Socioeconomic Challenges Caused by Health Shocks: A Household Poverty Perspective

Socioeconomic challenges arising from health-related crises represent a critical barrier to sustainable development and poverty reduction efforts globally. This study examines the relationship between health shocks and household poverty using household survey data from 345 households in Nepal. Health shocks, defined as episodes of non-communicable diseases or recent illnesses, affect 62.61% of households in the sample. Using logistic regression analysis, it was found that health shocks significantly increase the probability of poverty by 4.1 percentage points, controlling for household size, age, and gender of the head of the household. Households experiencing health shocks have a poverty rate of 96.44% compared to 92.45% for those without health shocks, a statistically significant difference (p < 0.001). The average household with health shocks spends NPR 89,914 annually on health expenses, representing 166% of total consumption and often exceeding total household resources. OLS regression results show that health shocks reduce per capita consumption by approximately 19.8%. These substantial financial burdens force families to employ costly coping strategies including borrowing, asset sales, and consumption reduction, perpetuating poverty cycles. The findings highlight how addressing socioeconomic challenges through improved health insurance coverage, strengthened social protection mechanisms, and enhanced healthcare delivery systems can effectively break the health-poverty nexus and contribute to broader development goals.