Catastrophic healthcare expenditures (CHE) are highly problematic for families are are unequally distributed throughout society. However, how can we quantify the incidence, intensity and inequality of CHE in a society? <\/p>\n
A paper by Ogwang and Mwabu (2025)<\/a> provide one methodology by using the Watts poverty measure and adapting it to measure CHE. We first describe what the Watts poverty measure is. Next we explain how to calculate the Ogwang and Mwabu Watts catastrophic health expenditure (WCHE) metric both in aggregate and by subgroup. Finally, I have provided a simple Excel spreadsheet you can download to see how WCHE is calculated. <\/p>\n As described above, the metric is based on the Watts poverty measure, developed by Harold W. Watts in 1964<\/a>. Perplexity describes the Watts Poverty Measure as follows:<\/p>\n \n The Watts Poverty Measure<\/strong> (or Watts Index) is a poverty metric that captures not just how many people are poor, but also how far below the poverty line they are. It is especially sensitive to the poorest individuals.\n<\/p>\n <\/p>\n \n The formula is:<\/p>\n W = (1\/N) \u2211 ln(z\/yi) <\/p>\n A higher Watts Index means greater poverty and deeper shortfalls from the poverty line. Whereas the Watts poverty measure is calculated based on whether individual\u2019s income falls below<\/em> the poverty line, the WCHE metric proposed examines the share (and degree) to which health expenditures are above<\/em> a given CHE threshold. Let\u2019s examine how WCHE is calculated, first at the aggregate level. <\/p>\n The formula for WCHE is: The interpretation of this index is similar to the Watts poverty index but applied to CHE:<\/p>\n A higher WCHE value means CHE is a larger problem in society WCHE is always zero or positive (never negative).If no one is has any CHE, the index equals zero<\/p>\n Now let us consider how to calculate WHCE this if we decompose this metric by group. <\/p>\n WCHE = (H\/N) \u2211j=1 to ksj \u03b2j) \nThe benefit of this approach is that you can decompose CHE into three categories: the overall incidence (H\/N), the inequality of the incidence of CHE across groups (sj<\/em>), and the typical amount over the threshold (by group) that CHE are when they occur \u03b2j<\/em>.<\/p>\n You may still be wondering how to calculate WCHE in practice. I encourage you to read the full paper here <\/a><\/strong>and then check out my simple spreadsheet calculation example here<\/strong><\/a>.<\/p>","protected":false},"excerpt":{"rendered":" Catastrophic healthcare expenditures (CHE) are highly problematic for families are are unequally distributed throughout society. However, how can we quantify the incidence, intensity and inequality of CHE in a society? A paper by Ogwang and Mwabu (2025) provide one methodology by using the Watts poverty measure and adapting it to measure CHE. We first describe…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-6713","post","type-post","status-publish","format-standard","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/6713"}],"collection":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6713"}],"version-history":[{"count":0,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/6713\/revisions"}],"wp:attachment":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What is the Watts Poverty Measure?<\/h2>\n
How is it Calculated?<\/h3>\n
\n
\n where N<\/em> is the total population, z<\/em> is the poverty line, and yi<\/em> is the income of each poor person (those with income below z<\/em>).\n<\/p>\nWhat Does the Number Mean?<\/h3>\n
\n The index is always zero or positive (never negative).
\n If no one is poor, the index equals zero.<\/p>\n
WCHE = (1\/N) \u2211 ln(E*i\/T)
where\u00a0N<\/em>\u00a0is the total population,\u00a0T<\/em>\u00a0is the CHE threshold and\u00a0E*i<\/em>\u00a0is the health expenditures only for individuals who\u2019s health expenditures exceed the CHE (T<\/em>).<\/p>\n
where\u00a0N<\/em>\u00a0is the total population,\u00a0H<\/em>\u00a0 is number of people in CHE overall, sj<\/em> is the share of individuals in group j who have expenditures over the CHE threshold and \u03b2j<\/em> is the intensity of the CHE, which is the average amount people are over the CHE threshold when it happens <\/p>\n