The causal effect of catastrophic health expenditure on poverty in Poland

Aleksandra Kolasa and Ewa Weychert ()
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Ewa Weychert: University of Warsaw

The European Journal of Health Economics, 2024, vol. 25, issue 2, No 2, 193-206

Abstract: Abstract Introduction Out-of-pocket medical expenses are a crucial source of health care financing in a number of countries. With the ongoing population aging, health care costs are likely to increase. Therefore, disentangling the relationship between health care spending and monetary poverty is becoming increasingly important. Although there is extensive literature on the impoverishment effect of out-of-pocket medical payments, it lacks empirical studies on a causal relationship between catastrophic health expenditure and poverty. In our paper, we try to fill this gap. Methods We estimate recursive bivariate probit models using Polish Household Budget Survey data covering years from 2010 to 2013 and from 2016 to 2018. The model controls for a wide range of factors and endogeneity between poverty and catastrophic health expenditure. Results We show that the causal relationship between catastrophic health expenditure and relative poverty is significant and positive across different methodological approaches. We find no empirical evidence that a one-time incidence of catastrophic health expenditure creates a poverty trap. We also show that using a poverty measure which treats out-of-pocket medical payments and luxury consumption as perfect substitutes can lead to an underestimation of poverty among the elderly. Conclusion Out-of-pocket medical payments should probably receive more attention from policymakers than the official statistics suggest. A current challenge is to correctly identify and appropriately support those who are most affected by catastrophic health expenditure. More prospectively, a complex modernization of the Polish public health system is needed.

Keywords: Monetary poverty; Catastrophic health expenditure; Out-of-pocket medical expenses; Recursive probit models (search for similar items in EconPapers)
JEL-codes: I14 I32 J14 (search for similar items in EconPapers)
Date: 2024
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Working Paper: The causal effect of catastrophic health expenditure on poverty in Poland (2022)
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DOI: 10.1007/s10198-023-01579-6

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