The Impact of Universal Health Coverage on Households' Consumption and Savings in Thailand

This paper studies the impact of Thailand's Universal Health Coverage Scheme (UCS) on households' consumption and savings by using a synthetic panel data approach. Using difference-in-differences estimation, this study finds that, in the short run, the UCS had little or no impact on either households' savings or households' consumption expenditures. In the long run, the UCS still had no effect on savings (unless savings is defined to include consumption of durable goods), but there is evidence of an increase in consumption, especially consumption of durable goods. These effects are generally consistent with economic theory. The provision of health care coverage at little or no cost to previously uninsured households has an income effect that will increase both savings and consumption and a risk reduction effect that will reduce precautionary savings and thus increase consumption. These two effects on savings are of opposite sign and appear to cancel each other out, while both effects on consumption are positive and so appear to increase consumption, at least in the long run.