Background Conventional estimates of poverty do not take account of out-of-pocket payments to finance health care. We aimed to reassess measures of poverty in 11 low-to-middle income countries in Asia by calculating total household resources both with and without out-of-pocket payments for health care.

Methods We obtained data on payments for health care from nationally representative surveys, and subtracted these payments from total household resources. We then calculated the number of individuals with less than the internationally accepted threshold of absolute poverty (US$1 per head per day) after making health payments. We also assessed the effect of health-care payments on the poverty gap—the amount by which household resources fell short of the $1 poverty line in these countries.

Findings Our estimate of the overall prevalence of absolute poverty in these countries was 14% higher than conventional estimates that do not take account of out-of-pocket payments for health care. We calculated that an additional 2·7% of the population under study (78 million people) ended up with less than $1 per day after they had paid for health care. In Bangladesh, China, India, Nepal, and Vietnam, where more than 60% of health-care costs are paid out-of-pocket by households, our estimates of poverty were much higher than conventional figures, ranging from an additional 1·2% of the population in Vietnam to 3·8% in Bangladesh.

Interpretation Out-of-pocket health payments exacerbate poverty. Policies to reduce the number of Asians living on less than $1 per day need to include measures to reduce such payments.