Intended for healthcare professionals

Feature Cost of Living

Health spending is driving people into poverty in Europe and central Asia

BMJ 2023; 383 doi: (Published 12 December 2023) Cite this as: BMJ 2023;383:p2883
  1. Mun-Keat Looi, international features editor
  1. The BMJ
  1. mlooi{at}

A new WHO report outlines the financial hardship many people fall into because of the cost of healthcare—and explains the political tweaks that could help them. Mun-Keat Looi reports

“Is it acceptable that people become poor as a result of ill health?” asks Tamas Evetovits, head of the World Health Organization’s Barcelona Office for Health Systems Financing. “Acceptable or not, this is what we see across the European region.”

Increasing numbers of people in Europe and central Asia are having to spend so much on healthcare that they don’t have enough money left for their other essential needs—so called “catastrophic health spending,” which occurs when the amount a household pays out of pocket exceeds a certain level of capacity to pay. And this is becoming more and more common, says a WHO report published this week.1

“It means that once they’ve spent that much out of pocket they probably don’t have enough left to meet their other basic needs such as food, housing, and utilities,” says Sarah Thomson, senior health financing specialist at the WHO Barcelona Office for Health Systems Financing. Evetovits, Thomson, and colleagues have published the WHO report on people’s spending on healthcare in 40 countries throughout Europe and central Asia. Their analysis shows that the number of people being pushed into catastrophic health spending is rising—and not just those in poorer demographics or countries.

“Even in the richest countries in Europe, there are households that are impoverished or experiencing catastrophic health spending,” Thomson tells The BMJ. “We find consistently across countries that it’s the poorest fifth of households that are most likely to be affected.”

Far reaching cost of everyday medicines

Catastrophic health spending affects fewer than 1% of people in Slovenia but almost 12% in Ukraine (figs 1 and 2). “Even within European Union countries, the worst performing [Bulgaria] has 8% of households facing impoverishing expenditure out of their pockets as a result of using health services,” Evetovits told the European Health Forum Gastein in September.

Fig 1
Fig 1

Out-of-pocket spending costs for different healthcare services in the EU

Fig 2
Fig 2

Proportion of household healthcare spending on different services by country and sorted by level of financial hardship. On average, households with catastrophic spending are mainly paying for medicines, dental care, and medical products such as glasses or inhalers

The WHO report highlights several causes of this, including the cost of everyday drugs. In countries where catastrophic spending is low, says Thomson, out-of-pocket expenses tend to be for dental care, glasses, hearing aids, nebulisers for asthma, and wheelchairs. “All of these gaps in coverage are things that affect people with low incomes the most,” she says.

But those aren’t the products that are driving financial hardship; rather, it’s predominantly the everyday, outpatient drugs. “Poor people prioritise medicines over other services and products,” says Evetovits. “The other services and products like dental care become an unmet need for them.”

Thomson adds, “What we see in a lot of health systems is governments not doing enough to give people access to much cheaper medicines for very common chronic diseases, like diabetes. It’s generally not the new, expensive, innovative medicines that are causing financial hardship for people—it’s the medicines that people need to take every day. And these are usually highly cost effective medicines.”

Poorer people also delay seeking healthcare, which can mean their conditions becoming so severe that they require hospital admission. “What happens in the hospital? Suddenly their medicines are covered,” says Evetovits. “Why is it that people who are getting their medicines when they’re hospitalised walk out of the hospital and the very same medicine becomes a significant cost of the treatment?”

Even when the cost of drugs for some chronic conditions is partly covered, the expense of some treatments for chronic conditions can still be unaffordable for people who aren’t well off. “That’s why we see compliance problems for chronic conditions,” says Evetovits—namely, people aren’t taking their medicines.

He adds, “In the eastern regions, you find medical practice where the doctor would advise a patient with high blood pressure, ‘Take this drug only when you are in crisis, because I know you cannot afford to buy and take it as prescribed’—which is normally, of course, to take every day.”

User charges

WHO’s researchers examined data from the Organisation for Economic Co-operation and Development, Eurobarometer, and other sources to determine the relation between financial hardship and how health coverage is implemented at a policy level.

Almost all of the 40 countries in the study had some user charges. Thomson says that this is despite a “huge body of evidence” showing that such charges can block access and are an inefficient way of getting money into a health system. “Lots of countries have them because they’ve always had them or because [governments] think, ‘People are wasting services, it’s good to make them pay a bit.’ None of this is evidence based,” she says.

In the wake of the 2008 financial crisis many countries increased their user charges or added new ones. “We’re concerned about this now,” says Thomson. “After the pandemic, ministers of finance are in some instances are saying, ‘You’ve had your fair share, and now money has to go elsewhere.’ And it’s very tempting for ministries of health facing a budget constraint to go back to increasing user charges.”

The researchers found that many countries with high levels of catastrophic health spending relied heavily on copayments, where users pay a proportion of the cost of a medicine. This, says Thomson, shifts financial risk onto the users of health services and means that insurance companies or purchasing agencies have less of an incentive to think about controlling prices. “[Copayments] are really unfair because if you were unlucky enough to have a condition that requires an expensive treatment, you would have to pay more of the cost,” she says (fig 3).

Fig 3
Fig 3

Percentage of households with catastrophic healthcare spending versus out-of-pocket payments as a share of current spending on health, by country. Financial hardship is higher in health systems that rely more heavily on out-of-pocket payments

This extra cost can have disastrous consequences. Facing a budget constraint in 2018, the Finnish government decided to increase user charges for people with type 2 diabetes from a low fixed copayment to a percentage copayment. Drugs for type 2 diabetes had already been under scrutiny because of rising costs, which were due to increasing prevalence of type 2 diabetes and therapeutic shifts towards newer and more expensive treatments.

Patients taking the newer, more expensive drugs faced increases of hundreds of euros a year in their copayments. But the policy didn’t produce the financial gains that the government expected. Katri Aaltonen, a researcher at the Academy of Finland, University of Turku, told the European Health Forum Gastein that medicine use decreased only slightly2—and that the use of social assistance by those households increased.3 One study4 found evidence of worsening glycaemic control in these patients. “This was more pronounced among the patients who prior to the reform used these newer and more expensive medicines,” says Aaltonen.

Thomson adds, “Instead of saying, ‘We’re going to negotiate and get a better price,’ the government put the financial risk on the patient. Adherence to the medication went down, and the need for social assistance went up.”

Bad ideas

Linking a person’s healthcare entitlement to their payment of mandatory social insurance is common in many countries that have social health insurance schemes. But this is a bad idea, says Thomson. “People are at high risk of losing their entitlement to publicly financed healthcare at the moment they need it most: when they’re losing their jobs, when they’ve been unemployed for a long time, or when their incomes are falling and they simply can’t afford to pay contributions—undermining their resilience but also the resilience of the health system,” she says.

This is also inefficient for health systems, as people who don’t have access to social health insurance benefits will self-treat or use emergency services. This leads to clear gaps in coverage. And it worsens inequalities because these gaps mainly affect people who do precarious work, those working in the informal sector, and people with unstable or insecure jobs (see box).

Progress is possible. France and Israel still run social health insurance schemes, but a person’s entitlement to health benefits is now based on legal residence rather than payment of mandatory contributions.

“In France, they were anticipating the challenges that would come from not being able to cover enough people when entitlement was linked to payment of contributions,” says Thomson. “They were particularly concerned about young people who are unemployed or in unstable work. And because they thought there was going to be an issue, they took action.”

Progressive universalism

Bad policies aren’t necessarily the result of policy makers being unable to understand evidence, Thomson argues. She says that more often it’s caused by inertia and what she calls “path dependency—where things have always been done this way.”

Policy design really matters, she adds. “Even if you have user charges, if you recognise the damage they can do, you can design your user charges policy very carefully to protect people,” she says. The team behind the WHO report recognise that “it’s hard for countries to give up revenue from user charges overnight.” But, says Thomson, change is possible.

She explains, “If you can redesign your policies—thinking about the people who are most likely to experience financial hardships, people with low incomes, people with multiple chronic conditions—[you can] have exemptions for people with chronic conditions and people on low incomes.

“If, for everybody, you can have a cap on out-of-pocket payments and everybody knows that they don’t have to pay more than 1-2% of their income a year; if you can have low fixed copayments—£1 for a prescription charge instead of making people pay a percentage of the medicine cost—then you can, even with a limited budget, protect the people who are most at risk of financial hardship.”

Gig economy leaves a generation without healthcare

Estonia has generally high levels of healthcare coverage (about 95%), but a growing proportion of people in their 20s aren’t covered.

Maris Jesse, a consultant and health expert in Estonia, told the European Health Forum Gastein in September that the nature of work had changed. She says, “We see more project work, irregular work, with young people choosing not to be in permanent employment. They have these bouts of intensive project work and then take off for three or four months to do their hobbies.”

Sarah Thomson, senior health financing specialist at the WHO Barcelona Office for Health Systems Financing, says, “It’s often hard for self-employed people to pay mandatory contributions, because their work is precarious—unpredictable, insecure, poorly paid.”

Estonia has been trying to find solutions. In 2002 it introduced a supplementary benefit for people who reached certain thresholds in out-of-pocket spending.

The switch to digital is helping the country to meet this challenge. Almost all prescriptions in Estonia are now e-prescriptions, and when someone goes to the pharmacy their reimbursements are calculated and deducted from the cost of their medicine.

Before the introduction of this system, reduced copayments applied to only 0.4% of Estonia’s people. In 2022 this figure was 15.6%, and the number of people spending more than €250 (£214; $269) a year on copayments had fallen from 24 000 to around 1000.


  • Competing interests: Mun-Keat Looi attended the European Health Forum Gastein on a press pass.

  • Commissioned, not externally peer reviewed.