Three Essays in Health Economics

This dissertation comprises three chapters on health economics, which analyses the existing problems in Georgia's healthcare system and offers specific recommendations for policy makers. The first chapter, “Household Catastrophic Health Expenditure in Georgia and its Policy Implication” is a single authored paper. The main purpose of the aforementioned paper is to identify the factors affecting the prevalence of catastrophic healthcare expenditures (CHE) in Georgia and to evaluate the Fairness in Financial Contribution index (FFC) for the fourth quarter of 2015. By using the Integrated Household Survey Database of the National Statistics Office of Georgia, the research predicts the probability of occurrences of catastrophic health expenditure via the Logistic Regression Model and methodology developed by Xu (2005). According to the results, in 2015, the FFC index equaled 0.82 illustrating that it had been worsening since 2007 (when the FFC index equaled 0.72). Existing deterioration may be explained by the launch of the Universal Health Coverage program, introduced in 2013, offering similar insurance packages both to poor and rich households. The quintile for the poor, 3.5%, is more likely to face catastrophic health expenditures, compared to the higher income quintile groups, while the main factors causing catastrophic health expenditure are the costs associated with the chronically ill, and inpatient and outpatient treatments. To improve the fairness of the Georgian healthcare system, this research suggests focusing on segments of the poor population by expanding the size of their healthcare package. The second chapter, “Moving towards a Universal Health Coverage System: Lessons from Georgia and its Policy Implications” is the main paper of the dissertation. Which studies the effects of Expanded Medical Assistance for Poor (EMAP) and the Universal Health Coverage (UHC) programs in Georgia on healthcare utilization rates and the financial burden of the population. In 2012, the Georgian government expanded its existing program, Medical Assistance for the Poor (MAP), by including pensioners, children under five and students. In 2013, Georgia subsequently moved to the UHC program from targeted healthcare iv insurance schemes. Since the initial implementation of the government’s initiative there has been no research assessing the impact of EMAP or UHC. Before 2012, the main recommendations of the existing research analyzing Georgia’s healthcare system was to focus on the most impoverished part of society and improve their insurance packages. Despite this, Georgia introduced UHC in 2013, instead of directing additional funds to vulnerable groups- offering better services, including medicinal benefits. The main objective of this paper is to evaluate the relevance of the decision of the Georgian government to move toward UHC in 2013 by comparing the effects of EMAP and UHC. Based on integrated data from the National Statistics Office of Georgia and using difference in difference (DID) with a matching methodology, this study reveals that EMAP had a positive effect in terms of utilization rates, but had no effect on the financial burden of participant households. In 2012-2013 there was a 6% increase in inpatient and outpatient utilization rates. While, in evaluating the pure effect of UHC, there were no statistically significant changes in terms of healthcare service utilization or the financial burden on households without pensioners, children under five or students. The main recommendation for policy-makers is to target its budgetary resources on the most vulnerable part of society and to cover only catastrophic health expenditures for other households in need. Furthermore, it is recommended that pharmaceutical benefits be included in insurance packages, as it is currently the main out-of-pocket healthcare expenditure (OOPHE). The third chapter, “Analyzing the Composition of Catastrophic Health Expenditures in Georgia (2012-2015)”, is also a single authored paper. The main purpose of the study is to identify the composition of OOPHE which cause catastrophic health expenditure and to measure the incidence and intensities of catastrophic payments in 2012 and 2015 through the World Bank Methodology. By using the Integrated Household Survey from the National Statistics Office of Georgia’s database, the study illustrates that pharmaceutical costs have a significant share in OOPHE. Moreover, medication appears to be the chief cause of v household catastrophic health expenditures, as a vast 72% of CHEs are prescription related expenses. Furthermore, those households suffering with chronically diseased or disabled members spend 79% of their OOPHE on medicine, herewith the extent of pharmaceutical costs of OOPHE for the poor quintile is 84.7%: 16.1% greater than the rich quintile. The situation is comparable for outpatient treatments, where the proportion of medicinal expenses in OOPHE is 44%. In the case of poor households’, the share amounts to 57%, which is 21.3% over the rich quintile. An analysis of these incidences illustrates that the poorest quintile group’s catastrophic expenditures accounted for 16.6% in 2015, while it was 13.2% in 2012. Though, the fraction of money spent by households belonging to said quintile does not experience significant changes. Accordingly, as pharmaceutical costs cover such an extent, this policy paper offers its recommendations to the provision of whichever prescription benefits packages shall be the primary policy objective for the government, in order to truly protect poor households from financial ruin.