We examine economic vulnerability to illness when, as for informal sector workers in Thailand, there is universal coverage for health care but earnings losses are uninsured. Even with comprehensive health care entitlement, severe illness that strikes an initially healthy worker is found to raise out-of-pocket medical expenses by around two thirds and increase the probability that medical spending absorbs more than a tenth of the household budget by nine percentage points. Moreover, severe illness reduces the probability of remaining in employment by 18 points and precipitates a reduction in household labor income of almost one third. Despite the rise in medical expenses and fall in earnings, households are able to maintain expenditure on goods and services other than medical care by drawing on remittances and informal transfers, cutting back on saving, and by borrowing. In the short term, informal insurance fills gaps left uncovered by formal insurance but there is likely to be substantial exposure to economic risks associated with long-term illness.

Health, medical expenditure, social insurance, universal coverage, Thailand
Health Insurance, Public and Private (jel I13), Informal Labor Markets (jel J46), Microeconomic Analyses of Economic Development (jel O12)
Tinbergen Institute Discussion Paper Series
This work was funded by the European Commission 7th Framework Programme; grant id fp7/223166 - Health Equity and Financial Protection in Asia (HEFPA), This work was funded by the European Commission 7th Framework Programme; grant id fp7/331815 - Financial Protection against Health Risks - Evidence from an Emerging Country with Universal Coverage and Methodological Considerations (HEALTHEVENT)
Erasmus School of Health Policy & Management (ESHPM)

Neelsen, S, Limwattananon, S., O'Donnell, O.A, & van Doorslaer, E.K.A. (2015). Economic Impact of Illness with Health Insurance but without Income Insurance (No. TI 2015-060/V). Tinbergen Institute Discussion Paper Series. Retrieved from http://hdl.handle.net/1765/110766