HEFPA Paper Digest I Supon Limwattananon. WP2 WP1.

HEFPA Paper Digest I

Supon LimwattananonSupon Limwattananon

WP

2

WP

1

Health shocks

- Labor supply

- Income (earned and unearned) - Medical spending

Food consumption Non-food consumption

- Health insurance

- Coping methods:

- Saving - Gift - Borrowing/loan - Asset

- Social insurance/security

- Informal solidarity

Consumption insurance

Financial risks

Paper 3

Which kind of insurance can protect welfare loss?

• For common minor illnesses vs. for unanticipated major illnesses

• First-dollar coverage with low capped benefits vs. catastrophic insurance with patient cost-sharing

1

1 Townsend (1995); Kochar (1995) found families in LICs were able to insure illness shocks fairly well.

Objective

FindingsSection III:

Section IV:

Panel data

Fixed-effects model

(1) ADLs vs. (2) Self-reported illness symptoms

Symptom lasting > 1 mo.Any symptom

1.

2.12.21.1

1.2

mean (SD)

%

%%mean (SD)

mean (SD)

hij

Problems on self-reported illnesses

Lij

3.

2.

1.1

1.2

Xij

Labor supply/wk

This has to be imputed for informal sectors

per wk

(C/n)ij

hij

Xij

Lij (1.1)

2.1

2.2

1.

per wk

Section III

hij 2.1 2.2 1.

Lij

1.1

1.2

2.

3.

per wk

Interpretation:

Moving from being able to perform all ADLs to being able to perform none would result in

- lowering hours of work by 30.9 hours per week (84% of baseline mean hours)

- 73.8% likelihood of becoming labor-force nonparticipant

- a reduction of earnings by Rp.20,170 (~ baseline mean earnings)

- an increase in medical spending of Rp.1,180

Section III

Section IV: Consumption insurance

ln(C/n)ij

hij

Xij

2.1

2.2

1.

Moving from being able to perform all ADLs to being able to perform none would lower consumption by 19.5%

Section IV

Section V: The extent to which households are able to insure consumption

Biased est.: For each Rp. that income falls, consumption falls by only 3%

Unbiased est.: For each Rp. that income falls, consumption falls by 35%

Households are able to insure only 65% of the consumption with respect to income loss due to a loss in ADL

Instrument Variable (IV)

Y = 1 + 1h + Z1 + 1

C = 2 + 2 + X2 + 2

^

YPredicted Y as an instrument

Step 1. Income

Step 2. Consumption

C = 0 + 0Y + X0 + 0

OLS method

Y is endogenous: some unobserved variables affect both Y and C.

Hence, Is biased (change in Y affecting change in C is spurious).

Consumption:

IV method

Paper 4

Sht-1

Sht-1

1.1

1.21.

2.

3.1

3.2

ln yht

1.

2.12.2

3.

Sht-1

Xht

e.g., gift, remittance, pension, compensation

e.g., wage/salary, agriculture, family business

esp., direct, nonmedical costs of care

yht

Rural

Urban

Effects on income per household

An urban household’s earned income

is more vulnerable to death shocks

than an rural household’s.

Statistically non-significant

Regression coefficient and (t-statistics)

Statistically non-significant

An increase in unearned income

offsets a decrease in earned income;

whereby other-than death shocks in

urban area are larger than in rural area.

Urban

Rural

Effects on income per capita

Effect of a death on per capita income

Is statistically non-significant and is

less than on household income.

Effects on medical expenditure (1)

Urban

Rural

Effects on medical expenditure (2)

Insured

Uninsured

Effects on food consumption

Rural

Urban

Households cannot smooth their food consumption in the face of some health shocks!

Effects on non-food/non-medical consumption

Urban

Rural

The evidence is more mixed!

Pr (y>0)

E[y|y>0](Housing)

Health shocks

Year 2004-05(wave 1: N = 5,673)

Year 2005-06(wave 2: N = 5,495)

% Dead: Any HH members 0% 2.3%

% Ill: Any HH members 57.0% 53.8%

% Ill: HH head 37.8% 35.1%

% Ill: Other than head 19.1% 18.7%

% Ill: Working member 43.4% 40.7%

% Hospitalized: Any HH members 21.3% NA

% Hospitalized: HH head 10.3% NA

% Hospitalized: Other than head 11.0% NA

% Hospitalized: Working member 14.7% NA

Economic consequencesYear 2005-06

(wave 2)Year 2006-07

(wave 3)

Mean Unearned income (Baht) 911 992

Mean Earned income (Baht) 4,357 4,664

Mean Total income (Baht) 5,269 5,656

% Catastrophic health exp. (>10% total exp.) 3.3% 3.3%

% Positive health exp. 57.3% 51.0%

Mean Health exp. (Baht), given positive 98 104

Mean Food expenditure (Baht) 1,173 1,260

Mean Nonfood/non-health exp. (Baht) 1,867 2,186

% Positive education exp. 56.2% 55.8%

Mean Education exp. (Baht), given positive 269 289

Covariates for adjustment

Year 2006 Year 2007

% Urban 29.1% 31.7%

% Rural 70.9% 68.3%

% Bangkok 15.8% 17.1%

% Central 16.9% 17.4%

% North 19.1% 19.4%

% Northeast 35.2% 35.0%

% South 12.9% 11.1%

Mean Age (years) 51.5 51.8

% Male 70.1% 70.1%

% Couple 73.9% 75.2%

% Primary educated 73.9% 71.2%

% Secondary educated 14.2% 15.2%

% Higher educated 11.8% 13.6%

Household head

Effect on per capita income

Thailand –whole country

Health shock Unearned Earned Total

Dead: Any HH members 0.778 -0.333 0.053

Ill: Any HH members 0.556 0.259 0.073

Ill: HH head 0.575 0.301 0.208

Ill: Other than head 0.040 -0.027 -0.175

Ill: Working member 0.357 0.143 0.083

Hospitalized: Any HH members 0.488 0.097 0.223

Hospitalized: HH head 0.641 -0.201 0.219

Hospitalized: Other than head 0.235 0.355 0.176

Hospitalized: Working member 0.380 -0.020 0.184

Effect on per capita incomeThailand –urban vs. rural

Health shock Unearned Earned Total

Dead: Any HH members 0.745 -0.943 -0.393

Hospitalized: Any HH members 0.652 -0.153 -0.037

Hospitalized: HH head 0.536 -0.438 0.017

Hospitalized: Other than head 0.617 0.142 -0.078

Hospitalized: Working member 0.280 -0.118 -0.027

Dead: Any HH members 0.751 -0.106 0.177

Hospitalized: Any HH members 0.448 0.183 0.334

Hospitalized: HH head 0.698 -0.139 0.289

Hospitalized: Other than head 0.108 0.444 0.299

Hospitalized: Working member 0.414 -0.023 0.233

Ru

ral

U

rba

n

Effect on per capita health spending (W2)

Thailand –whole country

Health shock (W1)Catast.

exp.

Positive

exp.

Exp.

if positive

Overall

exp.

Ill: Any HH members 0.009 0.088 0.136 0.767

Ill: HH head 0.007 0.070 0.108 0.611

Ill: Other than head 0.004 0.034 0.046 0.302

Ill: Working member 0.011 0.089 0.135 0.775

Hospitalized: Any HH members 0.017 0.053 0.154 0.517

Hospitalized: HH head 0.017 0.052 0.208 0.528

Hospitalized: Other than head 0.014 0.042 0.066 0.390

Hospitalized: Working member 0.018 0.049 0.170 0.488

Effect on per capita health spending (W2)

Thailand –urban vs. rural

Health shock (W1)Catast.

exp.

Positive

exp.

Exp.

if positive

Overall

exp.

Hospitalized: Any HH members 0.020 0.039 0.227 0.478

Hospitalized: HH head 0.026 0.024 0.306 0.407

Hospitalized: Other than head 0.009 0.044 0.107 0.439

Hospitalized: Working member 0.003 0.015 0.070 0.176

Hospitalized: Any HH members 0.017 0.058 0.130 0.530

Hospitalized: HH head 0.013 0.062 0.174 0.569

Hospitalized: Other than head 0.016 0.042 0.054 0.371

Hospitalized: Working member 0.023 0.059 0.208 0.580

Ru

ral

U

rba

n

Effect on per capita health spending (W3)

Thailand –CS vs. SS vs. UC

Health shock (W2)Catast.

exp.

Positive

exp.

Exp.

if positive

Overall

exp.

Ill: Any HH members 0.024 0.122 0.210 1.092

Ill: HH head 0.0007 0.042 0.213 0.435

Ill: Any HH members 0.017 0.070 0.167 0.655

Ill: HH head 0.004 0.070 0.182 0.627

Ill: Any HH members 0.016 0.068 0.292 0.695

Ill: HH head 0.018 0.047 0.326 0.549

UC

SS

C

S

Effect on per capita non-health spending

Thailand –whole country

Health shock   Food Nonfood

Dead: Any HH members -0.124 0.216

Ill: Any HH members -0.030 0.005

Ill: HH head 0.026 0.059

Ill: Other than head -0.079 -0.073

Ill: Working member -0.0004 0.062

Hospitalized: Any HH members -0.098 -0.073

Hospitalized: HH head -0.058 -0.009

Hospitalized: Other than head -0.114 -0.116

Hospitalized: Working member -0.080 0.005

Effect on per capita non-health spending

Thailand –urban vs. rural

Health shock Food Nonfood

Dead: Any HH members -0.115 -0.324

Hospitalized: Any HH members -0.104 -0.215

Hospitalized: HH head 0.024 -0.099

Hospitalized: Other than head -0.198 -0.275

Hospitalized: Working member -0.032 -0.083

Dead: Any HH members -0.120 0.415

Hospitalized: Any HH members -0.100 -0.026

Hospitalized: HH head -0.090 0.017

Hospitalized: Other than head -0.086 -0.060

Hospitalized: Working member -0.099 0.029

Ru

ral

U

rba

n

Effect on per capita education spending

Thailand –whole country

Health shockPositive

exp.

Exp.

if positive

Overall

exp.

Dead: Any HH members -0.043 -0.164 -0.432

Ill: Any HH members -0.026 0.028 -0.214

Ill: HH head -0.036 0.057 -0.304

Ill: Other than head 0.012 -0.029 0.098

Ill: Working member -0.057 0.062 -0.465

Hospitalized: Any HH members -0.024 -0.057 -0.248

Hospitalized: HH head -0.026 0.063 -0.198

Hospitalized: Other than head -0.017 -0.144 -0.239

Hospitalized: Working member -0.048 0.070 -0.385

Effect on per capita education spending

Thailand –urban vs. rural

Health shockPositive

exp.

Exp.

if positive

Overall

exp.

Dead: Any HH members -0.045 -0.426 -0.608

Hospitalized: Any HH members -0.073 -0.318 -0.832

Hospitalized: HH head -0.058 -0.236 -0.614

Hospitalized: Other than head -0.072 -0.331 -0.852

Hospitalized: Working member -0.098 -0.149 -0.991

Dead: Any HH members -0.039 -0.109 -0.345

Hospitalized: Any HH members -0.007 0.020 -0.037

Hospitalized: HH head -0.014 0.147 -0.052

Hospitalized: Other than head 0.002 -0.089 -0.015

Hospitalized: Working member -0.029 0.129 -0.166

Ru

ral

U

rba

n

VHLSS (Vietnam Household Living Standards Survey)

Coping Strategies

Source: VHLSS 2006 Report

Paper 5

(coping strategies)C = 2,580/2,760 = 0.93

Mean of proportion of exp. financed by coping

Coping-adjusted health expenditure ratio (P)(High spending households)

P

= unadjusted

C

Cumulative distributions of health expenditure ratiosw = Unadjusted; P = Coping-adjusted

(w)

(P)