The Effect of Universal Health Care on the Out‐of‐Pocket Health Expenditures: Evidence From a Natural Experiment

ABSTRACT In the first two quarters of 2013, the Georgian government introduced and fully implemented a universal health care (UHC) programme covering all those not yet publicly or privately insured. Using panel estimation methods and difference‐in‐differences estimation with synthetic treatment and control groups, we estimate the effect of the UHC programme on the level of out‐of‐pocket (OOP) health expenditures of households. The programme saved households an economically and statistically significant monthly amount of 105 Georgian Laris (64 USD then) per household, amounting to approximately 16% of the average household monthly income at the time. The reduction in OOP payments is almost entirely attributed to people utilising essential, emergency, and life‐saving health services. About half of the resulting increase in household disposable income has been rechannelled to other non‐health expenditures such as transportation, education, clothing, and other household items. All in all, the UHC programme is hypothesised to have improved the overall health status and the quality of life in the country.