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Catastrophic medical expenditure risk.

  • Flores G Faculty of Business and Economics, University of Lausanne, CH-1015 Lausanne, Switzerland. Electronic address: gabriela.flores@unil.ch.
  • O'Donnell O Erasmus School of Economics, Erasmus University Rotterdam, 3000 DR Rotterdam, The Netherlands; Tinbergen Institute, Amsterdam, The Netherlands; School of Economics and Regional Studies, University of Macedonia, Egnatia 156, Thessaloniki 54636, Greece. Electronic address: odonnell@ese.eur.nl.
  • 2016-01-27
Published in:
  • Journal of health economics. - 2016
Asia
Catastrophic payments
Medical expenditures
Reference-dependent utility
Risk
Asia
Catastrophic Illness
Cross-Sectional Studies
Financing, Personal
Health Expenditures
Health Surveys
Humans
Insurance Coverage
Insurance, Health
Models, Statistical
Risk Assessment
English We propose a measure of household exposure to particularly onerous medical expenses. The measure can be decomposed into the probability that medical expenditure exceeds a threshold, the loss due to predictably low consumption of other goods if it does and the further loss arising from the volatility of medical expenses above the threshold. Depending on the choice of threshold, the measure is consistent with a model of reference-dependent utility with loss aversion. Unlike the risk premium, the measure is only sensitive to particularly high expenses, and can identify households that expect to incur such expenses and would benefit from subsidised, but not actuarially fair, insurance. An empirical illustration using data from seven Asian countries demonstrates the importance of taking account of informal insurance and reveals clear differences in catastrophic medical expenditure risk across and within countries. In general, risk is higher among poorer, rural and chronically ill populations.
Language
  • English
Open access status
green
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Persistent URL
https://sonar.ch/global/documents/265290
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