Original Research

Determinants of out-of-pocket health expenditure and their welfare implications in a South African context

Ali Babikir, Ali Satty, Henry Mwambi
Journal of Economic and Financial Sciences | Vol 11, No 1 | a177 | DOI: https://doi.org/10.4102/jef.v11i1.177 | © 2018 Ali Babikir, Ali Satty, Henry Mwambi | This work is licensed under CC Attribution 4.0
Submitted: 31 January 2018 | Published: 17 May 2018

About the author(s)

Ali Babikir, Department of Mathematics and Statistics, College of Science, Taibah University, Saudi Arabia
Ali Satty, School of Mathematics, Statistics and Computer Science, University of KwaZulu-Natal, South Africa
Henry Mwambi, School of Mathematics, Statistics and Computer Science, University of KwaZulu-Natal, South Africa


This study aims to quantify the extent of catastrophic household health expenditures on welfare and determine factors influencing it. A logistic regression model based on the logit link function was used to predict the probability of catastrophic health expenditure occurrence. A comparison between 2008 and 2012 health status of adults shows that there was a sizable improvement of the health status of individuals. The high level of catastrophic health expenditure may be associated with the low share of prepayment in national health expenditure, adequate availability of services and a high level of poverty which for South Africa is 46.2% according to the Statistics South Africa report (2015). Major factors determining the catastrophic expenditure besides poverty were spending on hospitalisation and medical supplies. Thus, reducing catastrophic expenditures requires an increase in financial protection offered to the poor through expanding government-financed benefits for the poor such as implementation of the Social Health Insurance (SHI) scheme, which will cover all poor households.


Out-of-pocket; health expenditure; health care; logit model


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