Isfahan University of Medical Sciences Health Information Management 1735-7853 21 3 2024 09 22 Measuring Catastrophic Health Expenditures in Iran: A Recommendation for Using the Budget Share Approach Measuring Catastrophic Health Expenditures in Iran: A Recommendation for Using the Budget Share Approach 175 178 32895 10.48305/him.2025.45221.1302 FA Abdoreza Mousavi PhD Student in Health Economics, Department of Health Management, Policy and Economics, School of Public Health, Tehran University of Medical Sciences, Tehran, Iran 0000-0001-8786-7309 Ali Akbar Fazaeli Associate Professor, Health Economics, Department of Health Management, Policy and Economics, School of Public Health, Tehran University of Medical Sciences, Tehran, Iran Mohammadreza Rezayatmand Associate Professor of Health Economics, Health Management and Economics Research Center, Isfahan University of Medical Sciences, Isfahan, Iran 0000-0002-9907-3597 Amir Hossein Zarei MSc student in Health Economics, Department of Health Management, Policy and Economics, School of Public Health, Tehran University of Medical Sciences, Tehran, Iran Rajabali Daroudi Associate Professor , Health Economics, Department of Health Management, Policy and Economics, School of Public Health, Tehran University of Medical Sciences, Tehran, Iran Journal Article 2025 05 12 Protecting households from the financial risks associated with healthcare utilization is a fundamental aspect of universal health coverage. Catastrophic health expenditure is a widely used indicator for assessing financial protection, with two principal approaches for its calculation: • Budget Share Approach: This method assesses household out-of-pocket (OOP) payments as a proportion of total household expenditures or income. • Capacity to Pay Approach: This method calculates household capacity to pay by deducting essential spending from total household expenditures. Then, the proportion of OOP payments to capacity to pay is calculated. In recent years, the capacity-to-pay approach has faced criticism, primarily due to its limited ability to accurately capture the extent to which OOP payments compromise essential household resources. Additionally, the approach entails computational complexities that hinder its application. In light of these considerations, adopting the budget share method with a 25% threshold is recommended for monitoring progress toward reducing household exposure to catastrophic health expenditures within the framework of the Seventh Development Plan of the Islamic Republic of Iran. Protecting households from the financial risks associated with healthcare utilization is a fundamental aspect of universal health coverage. Catastrophic health expenditure is a widely used indicator for assessing financial protection, with two principal approaches for its calculation: • Budget Share Approach: This method assesses household out-of-pocket (OOP) payments as a proportion of total household expenditures or income. • Capacity to Pay Approach: This method calculates household capacity to pay by deducting essential spending from total household expenditures. Then, the proportion of OOP payments to capacity to pay is calculated. In recent years, the capacity-to-pay approach has faced criticism, primarily due to its limited ability to accurately capture the extent to which OOP payments compromise essential household resources. Additionally, the approach entails computational complexities that hinder its application. In light of these considerations, adopting the budget share method with a 25% threshold is recommended for monitoring progress toward reducing household exposure to catastrophic health expenditures within the framework of the Seventh Development Plan of the Islamic Republic of Iran.

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