The effect of catastrophic health expenditure on exit from poverty among the poor in South Korea

The study aims to examine the effect of catastrophic health expenditure (CHE) on exit from poverty among the poor at the poverty line of less than 40% of median income level (MIL), analysing data from the Korean Welfare Panel Study 2008–2016 through a discrete time event history analysis. Effects of CHE on poverty exit were different between exit to near‐poverty and exit to non‐poverty. Households facing CHE were less likely to exit from poverty to near‐poverty at the CHE thresholds of 20%–30%; however, effects of CHE were not associated with exiting from poverty to non‐poverty. Considering the majority of types of exit from poverty were exit to near‐poverty (about 70%), this result would raise concerns that occurrences of CHE may pose a big threat to their already limited household budget of the poor. Combined loss of income due to ill health and financial burden due to health care may force the poor to be stuck at poverty. The study was the first exploratory study in South Korea to examine the effect of CHE on exit from poverty. This study is expected to contribute to better understanding of the economic consequences of out‐of‐pocket payments due to health care among the poor over time. Reduction in the incidence of CHE by expanding the benefits coverage of the national health insurance in Korea can be an important step to reduce poverty.