Financial protection: When healthcare costs destroy families financially
Financial protection: 1 billion face catastrophic health costs—pushed into poverty
Maria Santos watched her daughter struggle to breathe.
Five-year-old Isabella had developed pneumonia, her fever climbing dangerously high. Maria rushed her to the hospital in Manila, where doctors said Isabella needed immediate admission, oxygen, antibiotics, and several days of intensive care.
The cost: 45,000 Philippine pesos—roughly $800. Maria’s family earned about $200 per month. They had no health insurance.
“I had to choose,” Maria recalled, tears streaming down her face. “Do I let my daughter die, or do I destroy our family financially?” She borrowed money from relatives, took loans from informal lenders at crushing interest rates, sold her sewing machine—her only source of income. Isabella survived. But the family’s financial security did not.
Maria’s story represents a global crisis. According to WHO’s work on financial protection, more than one billion people—about 14% of the global population—experience catastrophic out-of-pocket health spending, defined as exceeding 10% of a household budget. But even small expenditures in absolute terms can be devastating for low-income families. Approximately 1.3 billion individuals were pushed or further pushed into poverty by such payments, including 300 million people who were already living in extreme poverty.
One billion people facing catastrophic healthcare costs. 1.3 billion pushed into poverty by medical bills. This isn’t just a health crisis—it’s an economic catastrophe affecting families worldwide.
Understanding Financial Protection
Financial protection is at the core of universal health coverage (UHC) and is one of the final coverage goals of health financing policies. It is achieved when direct payments made to obtain health services do not expose people to financial hardship and do not threaten living standards.
The key to protecting people is to ensure prepayment and pooling of resources for health rather than relying on people paying for health services out-of-pocket (OOP) at the time of use. For more information, see WHO’s global monitoring report and visit the UHC fact sheet.
Dr. Agnes Soucat, a health economist who has studied financial protection for decades, explained the fundamental problem: “When families must pay for healthcare at the point of service—when they’re sick, vulnerable, desperate—they face impossible choices. Pay and face financial ruin, or don’t seek care and risk death or disability. No family should face this choice.”
WHO’s Tracking universal health coverage: 2025 global monitoring report, published December 2025, provides comprehensive data on the crisis. For more on UHC tracking, see WHO’s Q&A resources and the UHC data portal on financial protection.
For related health system issues, see our articles on healthcare access and poverty and health at ObserverVoice.com.
The Scope of the Crisis
Catastrophic out-of-pocket health spending, defined as exceeding 10% of a household budget, continues to rise. The numbers are staggering and getting worse.
More than one billion people experienced such large out-of-pocket payments relative to their budgets. But the definition of “catastrophic” at 10% actually understates the problem for the poorest families. For a family earning $100 per month, spending $10 on healthcare might mean no food for a week. For a family already living in extreme poverty, any healthcare spending is catastrophic.
That’s why WHO’s monitoring also tracks people pushed into poverty by health payments. Approximately 1.3 billion individuals were pushed or further pushed into poverty by such payments, including 300 million people who were already living in extreme poverty.
WHO’s technical brief on tracking inequalities in financial hardship due to out-of-pocket health spending by age structure of household, published August 2024, shows how different household types experience financial hardship differently.
Why Out-of-Pocket Payments Are Devastating
Financial protection is undermined by heavy reliance on out-of-pocket (OOP) health spending in all countries at all income levels. OOP health spending undermines efforts to eradicate poverty, which can be avoided by minimizing OOP health spending for people living close to poverty, and eliminating such payments for people living in poverty.
When families must pay out-of-pocket for healthcare, several terrible consequences follow:
Delayed or forgone care. Families delay seeking treatment until conditions become severe, leading to worse outcomes, higher eventual costs, and preventable deaths.
Asset depletion. Families sell productive assets like land, livestock, or tools—their means of earning income—to pay for healthcare, trapping them in poverty.
Debt bondage. Families borrow at predatory interest rates, creating debt they can never escape.
Intergenerational poverty. Children are pulled out of school to work, perpetuating poverty across generations.
Maria Santos experienced all of these. After Isabella’s illness, the family fell behind on loan payments. Interest accumulated. Maria couldn’t afford to replace her sewing machine, so she lost her income. Her older son dropped out of school to work. “One illness destroyed everything we’d built,” she said.
For more on health financing and health budget issues, see WHO’s comprehensive resources.
The Solution: Prepayment and Pooling
Financial protection is not guaranteed by participation in a health coverage scheme. There are different ways of financing health systems to ensure a population is financially protected, however, evidence shows that more significant prepaid, pooled, compulsory payments are needed.
WHO’s Health Financing and Economics department works on these solutions. The Economic Evaluation and Analysis team provides technical support to countries.
The principle is straightforward: instead of individuals paying for healthcare when they’re sick, everyone contributes in advance through taxes or mandatory insurance premiums. These prepayments are pooled together. When someone gets sick, their care is paid for from the pool. Healthy people subsidize sick people. Rich people subsidize poor people. Spreading risk across the entire population protects individuals from catastrophic costs.
Dr. Tessa Tan-Torres Edejer, a health financing specialist, explained: “In countries with strong prepayment and pooling systems—whether through tax-funded systems or mandatory insurance—families don’t face financial ruin from healthcare. Isabella’s pneumonia would have been treated, and Maria’s family would still have their sewing machine, their income, their hope.”
WHO’s monitoring universal health coverage data tracks progress globally. The Global Health Expenditure Database provides detailed country-level data on health financing.
Key Policy Messages from WHO
WHO identifies crucial policy directions for achieving financial protection:
In-depth, context-specific analysis and evaluations of health financing policies are needed to understand the drivers of trends.
Public health funding must increase further and be used more efficiently and equitably. Different revenue sources must be pooled or their utilization better coordinated. The size of compulsory prepaid funds must be sufficiently large; prepaid funds must be redistributed; and coverage for medicines must be extended.
OOP spending on health must be limited to low, fixed, and capped co-payments, and removed completely for the poor and most vulnerable. Removing financial barriers to care reduces forgone care, thereby improving service coverage and financial protection.
WHO’s activities on assessing country progress in health financing for UHC and monitoring financial protection support countries in implementing these policies.
For more on primary health care as a foundation for UHC, see WHO’s fact sheets.
Global Commitments and Progress
Multiple high-level political declarations have committed to universal health coverage. The UN General Assembly Political Declaration on UHC 2023 and 2019 declaration established global commitments.
WHO’s Draft fourteenth general programme of work, 2025–2028 and Thirteenth General Programme of Work, 2019–2025 prioritize UHC. The EB154/6 resolution on Universal Health Coverage from 2023 emphasizes financial protection.
Going back further, WHA 58.13 on Sustainable health financing, universal health coverage and social health insurance from 2005 established foundational commitments.
WHO published WHO delivering on its commitment to protect and improve people’s health in December 2024, featuring stories from the field on achieving UHC goals.
A major event on Tracking Universal Health Coverage: 2025 Global Monitoring Report was held December 2025. WHO also produced videos on Universal Health Coverage: a promise we must deliver and Tracking Universal Health Coverage.
For context on specific country progress, WHO published Health benefit packages analysis of AB-PMJAY SEHAT in January 2024, examining India’s health coverage scheme.
For more on global health governance, see our articles on international health policy at ObserverVoice.com.
Tools for Measurement and Monitoring
WHO provides multiple tools for countries to monitor financial protection progress. The World Health Survey+ Instrument – Household Questionnaire collects household-level data on health spending and hardship.
The UHC data portal on financial protection provides accessible visualizations of global trends. The monitoring universal health coverage dashboard tracks multiple UHC indicators including financial protection.
For detailed national health accounts data, the Global Health Expenditure Database is the authoritative source. For more on health accounts methodology, see WHO’s guidance.
Hope Through Health System Strengthening
Maria Santos eventually found help through a new government program that provided subsidized health insurance to the poorest families. When Isabella developed another respiratory infection two years later, the treatment was fully covered.
“I can’t describe the relief,” Maria said. “I didn’t have to borrow money. I didn’t have to sell anything. I just took my daughter to the hospital, and they treated her. That’s how healthcare should work.”
But Maria’s family still struggles with debt from the first illness. “We’re paying it off slowly,” she said. “It will take years. But at least now I know that if my children get sick again, we won’t be destroyed financially.”
With WHO’s comprehensive approach to monitoring and supporting financial protection, countries have the tools and guidance to strengthen their health financing systems. The 2025 global monitoring report shows that progress is possible when countries commit to prepayment, pooling, and progressive financing.
The question is whether the world will accelerate action to achieve the 2030 Sustainable Development Goal targets for universal health coverage, ensuring that no one anywhere faces Maria’s terrible choice between financial ruin and their child’s life.
For more information, visit WHO’s financial protection health topic page or explore related content at ObserverVoice.com.
Frequently Asked Questions (FAQs)
Financial protection is at the core of universal health coverage (UHC) and is one of the final coverage goals of health financing policies. It is achieved when direct payments made to obtain health services do not expose people to financial hardship and do not threaten living standards. The key to protecting people is to ensure prepayment and pooling of resources for health rather than relying on people paying for health services out-of-pocket (OOP) at the time of use. Catastrophic out-of-pocket health spending, defined as exceeding 10% of a household budget, continues to rise. More than one billion people—about 14% of the global population—experienced such large out-of-pocket payments relative to their budgets. But even small expenditures in absolute terms can be devastating for low-income families; approximately 1.3 billion individuals were pushed or further pushed into poverty by such payments, including 300 million people who were already living in extreme poverty. For more information, see WHO’s global monitoring report and the UHC fact sheet. WHO’s Tracking universal health coverage: 2025 global monitoring report published December 2025 provides comprehensive data. For more on poverty and health, see our articles at ObserverVoice.com.
According to WHO’s work on financial protection, more than one billion people—about 14% of the global population—experience catastrophic out-of-pocket health spending exceeding 10% of their household budget. Financial protection is undermined by heavy reliance on out-of-pocket health spending in all countries at all income levels. OOP health spending undermines efforts to eradicate poverty, which can be avoided by minimizing OOP health spending for people living close to poverty, and eliminating such payments for people living in poverty. Approximately 1.3 billion individuals were pushed or further pushed into poverty by health payments, including 300 million people who were already living in extreme poverty. WHO’s technical brief on tracking inequalities in financial hardship published August 2024 shows how different household types experience financial hardship. The UHC data portal on financial protection provides accessible visualizations. WHO’s monitoring universal health coverage dashboard tracks multiple indicators. For detailed data, see the Global Health Expenditure Database. For more on UHC tracking, see WHO’s Q&A resources. See our articles on healthcare inequality.
The key to protecting people is to ensure prepayment and pooling of resources for health rather than relying on out-of-pocket payments at time of use. Financial protection is not guaranteed by participation in a health coverage scheme—evidence shows that more significant prepaid, pooled, compulsory payments are needed. WHO identifies key policy directions: public health funding must increase and be used more efficiently and equitably; different revenue sources must be pooled or better coordinated; the size of compulsory prepaid funds must be sufficiently large; prepaid funds must be redistributed; coverage for medicines must be extended; OOP spending must be limited to low, fixed, capped co-payments, and removed completely for the poor and vulnerable. Removing financial barriers to care reduces forgone care, thereby improving service coverage and financial protection. WHO’s Health Financing and Economics department provides technical support. The Economic Evaluation and Analysis team assists countries. WHO’s activities on assessing country progress and monitoring financial protection support implementation. For more on health budget and health accounts, see WHO’s resources. See our articles on health system reform.
Multiple high-level political declarations have committed to universal health coverage. The UN General Assembly Political Declaration on UHC 2023 and 2019 declaration established global commitments. WHO’s Draft fourteenth general programme of work, 2025–2028 and Thirteenth General Programme of Work, 2019–2025 prioritize UHC. The EB154/6 resolution on Universal Health Coverage from 2023 emphasizes financial protection. WHA 58.13 on Sustainable health financing, UHC and social health insurance from 2005 established foundational commitments. WHO published WHO delivering on its commitment to protect and improve people’s health December 2024. A major event on Tracking Universal Health Coverage: 2025 Global Monitoring Report was held December 2025. WHO produced videos on Universal Health Coverage: a promise we must deliver and Tracking UHC. For more on primary health care as UHC foundation, see WHO fact sheets. See our articles on global health policy.
WHO provides multiple tools for countries to monitor financial protection progress. The World Health Survey+ Instrument – Household Questionnaire collects household-level data on health spending and hardship. The UHC data portal on financial protection provides accessible visualizations of global trends. The monitoring universal health coverage dashboard tracks multiple UHC indicators including financial protection. For detailed national health accounts data, the Global Health Expenditure Database is the authoritative source. For health accounts methodology, see WHO guidance. WHO’s Tracking universal health coverage: 2025 global monitoring report provides comprehensive analysis. WHO published technical brief on tracking inequalities in financial hardship by age structure of household August 2024 and Health benefit packages analysis of AB-PMJAY SEHAT January 2024 on India’s scheme. WHO’s Health Financing and Economics department coordinates this work. For UHC tracking Q&As and resources, see WHO materials. See our articles on healthcare data.
- WHO Financial Protection Health Topic
- WHO Universal Health Coverage (UHC) Fact Sheet
- WHO Primary Health Care Fact Sheet
- WHO Global Monitoring Report
- Tracking Universal Health Coverage: 2025 Global Monitoring Report (Dec 2025)
- WHO Delivering on Health Commitments (Dec 2024)
- Technical Brief on Tracking Inequalities (Aug 2024)
Disclaimer: This article is an adaptation of publicly available information from WHO’s Financial protection
health topic page (WHO, Geneva. Licence: CC BYNC-SA 3.0 IGO). WHO is not responsible for the
content or accuracy of this adaptation. This content is for informational and educational purposes
only and does not constitute medical advice. ObserverVoice.com is a news and information platform
— not a healthcare provider.
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