Sick and Tired: Climbing Out of the Health-Poverty Trap

December 15, 2009

There is never an ideal moment to get sick. People do not plan for illness and injury when they are formulating their schedules, budgets, or goals for the future. But health shocks, which arise suddenly and can linger indefinitely, can have devastating results. For many people, the personal and financial burden of severe health shocks (like chronic illness, serious injury, or the death of a family member) can be overwhelming. For the world’s poor, however, these shocks are nothing short of catastrophic.

Understanding the health-poverty trap

Poor health is the number-one poverty trigger. It can quickly tip people into poverty, specifically those already near the bottom of the socioeconomic ladder who lack health insurance or substantial savings to cover out-of-pocket healthcare costs. The financial repercussions related to health shocks also have the power to keep poor people submerged in poverty by quickly depleting any of their accumulated wealth with often exorbitant medical bills. Anirudh Krishna, associate professor of public policy and political science at Duke University, calls this phenomenon a “health-poverty trap.” After studying household poverty dynamics across four continents, Krishna concluded that millions of people per year fall into poverty because of ill health and high (and uninsured) healthcare expenditures.

“It is usually a sequence of events, of which illness is primary, that forces people into poverty,” Krishna says. “Some of the other [shock] events might be droughts, high-interest loans, price fluctuations, or job loss. But ill health is often one of the main events.” Illness triggers include chronic diseases that are prevalent in many developing countries, such as malaria and HIV/AIDS; seasonally triggered illnesses such as pulmonary and gastric diseases, which tend to affect areas of India during monsoon season, for example; or workplace injuries or roadside accidents. No matter the specific ailment, these shocks, as Krishna explains, pose a “double whammy,” meaning that high treatment costs and lost earning power are a dual threat to health and well-being as well as to livelihoods and assets.

At the household level, health shocks dramatically impede progress in every generation. Sick children suffer growth retardation and an incomplete education due to school absences, diminishing their potential for both manual and skilled labor in the future. Sick wage-earning adults cannot provide for their families or contribute to the economy. Sick elders are unable to provide childcare or other support to their families.

The repercussions can be felt at the national level as well. Health crises, especially in rural areas of developing countries, reduce the agricultural workforce, thereby decreasing agricultural productivity, inducing migration, and influencing risk-related behavior. Johannes Jütting, senior economist and head of the Poverty Reduction and Social Development division of the Organisation for Economic Cooperation and Development (OECD) in Paris, says “illness and poor healthcare are a barrier for agricultural development—especially in Africa.”

The interconnections between health, poverty, and agriculture mean that countries wishing to meet key economic development goals must find ways to address the health shocks affecting their most vulnerable populations.

Responding to health shocks

There are two key ways that policies can address the problem of health shocks and their subsequent poverty-related fallout: prevention and mitigation.

Prevention: Avoiding health shocks

There are fundamental health risks associated with life in developing countries, where major diseases exist that lack preventative vaccines (such as malaria and HIV/AIDS), and where low and unpredictable rainfall cause periods of extreme food and water insecurity. Poverty exacerbates the situation. In a 2008 study based on household-expenditure surveys, IFPRI Research Fellow Ruth Vargas Hill and her colleagues found that serious illness, accidents, or death occurred in 43 to 48 percent of poor households [in Bangladesh] compared to 29 percent of non-poor households. In Vietnam, long-term illness was repeatedly mentioned as being a defining characteristic of poor families.

At the same time, poverty is a key factor in keeping sick people sick. The Commission on Social Determinants of Health (CSDH), created by the World Health Organization (WHO), noted in 2005 that it is largely futile for a doctor to treat a sick patient and then send that patient back to the same conditions that were responsible for causing the illness in the first place.

Addressing these risks by providing people with information about how to make household practices and behavior safer is essential. But effective prevention policies must also address the broader issues of poverty and micronutrient malnutrition, which is a major contributor to childhood mortality as well as an impediment to growth, development, and learning potential in children. In addition to providing direct health benefits, says IFPRI Senior Research Fellow John Hoddinott, “improving nutrition in early childhood can also be a driver of economic growth for developing countries and a pathway out of poverty for poor households.” Methods of combating malnutrition can include crop biofortification, school-feeding programs, and targeted food-assistance programs.

A second example of policies that can alleviate certain health risks while also focusing on poverty alleviation are those that empower poor women, especially those in rural areas of developing countries, by strengthening their control over critical assets and land. This access to assets would curtail women’s need to engage in dangerous, health-impacting activities such as transactional sex in order to earn an income and provide for their families. When women have more control over their assets, there are better health/poverty outcomes for their families as well.

A third approach to health-crisis prevention is to create intersectoral, multistakeholder platforms that connect different sectors, namely agriculture and health, and enable them to work together and pool—rather than compete for—resources. Collaborative platforms such as the Agriculture and Health Research Platform (AHRP) coordinated by IFPRI Senior Research Fellow Stuart Gillespie, connect different sectors and allow them to cooperate on mutually beneficial research. Gillespie explains that, with regard to health, “agriculture can represent both a positive buffer by providing a source of livelihood, income, and food, but it can also be placed at risk by illness and death, given the high labor intensity of most smallholder agriculture on which the poor depend. So, there are two sides to the coin.”

To find equality between those two sides, an intersectoral platform must focus on providing evidence-based options for agricultural policies that improve health by producing the food and income necessary for workers’ overall well-being and for health policies that improve agriculture by protecting the agricultural workforce and, thereby, productivity itself.

Mitigation: Addressing health shocks as they occur

In addition to taking measures to prevent health shocks, it is imperative to find ways to manage them once they occur. That entails having an accessible, affordable healthcare system. Investing in an infrastructure that efficiently provides quality health care is essential. Also essential is health insurance, which has the power to limit financial devastation in the wake of serious health problems by reducing out-of-pocket costs to individuals and households.

Low-cost health insurance for low-income people in developing countries would be an enormous step forward in the fight against poverty. Some civil-society groups have started to provide limited types of health insurance to their members when they experience a health shock. One example is the case of traditional burial insurance groups in some parts of Ethiopia that have started to provide members with loans for healthcare-related costs.

The systems with the greatest potential, however, seem to be those that involve public–private partnerships: partnerships between insurance companies that have the expertise to assess risk and administer claims and NGOs or civil-society organizations that have the ability to better target and communicate with the poor hold great promise.

The partnership approach has proven successful to date for PharmAccess, a Dutch nongovernmental organization founded in 2001. PharmAccess focuses on improving health systems in Sub-Saharan Africa and works closely with both public health organizations and private companies, aiming to reduce the healthcare burden on African governments. The organization also works closely with local partners, a component that Stefan Dercon, professor of development economics at the University of Oxford, considers essential in developing-country health insurance. “Whether the insurance scheme involves the government or the private sector, you want to have some kind of local model—someone who’s locally embedded in the community—to provide information because insurance is information-intensive,” says Dercon.

In addition to working with local partners, insurance providers like PharmAccess, which began with workplace programs in large companies, must also focus on expanding accessibility. Jacques van der Gaag, senior fellow at the Brookings Institution and co-director of the Center for Universal Education in Washington, D.C., explains that “the major challenge now is not only to provide insurance coverage to workers at large, and often international, companies, but also to increase coverage for workers in small and local companies and for the self-employed.”

Moving toward a healthier, wealthier future

Ill health is a powerful part of the cycle of poverty. It can both trigger and exacerbate the personal and financial burdens facing poor families in developing countries, especially in rural areas. The repercussions of ill health on agricultural productivity and on the ability of many countries to meet the Millennium Development Goals (MDGs) are significant.

Therefore, it is imperative that public policies address this issue and seek ways to prevent or mitigate health shocks. Institutional innovations such as public-private partnerships and multisectoral platforms that link agriculture and health are an ideal approach. So, while policymakers and development practitioners continue to focus on achieving the MDGs, they should also keep an eye on promoting innovative multisectoral synergies, because although the current period of financial instability and healthcare upheaval may not be a particularly good time to face the problems of poor health, it is precisely the right time to explore their solutions.

—Reported by Ashley St. Thomas and Mary Paden