Abstract：
: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.
journal_name
J Health Econjournal_title
Journal of health economicsauthors
Flores G,O'Donnell Odoi
10.1016/j.jhealeco.2016.01.004subject
Has Abstractpub_date
2016-03-01 00:00:00pages
1-15eissn
0167-6296issn
1879-1646pii
S0167-6296(16)00005-9journal_volume
46pub_type
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