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Catastrophic Medical Expenditure Risk

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  • Gabriela Flores

    (Institute of Health Economics and Management, University of Lausanne, and Institute of Health Policy and Management, Erasmus University Rotterdam)

  • Owen O'Donnell

    (Erasmus School of Economics, Erasmus University Rotterdam, and University of Macedonia, Greece)

Abstract

Medical expenditure risk can pose a major threat to living standards. We derive decomposable measures of catastrophic medical expenditure risk from reference-dependent utility with loss aversion. We propose a quantile regression based method of estimating risk exposure from cross-section data containing information on the means of financing health payments. We estimate medical expenditure risk in seven Asian countries and find it is highest in Laos and China, and is lowest in Malaysia. Exposure to risk is generally higher for households that have less recourse to self-insurance, lower incomes, wealth and education, and suffer from chronic illness.

Suggested Citation

  • Gabriela Flores & Owen O'Donnell, 2012. "Catastrophic Medical Expenditure Risk," Tinbergen Institute Discussion Papers 12-078/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20120078
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    1. repec:kap:ijhcfe:v:17:y:2017:i:3:d:10.1007_s10754-016-9203-7 is not listed on IDEAS
    2. Ramses H. Abul Naga & Karine Lamiraud, 2008. "Catastrophic health expenditure and household well-being," Working Papers 0803, University of Lausanne, Institute of Health Economics and Management (IEMS).
    3. Zelalem Yilma & Owen O’Donnell & Anagaw Mebratie & Getnet Alemu & Arjun S. Bedi, 2015. "Subjective Expectations of Medical Expenditures and Insurance in Rural Ethiopia," Tinbergen Institute Discussion Papers 15-120/V, Tinbergen Institute.
    4. Gustav Kjellsson & Dennis Petrie & Tom (T.G.M.) van Ourti, 2018. "Measuring income-related inequalities in risky health prospects," Tinbergen Institute Discussion Papers 18-007/V, Tinbergen Institute.

    More about this item

    Keywords

    medical expenditures; catastrophic payments; downside risk; reference-dependent utility; Asia;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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