This paper analyses out-of-pocket payments (OOPs), their impact on catastrophic expenditures and the distribution of the taxation burden to finance health care in Estonia from 2000 to 2007. It also looks at income-related inequality in Estonian health care utilization in 2006. We use microdata of the Estonian Household Surveys collected by Statistics Estonia, national health accounts data, detailed tax revenue structure from 2000-2007, results from the ALAN microsimulation model, statistical and econometric methods outlined in Xu (2005), Klavus (1998), Habicht et al.(2006) and van Doorslaer and Masseria (2004).
The results show that out-of-pocket expenditures have increased since 2000. The socioeconomic factors that determine the relatively high household health expenditure relative to capacity to pay are those that describe income level, on the one hand, and health expenditure, on the other hand. Most affected are elderly people whose expenditure for both prescription and over-the-counter drugs increases their risk of impoverishment. The analysis of inequality in health care utilization shows that after taking into account the need for health care, the use of dental care, phone consultations and other medical specialties are positively related to income. Day treatment utilization also turns out to be highly related to income, though it is statistically insignificant due to very small number of people it in our sample who have used. The increasing share of OOPs has lead to a decline in the progressivity of overall health care financing.