The Economic Effect of Noncommunicable Diseases on Households and Nations: A Review of Existing Evidence

Abstract

In developing countries, the noncommunicable disease (NCD) and risk factor burdens are shifting toward the poor. Treating chronic diseases can be expensive. In developing countries where generally much health care costs are borne by patients themselves, for those who live in poverty or recently escaped severe poverty, when faced with large, lifelong out-of-pocket expenses, impoverishment persists or can reoccur. These patterns have implications for national economic growth and poverty-reduction efforts. NCDs can change spending patterns dramatically and result in significantly reducing non–medical-related spending on food and education. In India, about 40% of household expenditures for treating NCDs are financed by households with distress patterns (borrowing and sales of assets). NCD short- and long-term disability can lead to a decrease in working-age population participation in the labor force and reduce productivity and, in turn, reduce per capita gross domestic product growth. To fully capitalize on the demographic dividend (i.e., aging of the population resulting in less dependent children, not yet more dependent elderly, and greater national productivity), healthy aging is necessary, which, in turn, requires effectively tackling NCDs. Last, from an equity standpoint, the economic effect of NCDs, evident at the household level and at the country level, will disproportionately affect the poor and vulnerable populations in the developing world.

Acknowledgments

The opinions expressed and the data communicated in this paper are those of the authors only and do not necessarily reflect the views of the World Economic Forum or of all the members of the Global Agenda Council on Non-Communicable Diseases.

The findings and conclusions in this report are those of the authors and do not represent the official positions of the World Bank, its Executive Directors, or the countries they represent, or Monash University.

Notes

¹Health care spending for hospitalization was “catastrophic” when such spending exceeded 30% of their ability to pay, that is, household consumption spending less combined survival income for all household members. Survival income was defined as the poverty-line level of expenditure multiplied by household size.

²Hospitalization spending was considered “impoverishing” if, after subtracting it from total household spending, a household would fall below the poverty line.