Table 1.

Overview of the two main approaches used to measure catastrophic health expenditure

	Budget share approach	Capacity-to-pay approach
Definition	Catastrophic health expenditure is defined as occurring when out-of-pocket payments exceed a defined proportion of a household’s total income or expenditure	Catastrophic health expenditure is defined as occurring when out-of-pocket payments exceed a defined proportion of a household’s capacity to pay (the available household expenditure remaining after their basic needs have been met)
Calculation	$\frac{Outofpocketpayments}{Totalexpenditureorincome}>Threshold$	$\frac{Outofpocketpayments}{Totalexpenditure-basicneeds}>Threshold$
Numerator	Out-of-pocket payments	Out-of-pocket payments
Denominator	Total household expenditure or total household income	Sub-method 1: Total household expenditure minus actual food spending	Sub-method 2: Total household expenditure minus a standard amount representing subsistence food spendinga	Sub-method 3: Total household expenditure minus a standard amount representing subsistence spending on food, rent and utilities
Standard thresholds	10% and 25%	25% and 40%	40%	40%
Examples of application	Sustainable Development Goal (indicator 3.8.2), World Bank	Pan American Health Organization, World Bank	World Health Organization	World Health Organization—European Region
Representative papers	Wagstaff and Doorslaer [13], Wagstaff [12]	Xu et al. [14, 15],

^aExcept for household’s whose food spending is less than the estimated standard amount, where their actual food spending is used within the calculation instead