Financial hardship due to out-of-pocket spending on health care: an exploratory study using the Japan Household Panel Survey

As population ageing continues in Japan, concerns are growing that the burden of out-of-pocket spending on health care will cause people financial hardship or force them to forgo necessary care. This study uses Japanese data to compare different measures of financial protection in health care, including those used for global monitoring of SDG indicator 3.8.2¹, and assess their sensitivity to differences in health spending by age. Using these indicators, the study also explores the levels and trends of financial hardship in health care among households with older persons in Japan. The results have implications for both global and domestic monitoring of financial protection in health in the context of population ageing.

¹ SDG indicator 3.8.2 on financial protection was previously defined as the “proportion of the population with household expenditures on health greater than 10% (or 25%) of total household expenditure or income.” In 2025, this indicator was revised to the “proportion of the population with positive out-of-pocket health expenditures that exceed 40% of their discretionary household budget”, where discretionary budget is defined as total household expenditure or income minus the societal poverty line (i.e. whichever is greater – the international poverty line of $2.15 per person per day, or $1.15 + 50% of median household expenditure or income net of out-of-pocket health expenditure).

• Describe the levels and trends of financial hardship due to out-of-pocket health spending using the Japan Household Panel Survey data.
• Analyze the association of household age structure with financial hardship and compare the sensitivity of different indicators to these age-related inequalities.

• All available data from the nationally representative Japan Household Panel Survey from 2004 to 2023 (20 waves) (pooled sample size =82,705) were analyzed.
• Prevalence of financial hardship in healthcare due to out-of-pocket payments were calculated based on the previous SDG indicator 3.8.2 used by WHO/World Bank and its variants including the revised indicator in 2025.
• Indicators were disaggregated into categories of household age composition to assess associations between financial hardship due to out-of-pocket health spending with age.
• Persistence of financial hardship due to out-of-pocket health spending among households with older persons were analyzed by calculating transitional probabilities, means and counts over time.

• Based on the revised SDG3.8.2 indicator, defined as the proportion of the population with out-of-pocket health spending exceeding 40% of the household discretionary budget, overall prevalence of financial hardship due to health spending among Japanese households remained around 20% between 2004 and 2023.
• There are several indications that a substantial portion of the annual prevalence of financial hardship is due to persistent hardship because of out-of-pocket health spending (as opposed to isolated events of high expenditure): Households further pushed into poverty due to health payments is more prevalent (10-12%) than households pushed into poverty (i.e. otherwise not impoverished) (2%), and the prevalence of households in financial hardship due to health spending across consecutive years is about 10%.
• Multigenerational households are more exposed to financial hardship including persistent hardship, which may be due to several factors: the higher health needs of both children and older persons; lower capacity to pay including fewer financial assets; and the Japanese health insurance policy which prevents people within the same household from combining their health expenses across different insurers to meet the out-of-pocket spending cap.

The revision to the SDG 3.8.2 indicator helps reduce the risk of underestimating the impact that out-of-pocket spending on health care has on households with large total expenditures but relatively small discretionary budgets due to high basic living costs. Analysis of age-specific effects and the persistence of financial hardship are important to identify households in greater need of financial protection.

Several gaps in financial protection for health care were identified such as for older people, ages 65-69, who typically experience a significant reduction in income but are subject to the same copayment rate and out-of-pocket spending cap as working-age adults 64 and younger. While many policies are determined at the national level, local governments can facilitate access to better financial protection such as by simplifying administrative procedures or providing financial support for indirect costs of health care (e.g. transportation fees).  

Kamimura K, Rosenberg M. “Persistent financial hardship among households with older persons in Japan”, International Health Economics Association 2025 Congress, Bali, Indonesia, 19 July 2025.

Journal articles and other publications from this project are expected in (or after) 2026.