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Economic Impact of Illness with Health Insurance but without Income Insurance

Listed author(s):
  • Sven Neelsen

    (Erasmus University Rotterdam, the Netherlands)

  • Supon Limwattananon

    (Ministry of Public Health, Thailand; Khon Kaen University, Thailand)

  • Owen O'Donnell

    (Erasmus University Rotterdam, the Netherlands)

  • Eddy van Doorslaer

    (Erasmus University Rotterdam, the Netherlands)

We examine economic vulnerability to illness when, as for informal sector workers in Thailand, there is universal coverage for health care but earnings losses are uninsured. Even with comprehensive health care entitlement, severe illness that strikes an initially healthy worker is found to raise out-of-pocket medical expenses by around two thirds and increase the probability that medical spending absorbs more than a tenth of the household budget by nine percentage points. Moreover, severe illness reduces the probability of remaining in employment by 18 points and precipitates a reduction in household labor income of almost one third. Despite the rise in medical expenses and fall in earnings, households are able to maintain expenditure on goods and services other than medical care by drawing on remittances and informal transfers, cutting back on saving, and by borrowing. In the short term, informal insurance fills gaps left uncovered by formal insurance but there is likely to be subst antial exposure to economic risks associated with long-term illness.

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File URL: http://papers.tinbergen.nl/15060.pdf
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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 15-060/V.

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Date of creation: 21 May 2015
Handle: RePEc:tin:wpaper:20150060
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  1. Stefan Dercon & Pramila Krishnan, 2000. "In Sickness and in Health: Risk Sharing within Households in Rural Ethiopia," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 688-727, August.
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  8. Adam Wagstaff & Eddy van Doorslaer, 2003. "Catastrophe and impoverishment in paying for health care: with applications to Vietnam 1993-1998," Health Economics, John Wiley & Sons, Ltd., vol. 12(11), pages 921-933.
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  11. Manoj Mohanan, 2013. "Causal Effects of Health Shocks on Consumption and Debt: Quasi-Experimental Evidence from Bus Accident Injuries," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 673-681, May.
  12. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
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  14. Maria Eugenia Genoni, 2012. "Health Shocks and Consumption Smoothing: Evidence from Indonesia," Economic Development and Cultural Change, University of Chicago Press, vol. 60(3), pages 475-506.
  15. Limwattananon, Supon & Neelsen, Sven & O'Donnell, Owen & Prakongsai, Phusit & Tangcharoensathien, Viroj & van Doorslaer, Eddy & Vongmongkol, Vuthiphan, 2015. "Universal coverage with supply-side reform: The impact on medical expenditure risk and utilization in Thailand," Journal of Public Economics, Elsevier, vol. 121(C), pages 79-94.
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