What is it about?
Even though many other unwelcome circumstances can trigger unmanageable debt situations/debt distress (i.e., finding yourself with more debt than you can comfortably pay as it falls due), going down with a serious illness is one of the main trigger events for debt distress. This study examined the relationship between poor health and debt distress and found that, yes, poor health significantly increased the probability of finding oneself under serious financial strain. This is mainly because of the huge healthcare costs that follow and income deprivation due inability to go to work as you would normally do. That is when people are either forced to borrow more in order to solve their day-to-day issues and/or pay for medical expenses. In other cases, they are unable to keep up with their required monthly debt payments. All the while, financial problems keep piling up.
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Why is it important?
Most scholars in this field have looked at this topic from the opposite side, i.e., severe consumer debt distress leading to health problems, notably mental health and other stress-related problems including unhealthy behaviours like Alcohol abuse. Even though these scholars admit that they suspect the problem can also happen the other way round, they have not tried to test this possibility. So in this study, I have been able to test and prove their suspicion that indeed health problems can seriously disrupt people’s finances. Therefore the findings of this study have implications for assessing the diffusion of social safety nets as it appears that there are pockets of vulnerability with in the South African household sector resulting from the gap in healthcare accessibility and health insurance. Providing households with more affordable healthcare services and other social services can result in improved health outcomes, protection of personal incomes and ultimately afford the poor a modicum financial security. Designing health insurance schemes for those in unstable employment, the unemployed and rural households needs to be taken into serious consideration. Additionally, insofar as debt distress can be a consequence of adverse events beyond ones’ control such as illness or injury, a more humane and comprehensive debt discharge mechanism might be a more optimal safety net for the poor than restrictions on lending.
Perspectives
Note that the South African government provides universal free healthcare and that the government has made great efforts to introduce social policies aimed at reducing health inequality and poverty in the last 20 years. Nonetheless, there are still huge inequalities in access to facilities and where facilities are accessible, they are often plagued by poor quality services, due to inadequate supplies and technology, years of mismanagement, poor attitudes from healthcare workers many of whom are inadequately trained. Sometimes people are admitted to facilities where they are unable to get treatment for days due to staff, medication, even space shortages. So a combination of these problems forces people to seek expensive private healthcare alternatives which they can barely afford and hence find themselves in debt.
Dr. Ralph Abbey Ssebagala
Read the Original
This page is a summary of: Poor health as a precursor to consumer debt distress in South Africa, Development Southern Africa, February 2019, Taylor & Francis,
DOI: 10.1080/0376835x.2019.1585230.
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