Publication: Are Health Shocks Different?: Evidence from a Multi-Shock Survey in Laos
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2014-06
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2014-06
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Using primary data from Laos, we compare a broad range of different types of shocks in terms of their incidence, distribution between the poor and the better off, idiosyncrasy, costs, coping responses, and self-reported impacts on well-being. Health shocks are more common than most other shocks, more concentrated among the poor, more idiosyncratic, more costly, trigger more coping strategies, and highly likely to lead to a cut in consumption. Household members experiencing a health shock lost, on average, 0.6 point on a five-point health scale; the wealthier are better able to limit the health impacts of a health shock. For non-commercial use in accordance with Wiley Terms and Conditions at http://olabout.wiley.com/WileyCDA/Section/id-820227.html
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Publication Are Health Shocks Different? Evidence from a Multi-Shock Survey in Laos(2010-06-01)In Laos health shocks are more common than most other shocks and more concentrated among the poor. They tend to be more idiosyncratic than non-health shocks, and are more costly, partly because they lead to high medical expenses, but also because they lead to income losses that are sizeable compared with the income losses associated with non-health shocks. Health shocks also stand out from other shocks in the number of coping strategies they trigger: they are more likely than non-health shocks to trigger assistance from a nongovernmental organization and other households, dis-saving, borrowing, asset sales, an early harvest, the pawning of possessions, and the delaying of plans; by contrast, they are less likely to trigger assistance from government. Consumption regressions point to only limited evidence of households not being able to smooth consumption in the face of any shock. However, these results contrast with households' own assessments of the welfare impacts of shocks. The majority said they had to cut back consumption following a shock and that shocks considerably affected their welfare. Only health shocks are worse than a drought in terms of the likelihood of a family being forced to cut back consumption and in terms of the shock affecting a family's well-being "a lot." The poor are especially disadvantaged in terms of the greater damage that health shocks inflict on household well-being. Health shocks stand out too in leading to a loss of human capital: household members experiencing a health shock did not recover their former subjective health following the health shock, losing, on average, 0.6 points on a 5-point scale. The wealthier and better educated are better able to limit the health impacts of a health shock; the data are consistent with this being due to their greater proximity to a health facility.Publication Health Shocks in China : Are the Poor and Uninsured Less Protected?(World Bank, Washington, DC, 2005-10)Health shocks have been shown to have important economic consequences in industrial countries. Less is known about how health shocks affect income, consumption, labor market outcomes, and medical expenditures in middle- and low-income countries. The authors explore these issues in China. In addition to providing new evidence on the general impact of health shocks, they also extend previous work by assessing the extent of risk protection afforded by formal health insurance, and by examining differences in the impact of health shocks between the rich and poor. The authors find that health shocks are associated with a substantial and significant reduction in income and labor supply. 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They hope this, in turn, will lead to more comprehensive monitoring of trends in health equity, a better understanding of the causes of these inequities, more extensive evaluation of the impacts of development programs on health equity, and more effective policies and programs to reduce inequities in the health sector.Publication Can Insurance Increase Financial Risk? The Curious Case of Health Insurance in China(World Bank, Washington, DC, 2005-10)The most basic argument for insurance is that it reduces financial risk. But since insurance opens up new opportunities for consuming expensive high-technology care which permits health improvements that are valued by the insured, and because in many settings the provider is able and has an incentive to exploit the informational advantage he has over the patient, it is not immediately obvious that insurance will in practice reduce financial risk. The authors analyze the effect of insurance on the probability of an individual incurring "high" annual health expenses using data from three household surveys-one a cross-section survey, the other two panel surveys. All come from China, a country where providers have until recently largely been paid fee-for-service (often according to a schedule that encourages the overprovision of high-technology care and the underprovision of basic care) and who are only lightly regulated. The authors define annual spending as "high" if it exceeds 5 percent of average income in the sample and as "catastrophic" if it exceeds 10 percent of the household's own per capita income. The estimates of the effect of insurance on financial risk allow for the possible endogeneity of health insurance in the panel datasets by allowing for a time-invariant fixed effect capturing unobserved risk that may be correlated with insurance status, and in the cross-section dataset by using instrumental variables, where availability of and eligibility for health insurance are used as instruments. The results suggest that during the 1990s China's government and labor insurance schemes increased financial risk associated with household health care spending, but that the rural cooperative medical scheme significantly reduced financial risk in some areas but increased it in others (though not significantly). From the results, it appears that China's new health insurance schemes (private schemes, including coverage of schoolchildren) have also increased the risk of high levels of out-of-pocket spending on health. Where the authors find evidence of health insurance increasing the risk of "high" out-of-pocket expenses, the marginal effect is of the order of 15-20 percent; in the case of "catastrophic" expenses, it is even larger.
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