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Economic Impact of Illness with Health Insurance but without Income Insurance

Author

Listed:
  • 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)

Abstract
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.

Suggested Citation

  • Sven Neelsen & Supon Limwattananon & Owen O'Donnell & Eddy van Doorslaer, 2015. "Economic Impact of Illness with Health Insurance but without Income Insurance," Tinbergen Institute Discussion Papers 15-060/V, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20150060
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    References listed on IDEAS

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    More about this item

    Keywords

    Health; medical expenditure; social insurance; universal coverage; Thailand;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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