OOP is defined by the WHO as an individual’s direct payments (household
spending) to healthcare providers for any health services wherein any third-
party payer reimbursement, such as insurance funds or government subsidy,
do not cover the full cost of the services.
OOPs are composed of:
• Direct payments for uncovered or uninsured services
• Cost-sharing, including co-payments and deductibles
• Informal payments beyond prescriptions, such as informal payments to
health staff
The higher the OOP spending, the greater the risk that people who are not
protected against substantial payments, especially vulnerable populations
such as those with limited financial capacity, will incur catastrophic spending
that could deepen existing poverty, or even be forced to forgo care entirely.
This leads to inequity in healthcare access because access is tied to one’s
ability to pay. Thus, share of OOPs in health systems is an important
indicator of equity in healthcare access and is a marker of a country’s
progress towards UHC.

What can Governments do to reduce OOPs?

Towards UHC, common governmental approaches include a greater
allocation of public revenue sharing to health, with an expansion of a prepaid
funding pool to decrease OOP. Studies have identified various policies that
have led to reductions in OOPs.
Main components of successful policy strategies internationally include:

• Stewardship in implementing regulations through legislation, including
cost-sharing maximums, and effective monitoring,
• Creating resources by investing in the health workforce and improving
access to physical health facilities,
• Financing initiatives in purchasing and pooling, which includes insurance
enrolment, and healthcare service redesign to enable better access,
• Delivering services, such as screening and treatment.
This demonstrates that governance and financing mechanisms are tools for
Hong Kong to move towards UHC, so that quality health services are
accessible financially and equitably.

Sources: Jalali et al., 2021; WHO & IBRD, 2020

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