Catastrophic Medical Expenditures
The ‘basic’ approach to 'catastrophic' medical expenses (where expenses are related to consumption or income) indicates whether expenses cause a large percentage reduction in living standards. By contrast, the 'ability-to-pay approach' (where expenses are related to consumption or income less actual expenses on nonmedical necessities or an allowance for them) does not indicate whether expenses are large enough to undermine a household’s ability to purchase nonmedical necessities. If the individual is a borrower after a health shock, the income-based ratio will exceed the consumption-based ratio, while the opposite is true when the individual continues to be a saver after a health shock. In the first case, both ratios will exceed Flores et al.'s more theoretically correct ratio, with the income-based ratio overestimating it by more. But if the individual is still a saver even after a health shock, the income-based ratio will overestimate Flores et al.'s ratio by less and may not overestimate it at all. A lifetime money metric utility approach can capture the lifetime consequences of coping with medical expenses. Under certain assumptions, but not otherwise, it and the Flores et al. approaches are identical, and both are operationalizable without data on how households finance their medical expenses.
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| Format: | Working Paper biblioteca |
| Language: | English |
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World Bank, Washington, DC
2018-11
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| Subjects: | MEDICAL EXPENSES, IMPOVERISHMENT, FINANCIAL HARDSHIP, FINANCIAL PROTECTION, MEDICAL CARE COST, HEALTH FINANCE, |
| Online Access: | http://documents.worldbank.org/curated/en/102911543240444440/Catastrophic-Medical-Expenditures-Reflections-on-Three-Issues https://hdl.handle.net/10986/30878 |
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