Financial Ripple Effect: How Out-of-Pocket Healthcare Expenditures Reshape Consumption Patterns in NCD-Affected Households in Bangladesh*

Out-of-pocket (OOP) healthcare expenditures place a substantial financial burden on households in lower-middle-income countries like Bangladesh, where non-communicable diseases (NCDs) are a major cause of morbidity and mortality. This study investigates how healthcare costs related to NCDs crowd out essential household expenditures. Using nationally representative data from the 2022 Household Income and Expenditure Survey (HIES), we apply multivariate regression and seemingly unrelated regression (SUR) models to estimate the impact of NCDs—specifically diabetes, hypertension, heart disease, and chronic respiratory disease—on spending across five key categories: food, education, medical care, energy, and transport. Our analysis reveals that hypertension and diabetes are the most prevalent NCDs across all age and income groups. Households affected by NCDs, particularly those with multiple conditions, show significant changes in consumption patterns. Unadjusted estimates suggest that these households spend 5.85 percentage points less on food and 8.22 percentage points more on healthcare relative to unaffected households. These effects remain statistically significant, though slightly attenuated, after controlling for socio-demographic and economic factors. The crowding-out is especially pronounced in lower-income households, with spending on education, transport, and personal care being most affected. Heterogeneity analysis by income group further confirms that poor and lower-middle-income households bear the greatest financial burden. These findings highlight the need for targeted policy responses. Expanding public healthcare financing, improving insurance coverage, and designing tailored social protection programs are critical to alleviating financial stress and ensuring equitable access to essential services for NCD-affected households. JEL Codes: I14, D12, C31, I15