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

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  • 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.

Suggested Citation

  • Lindelow, Magnus & Wagstaff, Adam, 2005. "Health shocks in China : are the poor and uninsured less protected ?," Policy Research Working Paper Series 3740, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3740
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Michael Grimm, 2010. "Mortality Shocks and Survivors' Consumption Growth," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(2), pages 146-171, April.
    2. Carine Milcent & Feng Jin, 2010. "Decrease in the healthcare demand in rural China: A side effect of the industrialization process?," Working Papers halshs-00564848, HAL.
    3. You, Xuedan & Kobayashi, Yasuki, 2009. "The new cooperative medical scheme in China," Health Policy, Elsevier, vol. 91(1), pages 1-9, June.
    4. Grigorakis, Nikolaos & Floros, Christos & Tsangari, Haritini & Tsoukatos, Evangelos, 2016. "Out of pocket payments and social health insurance for private hospital care: Evidence from Greece," Health Policy, Elsevier, vol. 120(8), pages 948-959.
    5. 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.
    6. World Bank, 2007. "Social Protection in Pakistan : Managing Household Risks and Vulnerability," World Bank Other Operational Studies 7660, The World Bank.
    7. Carine Milcent, 2011. "Baisse du recours aux soins dans les zones rurales en Chine," Working Papers halshs-00653450, HAL.
    8. Islam, Asadul & Maitra, Pushkar, 2012. "Health shocks and consumption smoothing in rural households: Does microcredit have a role to play?," Journal of Development Economics, Elsevier, vol. 97(2), pages 232-243.
    9. 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.
    10. Adhvaryu, Achyuta & Nyshadham, Anant, 2017. "Health, Enterprise, and Labor Complementarity in the Household," Journal of Development Economics, Elsevier, vol. 126(C), pages 91-111.
    11. Michael Grimm, 2006. "Mortality and survivor's consumption," Working Papers DT/2006/13, DIAL (Développement, Institutions et Mondialisation).
    12. Carine Milcent, 2013. "Industrialisation et Inégalités : Le recours aux soins en zones rurales chinoises," Working Papers halshs-00826889, HAL.
    13. World Bank, 2012. "Addressing Vulnerability in East Asia : A Regional Study," World Bank Other Operational Studies 11900, The World Bank.
    14. 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.
    15. Sun, Ang & Yao, Yang, 2010. "Health shocks and children's school attainments in rural China," Economics of Education Review, Elsevier, vol. 29(3), pages 375-382, June.
    16. Zhang, Jing & Gan, Li & Xu, Lixin Colin & Yao, Yang, 2014. "Health shocks, village elections, and household income: Evidence from rural China," China Economic Review, Elsevier, vol. 30(C), pages 155-168.
    17. 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.
    18. Carine Milcent, 2011. "Baisse du recours aux soins dans les zones rurales en Chine," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00653450, HAL.
    19. Carine Milcent, 2013. "Industrialisation et Inégalités : Le recours aux soins en zones rurales chinoises," PSE Working Papers halshs-00826889, HAL.

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    Keywords

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

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