Out-of-pocket patient payments can impose a catastrophic burden on households. This problem may not only affect poor but also wealthy households who need to use health care frequently. The available literature offers no consensus on how to measure poverty and how to measure the effects of out-of-pocket payments on household budgets. The objective of this paper is to contribute to current research in this area by comparing results across different approaches. In particular, the paper examines the catastrophic and impoverishing effects of health care spending in Serbia applying different types of thresholds used in previous research. The application of various approaches allows us to analyze the robustness and convergent validity of the results. We also include the subjective poverty approach in our examination.

We use household data from the Serbian Living Standard Measurement Study (LSMS). The Serbian LSMS data were collected in 2007 and consists of 17,375 participants living in 5557 households (sample representative for Serbia). Our results indicate that irrespective of the approach applied, out-of-pocket patient payments have a catastrophic effect on poor households in Serbia. Moreover, households that are above the absolute, relative and subjective poverty lines respectively, after the subtraction of out-of-pocket payments fall below these poverty lines. The probability of catastrophic out-of-pocket patient payments is higher in rural areas, in larger households, and among chronically sick household members (namely, people with diabetes and mental diseases, as well as cardiology diseases in some instances). Perceived health status also appears to be a significant indicator. Policy in Serbia should aim to protect vulnerable groups, especially chronically sick patients and people from rural areas.