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Can insurance reduce catastrophic out-of-pocket health expenditure?

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  • Rama Joglekar

    ()
    (Indira Gandhi Institute of Development Research)

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Abstract

In India, the out-of-pocket health expenditure by households accounts for around 70 percent of the total expenditure on health. Large out-of-pocket payments may reduce consumption expenditure on other goods and services and push households into poverty. Recently, health insurance has been considered as one of the possible instruments in reducing impoverishing effects of large out-of-pocket health expenditure. In India, health insurance has limited coverage and the present paper studies whether it has been effective so far. Literature defines out-of-pocket health expenditure as catastrophic if its share in the household budget is more than some arbitrary threshold level. In the present paper, we argue that for households below poverty line any expenditure on health is catastrophic as they are unable to attain the subsistence level of consumption. Thus, we take zero percent as a threshold level to define catastrophic health expenditure and examine the impact of health insurance on probability of incurring catastrophic health expenditure.

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Bibliographic Info

Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2008-016.

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Length: 29 pages
Date of creation: Sep 2008
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Handle: RePEc:ind:igiwpp:2008-016

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Keywords: Out-of-pocket health expenditure; Catastrophic health expenditure; Health insurance;

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