The health shocks literature typically does not take into account the temporal patterns of loss since the time of the shock. This limits understanding of the long-run impact of health shocks and the capacity of individuals to cope over time. This study estimates the dynamic effects of a noncommunicable disease shock on the economic well-being of working-age individuals in China up to 6 years after onset. We find that after a period of temporal loss, individuals and their families can insure consumption against the average noncommunicable disease shock over the long-run. We observe significant heterogeneity according to the persistence of the disease, value of household wealth, and health insurance status. Individuals with consistent onset, with below median wealth, and without health insurance are least equipped to smooth consumption over the long-term.
Keywords: China; consumption; health expenditure; health shocks; income; noncommunicable disease.
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