Project Title:Health Insurance and Household Financial Well-being
PI:Dr Kai Liu
Project Period:May 01, 2020-Apr 30, 2021
Protection against risk associated with medical expenses is a major purpose of health insurance. Uninsured households face potential financial hardship when they are stricken with illness, especially in developing countries where consequences of illness and lack of insurance can be more severe because of sizable treatment costs relative to income. Uninsured health expenditure risks may also disincentivize households from engaging in risky entrepreneurial activities. This project investigates how public insurance provision affects households’ financial well-being as well as how reductions in health expenditure risk change households’ risk-taking behaviors, including allocation of investments among different types of informal cultivation activities. We exploit exogenous changes in medical expenditure risk and potential demand for healthcare among the previously uninsured households caused by a major health reform in Thailand in 2001. Using panel data from Townsend Thai Monthly households surveys of rural households, we predict potential demand for healthcare using pre-reform history of health conditions and verify that households with higher demand experienced larger reduction in the expected cost of illness and thus benefit more from the reform. The difference-in-differences strategy is then employed to gauge the effects of insurance.
Project Update - August 2021 End of Award