Effect of Out-of-Pocket Health Expenditure on Household Welfare: Evidence from Uganda National Household Survey: 2016–2017

Abstract

Out-of-Pocket health expenditures (OOP) in Uganda are increasingly rising due to the limited share of the national budget allocation to the health sector. Using Uganda National Household Survey data (UNHS) 2016/17, this study investigates the effect of OOP health expenditures on household welfare in Uganda. Due to the presence of endogeneity, the study employs a robust sampling instrumental variable technique to control for simultaneous causality between household welfare and the OOP health expenditure variable in the model. The findings show that a unit increase in OOP health expenditure reduces household food consumption expenditure by 9% and the household asset base by 2%, respectively. This study thus recommends the effective implementation of the Uganda National Health Insurance Scheme (NHIS), increased investment in preventive care services, and promotion of activities aimed at empowering health beneficiaries in Uganda to improve their household welfare. Keywords: out of pocket, welfare, food consumption expenditure, asset index, Uganda