Health is Wealth: The Impact of Health Insurance on Multidimensional Poverty in Ethiopia

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Haile, Kaleab K.
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African Economic Research Consortium
While previous empirical studies extensively examined the determinants of households’ health insurance (HI) uptake, little has been done to evaluate the accompanying impacts on household welfare and poverty incidence. This study bridges the existing gap in literature by examining the impact of HI on multidimensional household poverty. The data comes from the latest wave of the Ethiopia Socio-economic Survey (ESS) collected in 2018/19. The study uses propensity score matching and inverse probability weighted regression adjustment to even out the distribution of observed characteristics across purchasers and non-purchasers of HI. As these methods could not address simultaneity and self-selection biases, the study uses the endogenous switching analysis, which integrates HI uptake and multidimensional household poverty equations, considering the interdependencies among the equations and their relationships with relevant observed household characteristics. The results reveal that households’ uptake of HI significantly reduces their probability of being multidimensionally poor. Moreover, the heterogeneous impact assessments of this study show that the desired impact of HI is more pronounced among male-headed households, households with a majority of adult male members, and households in urban areas. This study sheds light on the role of universal health coverage through HI as a policy instrument in the fight against multidimensional deprivations in the context of sub-Saharan Africa.