The links between catastrophic health expenditures and multidimensional poverty: An instrumental variable analysis in India

The relationship between multidimensional poverty and catastrophic health expenditures has not been studied in detail, specifically how dependent such a connection is according to the specific context. This study aims to determine whether households who face catastrophic health expenditures in India have a higher probability of living in multidimensional poverty, given their socio-economic background and the protection provided by access to health insurance. We explore such a relationship in the case of India, exploiting variation in the development level of its regions and the socio-economic conditions faced conditional on caste. Using data from the Indian Human Development Survey, we exploit longitudinal variation at the household level using a linear probability model. We complement this analysis with an instrumental variable analysis, using a health shock to analyse the causal relationship between facing a shock which increases catastrophic health expenditures and living in multidimensional poverty. The results revealed that households facing catastrophic health expenditures in India have a higher probability of being multidimensionally poor. Such a relationship was only partially mitigated if the household was protected by health insurance, and there were almost no differences according to the caste of the household. Moreover, the relationship was stronger outside South India, especially on the role of health insurance. and place of residence. In the case of the instrumental variable analysis, the results show the same pattern as in the longitudinal model; however, the results are not significant.