Public Health Financing Reforms and Catastrophic Health Expenditure: A Global Equity Analysis of 4,368 Country–Years

Background Catastrophic health expenditure (CHE) undermines financial protection and progress towards universal health coverage. Although public financing reforms are widely promoted, their causal impact on CHE—and their equity implications across income groups—remain unclear. Methods We assembled a balanced global panel of 4368 country–year observations (2000–2022) with complete data on CHE at the 10% and 25% thresholds (CHE10, CHE25), public financing share of health expenditure, out-of-pocket spending, macroeconomic controls, and poverty rates. Fixed-effects and event-study models estimated the association between increases in public financing share and subsequent changes in CHE, adjusting for time-varying confounders. Mediation analyses tested whether reductions in out-of-pocket payments or changes in poverty explained observed effects. Subgroup, sensitivity, and placebo analyses assessed robustness. Findings Each 10-percentage-point increase in public financing share was associated with a 0.9-percentage-point reduction in CHE10 (95% CI −1.6 to −0.1; p=0.02) but not with significant changes in CHE25. Event-study models showed progressive declines in CHE10 after reforms, reaching −3.4 percentage points by year 10 (95% CI −6.0 to −0.8) and −5.9 by year 12 (95% CI −9.8 to −2.0). Equity-stratified analyses revealed disproportionate benefits for the poorest quintile in low- and middle-income countries (reductions of 5–7 percentage points by year 10), while effects were smaller in high-income settings. Mediation analyses indicated that one-third of the effect on CHE10 was explained by declines in out-of-pocket payments, whereas GDP and poverty rates did not attenuate associations. Results were robust across alternative thresholds, lag structures, and placebo tests. Interpretation Public health financing reforms are consistently associated with improved financial protection, particularly at the 10% threshold and among poorer households in low-resource settings. Effects are mediated primarily by reductions in out-of-pocket payments, underscoring the importance of pooled prepayment mechanisms. Universal health coverage is unattainable without public financing: every 10% increase shields millions of households—especially the poorest in LMICs—from catastrophic health expenditure. Funding No external funding.