Despite Latin America’s economic growth of 5 percent in the last three years and significant progress in reducing poverty in recent years, a World Bank report launched to mark World Health Day warns that illness, accidents, and normal life-cycle events such as old age can jeopardize people’s health and throw their households and families into poverty.


The report—“Beyond Survival: Protecting Households from Health Shocks in Latin America”—is based on six case studies in: Argentina, Chile, Colombia, Ecuador, Honduras, and Mexico, and argues that applying a classical insurance system could better protect Latin American households which are over-burdened with out-of-pocket spending and lack sufficient access to instruments with which to pool risks.

“With total health expenditures accounting for 6.4 percent of gross domestic product, Latin America and the Caribbean is the highest-expending region in the world after the countries of the Organization for Economic Cooperation and Development,” said Cristian Baeza, a World Bank Acting Director of Health and co-author of the report. “Public expenditures on health care are low in most countries in the region, but private spending on health – particularly spending out of pocket paid when services are needed - is correspondingly high,” added Truman Packard, World Bank Senior Economist and co-author of the report.

The report carries four main messages for policy makers in the Latin American and Caribbean (LAC) region:

1. Health out-of-pocket payments—and loss of income as a consequence of illness—can impoverish households and plunge already poor people into a transgenerational cycle of abject poverty.

2. People need protection from the potentially ruinous costs of health care and loss of income due to illness. The costs rival losses of income from unemployment as a cause of poverty.

3. Risk pooling in LAC has mostly benefited formally employed salaried workers who are covered by mandatory public and quasi-public risk pooling mechanisms.

4. Extending risk pooling to the large and growing informal labor sector is a priority in LAC. This means inventing contribution mechanisms for non-poor households to participate in risk pooling that are not linked to workplace or labor status.

“Despite nearly two decades of bold reforms in the health sector, households in the Latin America and the Caribbean region are still overexposed to health shocks that can force them to cut consumption of other basic services and goods and even result in destitution,” said Guillermo Perry, World Bank Chief Economist for the Latin America and the Caribbean Region. “Around the world, including in Latin America, health care costs are rising,” Perry added.

“Beyond Survival breaks new ground in the ongoing debate about health finance and financial protection from the costs of health care,” said Keith Hansen, World Bank Sector Manager for Health in the Latin America and the Caribbean Region. “This book reviews existing and new evidence on the mechanisms and magnitude impoverishing effects of health events and the importance of public policy to prevent such impoverishment,” Hansen added.