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Abstract

Out-of-pocket health spending (OOPHS) can convert healthcare needs into financial hardship, particularly where risk-pooling mechanisms are limited. Evidence on its direct contribution to household impoverishment in Tanzania remains limited. This study estimates the impoverishing effect of OOPHS and examines the factors associated with household exposure to healthcare payments. We analysed nationally representative data from the 2020/21 Tanzania National Panel Survey. Household welfare was assessed before and after OOPHS using the Foster–Greer–Thorbecke poverty framework. Changes in the poverty headcount, poverty gap and poverty severinty were used to identify poverty entry and poverty deepening. Determinants of OOPHS were estimated using a two-part model comprising a probit model for the probability of positive expenditure and a generalised linear model with a gamma distribution and log link for expenditure conditional on positive spending. After healthcare payments were accounted for, the poverty headcount increased from 25.07% to 26.40%, indicating that in absolute terms 1.33% (5.3% in relative terms) of households were pushed below the poverty line, while increases in the poverty gap and poverty severity indicated deeper deprivation among households already living in poverty. Illness incidence was positively associated with OOPHS, whereas health insurance was associated with lower direct healthcare payments. Healthcare spending also differed across socioeconomic, demographic and geographic characteristics. Since OOPHS represents an important pathway through which healthcare needs contribute to household impoverishment in Tanzania, strengthening effective risk pooling and expanding comprehensive financial protection should therefore be central to health-financing reforms.

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