The Determinants of Household Out-of-Pocket (OOP) Medical Expenditure in Rural Bangladesh

Background The Government of Bangladesh has a National Healthcare Strategy 2012–2032 that reiterates a goal to achieve universal health coverage (UHC) by the year 2032. To achieve the goal, the government has set up a strategy to reduce the share of out-of-pocket (OOP) expenditure from the current 64% of the total household healthcare costs to 32% at the national level. As the majority of the people live in the rural areas, and the rural people are generally poor, the success of the strategy relies predominantly on any type of pro-poor healthcare policy and strategy. Objective To estimate if there is any feedback effect in the healthcare costs model and to estimate relative contributions of various determinants to OOP medical expenditure in rural Bangladesh. Methods This study used an econometric approach and a system of simultaneous equations models. The OOP expenditure was measured by household medical expenditure, which is a sum of expenditures for medicine, ayurvedic, various kinds of tests, hospitalization, and dental-related, incidental and other health-related costs. The feedback effect hypothesis is tested by the level of statistically significant dependent variables of the three equations used in the system of simultaneous equations model. The relative importance of the determinants of OOP expenditures was measured by the size of standardised coefficients of the determinants. Results There is a feedback effect between the three dependent variables—medical expenditure, sickness of the household members and the selection of healthcare provider. We also find that although the selection of private healthcare facilities is relatively the most important determinant of OOP expenditures in the rural areas, the sickness of the members of a household and the selection of healthcare provider together have a real effect on the OOP expenditure in rural Bangladesh. Conclusions Bangladesh needs a holistic approach to undertake any strategy; private healthcare facilities are relatively the most important source of high medicine costs; hence, the supply of medicine and its price should be given attention on a priority basis for pro-poor policy framing in conjunction with healthcare insurance and motivation to consult doctors rather than pharmacists in case of sickness.