Abstract Investigating income‐elasticity of health expenditures can provide insights into the extent of public involvement in the health sector and the need for co‐financing schemes. Although this is particularly relevant in vulnerable countries, evidence from sub‐Saharan Africa is lacking. The paper explores the relationship between permanent and current income and health expenditures. First, at the patient level, income‐elasticity of health expenditures during the last medical contact with a qualified health provider is investigated. Second, household‐level estimation of income‐elasticity of household health expenditures is conducted to account for the healthcare use rate. The results suggest that health is a necessity good, which has methodological and policy implications. Copyright © 2014 John Wiley & Sons, Ltd.