In 2010, in an attempt to increase access to modern health care and provide financial protection against health shocks, a Community Based Health Insurance (CBHI) pilot programme will be launched in Ethiopia.

The first objective of the proposed research is to identify the conduits through which health shocks affect household welfare, for instance, in terms of increased expenditures, foregone health care or greater use of child labour. The second objective is to examine how health care utilization, out-of-pocket health spending and poverty are affected by CBHI.

The study will use a variety of research methods and in particular draw on a longitudinal household survey, which will allow comparison of households in intervention and control villages, before and after the introduction of CBHI. The planned CBHI pilot scheme provides a rare opportunity for a baseline survey before the implementation of the CBHI scheme, and subsequent follow up surveys, allowing us to conduct a rigorous impact evaluation of CBHI.

The scientific and policy relevant contributions of this study largely overlap, in that they address the lack of knowledge regarding the impacts of and scope for CBHI interventions. This study aims to provide scientifically credible and policy relevant empirical evidence on the effect of CBHI on health care utilization, on out-of-pocket health spending and on mitigating the financial risks from health shocks. In addition, the project aims to examine the sustainability and feasibility of such schemes in terms of generating resources to finance health care.

While the impoverishing effects of health shocks have been acknowledged in the academic literature, little is known about the underlying mechanisms driving this relationship, and the traditional coping strategies and intra-household dynamics at play. Evidence of the effect of health shocks on poverty will provide policy makers with new insights on poverty monitoring and help tailor anti-poverty programs. In addition, lessons learnt from the CBHI evaluation will help policy makers and health care practitioners design more effective tools to respond to health shocks and achieve universal health care coverage.