Economic Impact of Illness With Health Insurance But Without Income Insurance

Tinbergen Institute Discussion Paper 15-060/V

31 Pages Posted: 21 May 2015

See all articles by Sven Neelsen

Sven Neelsen

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Chulaporn Limwattananon

Khon Kaen University

Owen O'Donnell

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Eddy van Doorslaer

Erasmus School of Economics

Date Written: April 30, 2015

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 substantial exposure to economic risks associated with long-term illness.

Keywords: Health, medical expenditure, social insurance, universal coverage, Thailand

JEL Classification: I13, J46, O12

Suggested Citation

Neelsen, Sven and Limwattananon, Chulaporn and O'Donnell, Owen and van Doorslaer, Eddy, Economic Impact of Illness With Health Insurance But Without Income Insurance (April 30, 2015). Tinbergen Institute Discussion Paper 15-060/V. Available at SSRN: https://ssrn.com/abstract=2608856 or http://dx.doi.org/10.2139/ssrn.2608856

Sven Neelsen (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research) ( email )

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Germany
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Chulaporn Limwattananon

Khon Kaen University ( email )

23 Moo 16 Mittapap Rd
Nai-Muang, Muang District 40002
Thailand

Owen O'Donnell

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Eddy Van Doorslaer

Erasmus School of Economics ( email )

Netherlands

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