When examining the degree of financial risk protection afforded by the health care sector, one measure often used is the proportion of health expenditure shares that exceed a pre-determined threshold. This measure is referred to as catastrophic health care payments, and the pre-determined threshold, although arbitrary, is often set at 10%, 20% and 40%. Allowing for a range of thresholds offers the policymaker a lens through which to examine healthcare finance. The process underpinning the calculation of catastrophic health care payments is predicated on an approach outlined by the World Health Organization. That approach assumes household economies of scale to follow a constant elasticity formulation with a value of 0.56, i.e., a 10% increase in household size yields a 5.6% increase in household food expenditure.
