Out-of-pocket health payments: a catalyst for agriculturalproductivity growth, but with potentially impoverishingeffects in Senegal

This paper analyzes the relationship between healthexpenditures and productivity in Senegal by using a dynamicrecursive computable general equilibrium (CGE) model thathas been run from 2011 to 2020. This model links the growthrate of agricultural productivity to household investment inhealth goods taking into account catastrophic health paymentsconsidered as barriers to achieve maximal productivity gains.In fact, despite being a potential catalyst for productivity, out-of-pocket health expenditures can be a burden after a criticalthreshold has been crossed and might potentially decreasehousehold resources and place constraints on theproductivity-generating process. Results show a positive im-pact on poverty reduction when the Government reduces theburden on households by financing catastrophic paymentovershoots. Lower health costs also appear to improve house-holds’well-being, especially in the case of agricultural house-holds. These results suggest the need for policies which willreduce the health system’s reliance on out-of-pocket paymentsand demonstrate that health programs should reach the mostvulnerable households. Theeffectiveness of poverty-orientated interventions can be increased by targeting house-holds incurring catastrophic health expenditures.