Illness makes credit sick: Can health insurance rescue the poor from exploitative credit?

Savitha, B (2016) Illness makes credit sick: Can health insurance rescue the poor from exploitative credit? Geneva Papers on Risk and Insurance: Issues and Practice, 41 (2). pp. 184-204. ISSN 10185895

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Abstract

Health shocks cripple the poor households through hardship financing and impoverishment. Borrowing from non-market sources is the most common strategy used by these households that eventually pushes them to debt trap. Micro health insurance (MHI) is expected to reduce the reliance on these sources of finance by ensuring financial protection. We use the data from a cross-sectional study undertaken in Karnataka to investigate any association between MHI and non-market credit during health shocks. The sample size was 1146 consisting of 416 insured households and the remaining being uninsured. The analysis of data shows inadequate risk protection provided by MHI giving rise to borrowing, sale of assets and liquidation of savings by insured individuals. Yet, they relied less on usurious credit compared to uninsured individuals. This finding not only substantiates the importance of MHI in health care financing but also highlights the need for affordable and comprehensive financing mechanisms to replace non-market institutions with formal insurance.

Item Type: Article
Uncontrolled Keywords: Health care financing, micro health insurance,usurious borrowing, non-market institutions, informal
Subjects: Management > MIM Manipal
Depositing User: MIM User
Date Deposited: 20 Apr 2016 14:15
Last Modified: 12 May 2016 14:18
URI: http://eprints.manipal.edu/id/eprint/145895

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