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Journal of Preventive Medicine and Public Health September 2010, Vol. 43,. 5, 423-435 doi: 10.3961/jpmph.2010.43.5.423 The Effect of Catastrophic Health Expenditure on the Transition to Poverty and the Persistence of Poverty in South Korea Eun-Cheol Song, Young-Jeon Shin Department of Preventive Medicine, Hanyang University College of Medicine Objectives: The low benefit coverage rate of South Korea s health security system has been continually pointed out. A low benefit coverage rate inevitably causes catastrophic health expenditure, which can be the cause of the transition to poverty and the persistence of poverty. This study was conducted to ascertain the effect of catastrophic health expenditure on the transition to poverty and the persistence of poverty in South Korea. Methods: To determine the degree of social mobility, this study was conducted among the 6311 households that participated in the South Korea Welfare Panel Study in both 2006 and 2008. The effect of catastrophic health expenditure on the transition to poverty and the persistence of poverty in South Korea was assessed via multiple logistic regression analysis. Results: The poverty rate in South Korea was 21.6% in 2006 and 20.0% in 2008. 25.1-7.3% of the households are facing catastrophic health expenditure. Catastrophic health expenditure was found to affect the transition to poverty even after adjusting for the characteristics of the household and the head of the household, at the threshold of 28% or above. Conclusions: 25.1% of the households in this study were found to be currently facing catastrophic health expenditure, and it was determined that catastrophic health expenditure is a cause of transition to poverty. This result shows that South Korea s health security system is not an effective social safety net. As such, to prevent catastrophic health expenditure and transition to poverty, the benefit coverage of South Korea s health security system needs to the strengthened. Key words: Catastrophic health expenditure, Health security, Poverty J Prev Med Public Health 2010;43(5):423-435

Figure 1. Types of social mobility. Figure 2. Study model.

Table 1. Poverty rates and social mobility: households of Korea Welfare Panel Study, 2006, 2008 Unit: number of households (%) 2008 2006 n-poverty (N) Total Poverty (P) n-poverty (N) NN 4363 (91.3) PN 0512 (38.9) 4875 (80.0) Poverty (P) NP 0416 (8.7)0 PP 0806 (61.1) 1222 (20.0) Total 4180 (78.4)0 1318 (21.6)0 6098 (100.0) NN: persistence of non-poverty, NP: transition to poverty, PN: exiting from poverty, PP: persistence of poverty. Poverty line: equivalised household income below the 50% median line. p-value < 0.001.

Table 2. Characteristics of the study subjects: households of Korea Welfare Panel Study, 2006 n Total 6098 npoverty npoverty 4780 Poverty (2006) Poverty p- 1318 value Unit: number of households (%) Types of social mobility NN NP PN PP p- 4363 416 512 806 value Household income (%) Poverty line 200 Poverty line 100-200 Poverty line 50-100 Poverty line 50 > Number of working family members 0 Housing tenure Owner occupancy Residential area Metropolitan city Child in family Medical aid Sex of household head Men Age of household head 65> Disabled household head 2961 (48.6) 1818 (29.8) 0956 (15.7) 0362 (5.9)0 1186 (19.4) 3329 (54.6) 2796 (45.8) 3937 (64.6) 5699 (94.0) 5014 (82.2) 4411 (72.3) 5564 (91.3) 2961 (62.0) 1818 (38.0) 0458 (9.6)0 2711 (56.7) 2263 (47.3) 2830 (59.2) 4641 (97.6) 4207 (88.0) 3928 (82.2) 4466 (93.4) 0956 (72.5) 0362 (27.5) 0727 (55.2) 0618 (46.9) 0533 (40.4) 1107 (83.9) 1058 (80.8) 0807 (61.2) 0483 (36.6) 1099 (83.3) 2874 (65.9) 1489 (34.1) 0343 (7.9)0 2492 (57.1) 2083 (47.7) 2523 (57.8) 4269 (98.3) 3908 (89.6) 3692 (84.6) 4091 (93.8) 087 (20.9) 330 (79.1) 115 (27.7) 219 (52.6) 180 (43.2) 307 (73.6) 372 (90.6) 299 (71.9) 237 (56.9) 375 (89.9) 378 (73.8) 134 (26.2) 195 (38.1) 269 (52.6) 220 (43.0) 383 (74.8) 459 (89.9) 354 (69.2) 290 (56.6) 434 (84.6) 578 (71.7) 228 (28.3) 532 (66.0) 349 (43.4) 313 (38.8) 723 (89.7) 600 (75.0) 452 (56.1) 193 (23.9) 665 (82.5) NN: persistence of non-poverty, NP: transition to poverty, PN: exiting from poverty, PP: persistence of poverty. Poverty line: equivalised household income below the 50% median line. Table 3. Proportion of households facing catastrophic health expenditure: households of Korea Welfare Panel Study, 2006 Unit: number of households (%) Poverty (2006) Types of social mobility n Total 6098 4780 Poverty p- 1318 value NN NP PN PP p- 4363 416 512 806 value Catastrophic health expenditure (T/y 10%) Catastrophic health expenditure (T/y 20%) Catastrophic health expenditure (T/y 30%) Catastrophic health expenditure (T/y 40%) 1531 (25.1) 0848 (13.9) 0591 (9.7)0 0444 (7.3)0 773 (16.2) 309 (6.5)0 177 (3.7)0 107 (2.2)0 758 (57.5) 539 (40.9) 413 (31.3) 337 (25.6) 646 (14.8) 247 (5.7)0 131 (3.0)0 076 (1.7)0 127 (30.4) 063 (15.1) 046 (11.1) 031 (7.4)0 299 (58.3) 224 (43.7) 173 (33.8) 151 (29.6) 459 (57.0) 315 (39.1) 240 (29.8) 186 (23.1) NN: persistence of non-poverty, NP: transition to poverty, PN: exiting from poverty, PP: persistence of poverty. T: health expenditure, y: capacity to pay (=disposable income - food expenditure). Poverty line: equivalised household income below the 50% median line.

Table 4. Characteristics of households facing catastrophic health expenditure: households of Korea Welfare Panel Study, 2006 Unit: number of households (%) Catastrophic health Catastrophic health Catastrophic health Catastrophic health expenditure expenditure expenditure expenditure (T/y 10%) (T/y 20%) (T/y 30%) (T/y 40%) Household income (%) Poverty line 200 Poverty line 100-200 Poverty line 50-100 Poverty line 50 > Number of working family members 0 Housing tenure Owner occupancy Residential area Metropolitan city Child in family Medical aid Sex of household head Men Age of household head 65> Disabled household head n 4567 2665 (58.4) 1342 (29.4) 0472 (10.3) 0089 (1.9)0 0560 (12.3) 2462 (53.9) 2110 (46.2) 2703 (59.2) 4276 (94.2) 3895 (85.3) 3685 (80.7) 4227 (92.6) 1531 p-value 5250 0297 (19.4) 0476 (31.1) 0485 (31.7) 0274 (17.9) 0626 (40.9) 0868 (56.7) 0686 (44.8) 1233 (80.6) 1424 (93.5) 1119 (73.1) 0726 (47.4) 1337 (87.3) 0.064 0.344 0.354 2866 (54.6) 1604 (30.6) 0658 (12.5) 0121 (2.3)0 0758 (14.4) 2844 (54.2) 2417 (46.1) 3215 (61.3) 4916 (94.2) 4413 (84.1) 4059 (77.3) 4839 (92.2) T: health expenditure, y: capacity to pay (disposable income - food expenditure). 848 095 (11.2) 214 (25.3) 298 (35.1) 241 (28.4) 428 (50.4) 486 (57.3) 378 (44.6) 721 (85.0) 783 (92.8) 601 (70.9) 352 (41.5) 725 (85.5) p-value 0.104 0.434 0.124 5507 2916 (52.9) 1686 (30.6) 0760 (13.8) 0145 (2.6)0 0876 (15.9) 2983 (54.2) 2535 (46.0) 3429 (62.3) 5152 (94.1) 4588 (83.3) 4170 (75.7) 5067 (92.0) 591 046 (7.7)0 132 (22.3) 196 (33.2) 217 (36.8) 310 (52.4) 347 (58.7) 261 (44.2) 508 (86.0) 547 (93.4) 426 (72.2) 242 (40.9) 497 (84.2) p-value 0.044 0.394 0.494 5654 2934 (51.9) 1739 (30.8) 0816 (14.4) 0165 (2.9)0 0945 (16.7) 3072 (54.4) 2592 (45.8) 3555 (62.9) 5288 (94.1) 4692 (83.0) 4220 (74.6) 5187 (91.7) 444 028 (6.3)0 079 (17.8) 140 (31.5) 198 (44.5) 241 (54.2) 258 (58.0) 204 (45.8) 381 (85.9) 411 (93.3) 322 (72.5) 191 (43.0) 377 (84.9) p-value 0.144 >0.994 0.554

Table 5. Effects of catastrophic health expenditure on the transition to poverty, result of multiple logistic regression: households of Korea Welfare Panel Study, 2006, 2008 Model I Transition to poverty Model II-1 Catastrophic health expenditure (T/y 20%) Model II Model II-2 Catastrophic health expenditure (T/y 30%) OR 95% CI OR 95% CI OR 95% CI Catastrophic health expenditure Household income (%) Poverty line 200 Poverty line 100-200 Number of working family members 0 1 Housing tenure Owner occupancy Tenancy Residential area Metropolitan city Others Child in family Medical aid Sex of household head Men Women Age of household head 65 > 65 Disabled household head 5.41 0.67 1.02 1.46 0.73 2.65 1.88 2.22 1.02 4.16-7.02 0.50-0.91 0.81-1.29 1.17-1.82 0.56-0.95 1.67-4.20 1.42-2.48 1.69-2.92 0.70-1.49 1.17 5.34 0.69 1.03 1.46 0.73 2.66 1.89 2.21 1.01 0.83-1.65 4.10-6.95 0.51-0.93 0.81-1.30 1.17-1.83 0.56-0.96 1.68-4.21 1.43-2.49 1.68-2.91 0.70-1.48 1.57 5.27 0.71 1.04 1.47 0.74 2.70 1.89 2.19 1.01 1.05-2.33 4.05-6.86 0.52-0.95 0.82-1.32 1.18-1.84 0.57-0.97 1.70-4.27 1.43-2.50 1.67-2.89 0.69-1.47 T: health expenditure, y: capacity to pay (disposable income - food expenditure). OR: odds ratio, CI: confidence interval. Table 6. Effects of catastrophic health expenditure on the transition to poverty by threshold, result of multiple logistic regression: households of Korea Welfare Panel Study, 2006, 2008 Thresholds of catastrophic health OR 95% CI expenditure (T/y ) (%) 20 21 22 23 24 25 26 27 28 29 30 1.17 1.17 1.20 1.21 1.26 1.26 1.34 1.38 1.51* 1.52* 1.57* 0.83-1.65 0.82-1.65 0.85-1.71 0.85-1.73 0.88-1.81 0.87-1.82 0.96-1.95 0.95-2.02 1.03-2.21 1.03-2.25 1.05-2.33 T: health expenditure, y: capacity to pay (disposable income - food expenditure). OR: odds ratio, CI: confidence interval. *p<0.05.

Table 7. Effect of catastrophic health expenditure on the persistence of poverty, result of multiple logistic regression: households of Korea Welfare Panel Study, 2006, 2008 Model I Persistence of poverty Model II-1 Catastrophic health expenditure (T/y 20%) Model II Model II-2 Catastrophic health expenditure (T/y 30%) OR 95% CI OR 95% CI OR 95% CI Catastrophic health expenditure Household income (%) Poverty line 50-100 Poverty line 50> Number of working family members 0 1 Housing tenure Owner occupancy Tenancy Residential area Metropolitan city Others Child in family Medical aid Sex of household head Men Women Age of household head 65 > 65 Disabled household head 1.21 0.55 1.46 1.37 0.70 2.66 1.06 3.64 1.05 0.91-1.60 0.42-0.72 1.11-1.91 1.05-1.77 0.49-0.99 1.80-3.91 0.81-1.40 2.73-4.86 0.75-1.49 0.81 1.30 0.54 1.44 1.37 0.70 2.54 1.05 3.66 1.06 0.62-1.07 0.96-1.75 0.41-0.70 1.10-1.89 1.05-1.77 0.49-0.99 1.72-3.76 0.80-1.39 2.74-4.88 0.75-1.50 0.89 1.26 0.54 1.45 1.36 0.70 2.60 1.05 3.63 1.06 0.67-1.19 0.93-1.72 0.41-0.71 1.11-1.91 1.05-1.77 0.49-0.99 1.76-3.85 0.80-1.39 2.72-4.85 0.75-1.50 T: health expenditure, y: capacity to pay (disposable income - food expenditure). OR: odds ratio, CI: confidence interval.

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