Who Needs Financial Protection? Evidence on Threshold-Disaggregated Catastrophic Health Expenditure and Poverty in Nigeria

This study examines the prevalence of catastrophic OOP health spending among households in Nigeria following the Xu et al. (2003) framework using two benchmarks – total and non-food expenditures. Using data from the 2018/2019 Living Standards Survey, it disaggregates CHE incidence and concentration across six thresholds – 5%, 10%, 15%, 25%, 30% and 40% - to capture effects across heterogenous household income groups in the context of high poverty, informality, and limited social protection as obtains in Nigeria. The study finds that more than a fifth of households experience catastrophic spending at 15% threshold and below, and that this increases monotonically under both benchmarks as the threshold is lowered from 40% to 5%. As thresholds increase above 15%, incidence of catastrophic expenditure declines more noticeably, signalling constrained access to care and potential for forgone health services for the poor. Estimates of both incidence and concentration of the non-food benchmark indicate greater vulnerability of discretionary consumption to health shocks. The study finds that CHE is characterised by both frequent OOP payments at lower thresholds and by less common but severe shocks that overwhelm household resources at higher thresholds. Disproportionate financial fragility and CHE burden indicating financial distress from relatively modest health expenditures at lower thresholds (pro-poor CHE) appear to co-exist with less frequent but high-end health costs (pro-rich CHE) at higher thresholds. The study recommends differentiated policy responses that reflect the heterogeneity of household vulnerability which simultaneously incorporate early-stage financial distress among the poor as well as exposure to severe health shocks among wealthier households.