Consumption Vulnerability to Prolonged Illness

Despite its significance in household welfare, little is known about the capacity of intrahousehold risk sharing arrangements to insure consumption against major health shocks. Using rich health data from the Indonesian Family Life Survey, this study finds no evidence of full insurance against adult morbidity in rural Indonesia. In particular, the results show sizable and significant effects of adult morbidity on food consumption. They imply that, despite the recent health sector reforms of Indonesia, the health insurance system is not effective in shielding agricultural households against some severe and long lasting health shocks. (O12,I15) Copyright (c) 2015 John Wiley & Sons, Ltd.