Dynamics of Impoverishment Impact of Healthcare Payments in Nepal: An Analysis of Synthetic Panel Data Between 2004 and 2011

Poverty dynamics encompass the duration of experiencing poverty and elucidate the transitions into and out of poverty. Evidence concerning poverty dynamics is crucial for policymakers in formulating effective anti-poverty strategies. Additionally, healthcare payment significantly influences the dynamics of poverty. Utilizing panel data is pivotal for gaining a deeper comprehension of poverty dynamics. In the absence of such data, this study constructs a synthetic panel dataset by merging two rounds of cross-sectional surveys conducted in Nepal in 2003/04 and 2010/11 to evaluate poverty dynamics. It’s important to note that the incidence of poverty estimated from the hybrid dataset may not be directly comparable to estimations derived from conventional approaches. The findings reveal that chronic poverty, without adjusting for healthcare payment, stood at approximately 21% for both 2003/04 and 2010/11. Furthermore, healthcare payment contributed to a 1% increase in chronic poverty. Movements into and out of poverty, such as transitions from non-poor to poor and vice versa, signify transient poverty. Healthcare payment also influences transient poverty, with payments increasing the transition from non-poor to poor while reducing the likelihood of households moving from poor to non-poor status. Chronic poverty is prevalent across all regions and among marginalized ethnic and Dalit (occupational caste) groups. Tailored anti-poverty policies are necessary to address both chronic and transient poverty. Policies aimed at stabilizing short-term income fluctuations, such as increasing access to credit facilities, services, remittances, and social safety net programs, may be more effective in addressing transient poverty. Conversely, policies focusing on structural or long-term interventions, such as developing basic infrastructure, enhancing social and political inclusion, redistributing assets, and promoting capital accumulation, are imperative for addressing chronic poverty.