Background The coexistence of illness and poverty is a very common phenomenon over the world, and is one of the most intolerable forms of damage to a person’s life and social stability. South Korea has the highest out-of-pocket burden for medical expense among OECD member countries and has no formal sickness benefit system, greatly increasing the risk of poverty due to sudden illness (a ‘health shock). In this study, we aimed to identify the causal effect of sudden illness on impoverishment up to four years after the experience of such a health shock.

Methods For the purpose, we analyzed longitudinal data from 2007 to 2012 of 5175 households who participated in the representative Korean panel study, the Korean Welfare Panel Study. In this study, a health shock was defined as an event which increased the household’s out-of-pocket medical expenses by at least three times over the previous year. A generalized estimating equation (GEE) with logit link function was used to evaluate the association between health shocks and repeated measured poverty. Because the health shock variable was not based on a random process, potential confounding and selection biases were accounted for by developing a propensity score for group allocation. All analyses were performed using Stata 11.0.

Results Of the 5175 households eligible for analysis, 1252 households (24.2%) were classified as who had experienced health shock. Generally, baseline characteristics (such as age, sex, subjective health, income, educational and marital status) were well balanced between groups of allocation. The results showed that a health shock increased the risk over that following four years of relative poverty by 1.18 times (OR 1.18, 95% CI 1.02 to 1.36, p 0.022). The risk of official poverty, defined as becoming a recipient of public assistance, increased by 1.54 times (OR 1.54, 95% CI 1.25 to 1.89, p<0.001). These findings were essentially unchanged even after performing a rigorous propensity score analysis.

Conclusion This study suggests that policy is needed for income stability to prevent impoverishment due to a health shock. Further research is needed to clarify several issues, including a definition of health shock, the role of coping strategies, and the detailed mechanism of medical impoverishment.