Hardship financing, productivity loss, and the economic cost of illness and injury in Cambodia

• Published in: International journal for equity in health 2023-10, Vol.22 (1), p.1-208, Article 208
• Main Authors: Kolesar, Robert John, Erreygers, Guido, Van Damme, Wim, Chea, Vanara, Choeurng, Theany, Leng, Soklong
• Format: Article
• Language: English
• Subjects: Analysis; Banks (Finance); Borrowing; Cambodia; Debt restructuring; Economic analysis; Economic aspects; Economic development; Economic growth; Economic impact; Equity funds; Expenditures; Finance; Financial risk; Financial risk protection; Financing; GDP; Gross Domestic Product; Hardship financing; Health aspects; Health care; Health care expenditures; Households; Illnesses; Inequity; Influence; Injuries; Interest rates; Labor productivity; Loans; Mathematical analysis; Medical care, Cost of; Medical research; Medicine, Experimental; Microfinance; National health insurance; Population; Poverty; Productivity; Risk; Social health protection; Social networks; Stock funds; Surveys; Universal health coverage; Wages & salaries
• ISSN: 1475-9276; 1475-9276
• DOI: 10.1186/s12939-023-02016-z

Financial risk protection is a core dimension of universal health coverage. Hardship financing, defined as borrowing and selling land or assets to pay for healthcare, is a measure of last recourse. Increasing indebtedness and high interest rates, particularly among unregulated money lenders, can lead to a vicious cycle of poverty and exacerbate inequity. To inform efforts to improve Cambodia's social health protection system we analyze 2019-2020 Cambodia Socio-economic Survey data to assess hardship financing, illness and injury related productivity loss, and estimate related economic impacts. We apply two-stage Instrumental Variable multiple regression to address endogeneity relating to net income. In addition, we calculate a direct economic measure to facilitate the regular monitoring and reporting on the devastating burden of excessive out-of-pocket expenditure for policy makers. More than 98,500 households or 2.7% of the total population resorted to hardship financing over the past year. Factors significantly increasing risk are higher out-of-pocket healthcare expenditures, illness or injury related productivity loss, and spending of savings. The economic burden from annual lost productivity from illness or injury amounts to US$ 459.9 million or 1.7% of GDP. The estimated household economic cost related to hardship financing is US$ 250.8 million or 0.9% of GDP. Such losses can be mitigated with policy measures such as linking a catastrophic health coverage mechanism to the Health Equity Funds, capping interest rates on health-related loans, and using loan guarantees to incentivize microfinance institutions and banks to refinance health-related, high-interest loans from money lenders. These measures could strengthen social health protection by enhancing financial risk protection, mitigating vulnerability to the devastating economic effects of health shocks, and reducing inequities.