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Health shocks in China : are the poor and uninsured less protected ?

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Author Info

  • Lindelow, Magnus
  • Wagstaff, Adam

Abstract

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. There are indications that the impact on income is less important for the insured, possibly because health insurance coverage is also associated with limited sickness insurance, but the effect is not significant. They also find evidence that negative health shocks are associated with an increase in unearned income for the poor but not the non-poor. This effect is however not strong enough to offset the impact on overall income. The loss in income is a consequence of a reduction in labor supply for the head of household, and the authors do not find evidence that other household members compensate by increasing their labor supply. Finally, negative health shocks are associated with a significant increase in out-of-pocket health care expenditures. More surprisingly, there is some evidence that the increase is greater for the insured than the uninsured. The findings suggest that households are exposed to considerable health-related shocks to disposable income, both through loss of income and health expenditures, and that health insurance offers very limited protection.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3740.

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Date of creation: 01 Oct 2005
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Handle: RePEc:wbk:wbrwps:3740

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Related research

Keywords: Health Monitoring&Evaluation; Health Economics&Finance; Rural Poverty Reduction; Housing&Human Habitats; Health Law;

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References

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Citations

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Cited by:
  1. Wagstaff, Adam & Yu, Shengchao, 2007. "Do health sector reforms have their intended impacts?: The World Bank's Health VIII project in Gansu province, China," Journal of Health Economics, Elsevier, vol. 26(3), pages 505-535, May.
  2. Carine Milcent, 2013. "Industrialisation et Inégalités : Le recours aux soins en zones rurales chinoises," PSE Working Papers halshs-00826889, HAL.
  3. Grimm, Michael, 2006. "Mortality and survivors' consumption," Proceedings of the German Development Economics Conference, Berlin 2006 9, Verein für Socialpolitik, Research Committee Development Economics.
  4. Carine Milcent & Feng Jin, 2010. "Decrease in the healthcare demand in rural China: A side effect of the industrialization process?," PSE Working Papers halshs-00564848, HAL.
  5. World Bank, 2007. "Social Protection in Pakistan : Managing Household Risks and Vulnerability," World Bank Other Operational Studies 7660, The World Bank.
  6. repec:hal:wpaper:halshs-00826889 is not listed on IDEAS
  7. Carine Milcent, 2011. "Baisse du recours aux soins dans les zones rurales en Chine," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00653450, HAL.
  8. Asadul Islam & Pushkar Maitra, 2008. "Health Shocks And Consumption Smoothing In Rural Households: Does Microcredit Have A Role To Play?," Development Research Unit Working Paper Series 22/08, Monash University, Department of Economics.
  9. World Bank, 2012. "Addressing Vulnerability in East Asia : A Regional Study," World Bank Other Operational Studies 11900, The World Bank.
  10. repec:hal:psewpa:halshs-00653450 is not listed on IDEAS
  11. Gabriela Flores & Jaya Krishnakumar & Owen O'Donnell & Eddy van Doorslaer, 2008. "Coping with health-care costs: implications for the measurement of catastrophic expenditures and poverty," Health Economics, John Wiley & Sons, Ltd., vol. 17(12), pages 1393-1412.
  12. repec:hal:wpaper:halshs-00653450 is not listed on IDEAS
  13. repec:hal:wpaper:halshs-00564848 is not listed on IDEAS
  14. Manoj K. Pandey, 2013. "Elderly's Health Shocks and Household's Ex-ante Poverty in India," ASARC Working Papers 2013-01, The Australian National University, Australia South Asia Research Centre.

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