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

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Author Info
Rama Joglekar () (Indira Gandhi Institute of Development Research)
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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Publisher 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
Date of revision:
Handle: RePEc:ind:igiwpp:2008-016

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

Find related papers by JEL classification:
I12 - Health, Education, and Welfare - - Health - - - Health Production
I19 - Health, Education, and Welfare - - Health - - - Other

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    Other versions:
  2. Jeffrey J. Rous & David R. Hotchkiss, 2003. "Estimation of the determinants of household health care expenditures in Nepal with controls for endogenous illness and provider choice," Health Economics, John Wiley & Sons, Ltd., vol. 12(6), pages 431-451. [Downloadable!]
  3. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr. [Downloadable!] (restricted)
  4. Pia Schneider & Kara Hanson, 2006. "Horizontal equity in utilisation of care and fairness of health financing: a comparison of micro-health insurance and user fees in Rwanda," Health Economics, John Wiley & Sons, Ltd., vol. 15(1), pages 19-31. [Downloadable!]
  5. Mendola, Mariapia & Bredenkamp, Caryn & Gragnolati, Michele, 2007. "The impoverishing effect of adverse health events : evidence from the western Balkans," Policy Research Working Paper Series 4444, The World Bank. [Downloadable!]
  6. Alexander J. Cowell, 2006. "The relationship between education and health behavior: some empirical evidence," Health Economics, John Wiley & Sons, Ltd., vol. 15(2), pages 125-146. [Downloadable!]
  7. Ardeshir Sepehri & Sisira Sarma & Wayne Simpson, 2006. "Does non-profit health insurance reduce financial burden? Evidence from the Vietnam living standards survey panel," Health Economics, John Wiley & Sons, Ltd., vol. 15(6), pages 603-616. [Downloadable!]
  8. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-32, Nov.-Dec.. [Downloadable!] (restricted)
    Other versions:
  9. Michael Grossman, 1999. "The Human Capital Model of the Demand for Health," NBER Working Papers 7078, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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