Effect of Health Shocks on Poverty Status in South Korea: Exploring the Mechanism of Medical Impoverishment

Background: South Korea has the highest out-of-pocket burden for medical expenses among the Organisation for Economic Co-operation and Development (OECD) member countries and has no formal sickness benefit system, along with United States and Switzerland, greatly increasing the risk of poverty due to a sudden illness. Methods: We identify the causal effect of health shocks on poverty status and explore the mechanisms of medical impoverishment by analyzing longitudinal data from 13 670 households that participated in the representative Korean Welfare Panel Study (KOWEPS) from 2007 to 2016. In this study, we define a health shock as a case in which no household members were hospitalized in the previous year, but together they had more than 30 days of hospitalization in this year. The propensity score matching method was combined with a mediation analysis in this work. Results: The proportion of households in absolute poverty increased by 4.6–8.0 percentage points among households that experienced a health shock compared with matched controls. The selection effects due to health shock were estimated to be 5.6–8.2 percentage points. On average, a sudden hospitalization reduces annual non-medical expenditures and equivalized disposable income by just over 3.2 million KRW (2500 USD) and 1.2 million KRW (1000 USD), respectively. Health shock induces impoverishment after one year through both the medical expense and work capacity pathways, which explain 12.8% and 12.8% of the total effect, respectively. However, when we decompose the mediation effect of a health shock on poverty status after two years, we find that a health shock leads to poverty mainly through labor force nonparticipation (9.9%). Conclusion: Income stabilizing scheme to protect households that experience a health shock should be introduced as a policy alternative to confront the issue of medical impoverishment.

What fragile factors hinder the pace of China’s alleviation efforts of poverty-stricken population?

Objective: China has made remarkable achievements in poverty alleviation. However, with the change in economic development and age structure, the population stricken by poverty due to medical expenses and disability accounted for 42.3% and 14.4% of the total poverty-stricken population, respectively. The efforts to reduce the catastrophic health expenditure among Chinese residents are not optimistic. Poverty alleviation efforts might only focus on the people who are currently poor but ignores the increase in poverty that may occur. Accordingly, it is crucial to accurately pinpoint the characteristics of people who are about to become poor due to illness. Therefore, we prospectively analyzed the incidence of impoverishment by medical expense at the provincial, family, and different medical insurance scheme levels to identify the precise groups that are vulnerable to medical-related poverty.Method: This study obtained the data from the Chinese government’s Fifth National Health Service Survey for 2013. This survey is conducted every five years and has the most nationally representative sample obtained through a multi-stage, stratified, and random sampling method. To clean the data, we excluded incomplete records and those with logic errors, leaving 93,570 households (273,626 people) for the final sample. The method recommended by World Health Organization (WHO) was adopted to calculate impoverishment by medical expense, and logistic regression was adopted to evaluate its determinants.Results: The poverty rates in western region had much higher poverty rates than the other two regions, and the eastern region had the lowest. The rate of medical impoverishment (MI) was higher in the western region (7.2%) than that in the central (6.5%) and eastern (5.1%) regions. Compared with people enrolled in other medical insurance schemes, those enrolled in the Medical Insurance for Urban Employees Scheme (UE-BMI) and a mixture of schemes had better capacity to deal with the burden brought by diseases. The New Cooperative Medical Scheme (NCMS)was associated with the highest rate (9.1%) of MI cases. A comparison of the MI groups revealed that the top three diseases associated with MI were malignant tumor, congenital heart disease, and mental disease. Households with members suffering from NCDs, and with members who were inpatients were all more likely to suffer from MI. NCMS-enrolled households had greater exposure to the risk of MI, at 1.84 times that of UE-BM-enrolled households. Poorer households were 15.8 times more likely to suffer from MI than richer households.Conclusion: The joint roles of economic development, health service utilization, and welfare policies result in medical impoverishment for different regions. Poverty and health service utilization are indicative of households with high incidence of medical impoverishment. Chronic diseases lead to medical impoverishment. The inequity existing in different medical insurance schemes leads to different degrees of risk of MI. A combined strategy to precise target multiple vulnerabilities of poor population should be more effective.

HEALTH INSURANCE AND MEDICAL IMPOVERISHMENT IN RURAL CHINA: EVIDENCE FROM GUIZHOU PROVINCE

We analyze the effects of the New Rural Cooperative Medical Scheme (NCMS) on poverty, using micro-level household data from 17 villages in a poor area of China’s Guizhou province. A four-wave panel dataset allows us to follow NCMS through its reforms. First-order impact assessments suggest NCMS helps reduce the poverty rate by up to 3 percentage points, and the poverty gap by up to 15 percentage points. It also reduces the contribution of health expenditures to inequality as measured by Gini coefficient. The benefits of NCMS in terms of poverty and inequality appear considerably larger after major reforms in 2009, which expanded benefits and coverage.

Partnering for Universal Health Coverage in Thailand

The Thai National Health Security Act of 2002 established a universal health coverage program that extended health care to 18 million previously uninsured Thais and significantly reduced rates of medical impoverishment. This article highlights the key role that a coalition of health bureaucrats and NGOs played in achieving this outcome.