Causal Effects of Health Shocks on Consumption and Debt: Quasi-Experimental Evidence from Bus Accident Injuries

Mohanan, Manoj

doi:10.1162/rest_a_00262

“…This paper also contributes to our understanding of how households in developing countries respond to unexpected changes in household resources. Closely related to the current paper is a set of papers analyzing the effects of health shocks on income, consumption and household choices (e.g., Townsend (1994), Kochar (1995), Gruber (2002), andMohanan (2013)). In focusing on a household-level shock and human capital investments, this paper also relates to studies of the impact of household-level shocks on child labor and schooling (e.g., Beegle, Dehejia, and Gatti (2006) and Yang (2008)).…”

Section: Introductionmentioning

confidence: 99%

Insuring against health shocks: Health insurance and household choices

Liu

¹

2016

Journal of Health Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper provides empirical evidence on the role of public health insurance in mitigating adverse outcomes associated with health shocks. Exploiting the rollout of a universal health insurance program in rural China, I find that total household income and consumption are fully insured against health shocks even without access to health insurance. Household labor supply is an important insurance mechanism against health shocks. Access to health insurance helps households to maintain investment in children's human capital during negative health shocks, which suggests that one benefit of health insurance could arise from reducing the use of costly smoothing mechanisms. JEL Classification:D1, O1, I1

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“…Formal and informal borrowing has been shown to be a key instrument used by households to cover liquidity shortages in cases of idiosyncratic shocks, such as health-related shocks. In a quasi-experimental setting of bus accidents in India, Mohanan (2011), for example, finds that debt was the principal mechanism used by households to mitigate the shock's effects while consumption was smoothed quite well. Although taking up debt may be chosen by households to avoid other, eventually more harmful strategies to cope with such events, like the sale of assets, work more, take children out of school, or cut investment spending (Beegle, Dehejia, & Gatti, 2006;Gertler, Levine, & Moretti, 2009;Guarcello, Mealli, & Rosati, 2009; specifically on health shocks : Islam & Maitra, 2011;Jacoby & Skoufias, 1997), the financing of health care expenditures through debt can also create large and lasting financial burdens for households (Damme, Leemput, Por, Hardeman, & Meessen, 2004).…”

Section: Introduction and Related Literaturementioning

confidence: 99%

Are Remittances a Substitute for Credit? Carrying the Financial Burden of Health Shocks in National and Transnational Households

Ambrosius¹,

Cuecuecha²

2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The assumption that remittances are a substitute for credit has been an implicit or explicit theoretical foundation of many empirical studies on remittances. This paper directly tests this assumption by comparing the response to health-related shocks among national and transnational households using panel data from Mexico for 2002 and. While the occurrence of serious health shocks that required hospital treatment doubled the average debt burden of exposed households compared to the control group, households with nuclear family members (a parent, child, or spouse) in the US did not increase their debts due to health shocks. This finding is consistent with the view that remittances respond to households' demand for financing emergencies and make them less reliant on debt-financing. Terms of use: Documents in

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“…Pauly et al (2008) use data from the World Health Survey for 14 developing countries and show that risk averse individuals may benefit from having access to health insurance, out of a pure consumption motive. Mohanan (2013) shows that households faced with shock-related expenditures are able to smooth consumption on food, housing, and festivals, with small reductions in educational spending, and that debt was the principal mitigating mechanism households used, leading to significantly larger levels of indebtedness.…”

mentioning

confidence: 99%

The Effects of Access to Health Insurance for Informally Employed Individuals in Peru

Bernal

¹

,

Carpio

²

,

Klein

³

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu While it is commonly believed that this has positive effects, to date, it is not well understood through which channels health insurance coverage contributes to the well-being of individuals. More generally, the effects are usually not quantified at the individual level. There are two main reasons for this. First, we lack detailed data on health care utilization and health outcomes, and second, it is not easy to control for selection into insurance. The second problem means that a regression of utilization or outcome measures on insurance coverage will yield biased results and will not estimate the causal effects of health insurance. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIn this paper, we make progress in both directions. We use rich survey data to evaluate the impact of access to the Peruvian Social Health Insurance called "Seguro Integral de Salud" for individuals outside the formal labor market on a variety of measures for health care utilization, preventive care, health expenditures, and health indicators. We address the second concern by exploiting a fuzzy regression discontinuity design. A household is eligible for the program if a welfare index that is calculated from a number of variables is below a specific threshold. We base our analysis on a natural experiment that is generated by variation in the index around the threshold. We interpret our results through the lens of a simple model. As expected, and in contrast to studies for a number of other countries, we find strong effects of insurance coverage on measures of health care utilization, such as visiting a doctor, receiving medication and medical analysis. The program does not strongly incentivice individuals or health care providers to invest into preventive care. In line with this, in general, we find no effects of insurance coverage on preventive care. The only exceptions to this are our findings that, controlling for selection into insurance coverage, women of fertile age with insurance are more likely to receive pregnancy care and that insured individuals are more likely to be vaccinated. This is in line with the stark decrease in maternal and child mortality that was observed after the program was introduced. As for health care expenditures, we generally find positive effects on the mean and the variability. We complement these findings with quantile treatment effect estimates that show increases at the high end of the distribution. Our inte...

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Causal Effects of Health Shocks on Consumption and Debt: Quasi-Experimental Evidence from Bus Accident Injuries

Cited by 90 publications

References 34 publications

Insuring against health shocks: Health insurance and household choices

Insuring against health shocks: Health insurance and household choices

Are Remittances a Substitute for Credit? Carrying the Financial Burden of Health Shocks in National and Transnational Households

The Effects of Access to Health Insurance for Informally Employed Individuals in Peru

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