Economic impacts of health shocks on households in low and middle income countries: a review of the literature

Health shocks, whether an event of death or disease, can cause significant adverse economic outcomes for households low- and middle-income countries (LMICs). Poor health among members can increase the risk of a household becoming destitute if there are significant out-of-pocket (OOP) healthcare expenditures incurred to obtain healthcare. 

From a policy standpoint, any adverse economic outcomes of health shocks of households hinder progress on national development goals such as poverty reduction and economic growth. Excessive reliance on OOP health spending may also ration scarce healthcare services away from the less well-off to those who can afford to pay, enhancing inequalities in access to care. Intergenerational equality may also be affected, if health shocks adversely influence national and household ability to contribute to child health and educational outcomes.

The primary goal of this paper is to summarize recent evidence on the economic impacts of health shocks in LMICs. The overarching research question guiding this review was: what are the economic impacts of health shocks on households in LMICs and what factors influence the magnitude of these impacts? The specific sub-questions were: 

• what are the impacts of health shocks on OOP health payments of the households and on measures of catastrophic spending and impoverishment? 
• What are the impacts of health shocks on labour supply and earnings of households? 
• What are the impacts on non-medical consumption of the households? 
• What contextual and other factors influence the magnitude of these impacts?