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The Challenges of Universal Health Insurance in Developing Countries: Experimental Evidence from Indonesia’s National Health Insurance
Abstract
To investigate barriers to universal health insurance in developing countries, we designed a randomized experiment involving about 6,000 households in Indonesia who are subject to a government health insurance program with a weakly enforced mandate. Time-limited subsidies increased enrollment and attracted lower-cost enrollees, in part by reducing the strategic timing of enrollment to correspond with health needs. Registration assistance also increased enrollment, but increased attempted enrollment much more, as over one-half of households who attempted to enroll did not successfully do so. These findings underscore how weak administrative capacity can create important challenges in developing countries for achieving widespread coverage. (JEL D82, G22, H51, I13, I18, O15)
... According to NHI membership records, approximately 20% of enrolees-issue of premium non-payment among those required to pay individual contributions. Notable examples include Dartanto et al. (2020) and Muttaqien et al. (2021), which explore factors associated with payment compliance, and Banerjee et al. (2021), who experimentally test multiple interventions to promote NHI enrollment and coverage retention. However, evidence on the causes and consequences of the significantly higher coverage dropout rate among young adults is lacking. ...
... The increase was mainly driven by the expansion of the fully subsidized scheme provided by local governments and a stronger enforcement toward employers to register their employees. 9 However, the weak individual mandate and the significant administrative hassles associated with the registration process are still impeding those who must enroll in the contributory scheme (Banerjee et al. 2021). ...
... For example, those who are still unemployed but are no longer enrolled in formal education must switch to the contributory scheme. 20 Although the switch is compulsory by law, the enforcement of coverage mandates is known to be very weak (Banerjee et al. 2021). On top of that, switching to the contributory scheme would require young adults to pay the premiums every month until they get formal employment. ...
This paper investigates the impact of a dependent coverage age‐eligibility rule on young adults' health and healthcare utilisation under Indonesia's National Health Insurance (NHI) program. Employing a regression discontinuity design, analysis of the NHI administrative data documents a significant 14.6 to 20.9 percentage points drop in coverage among young adults at age 21, the age cut‐off imposed by the rule. Using a large nationally representative household survey, this paper shows that the loss of insurance coverage does not change young adults' health status but markedly decreases the utilisation of outpatient care among those who are ill. Specifically, there is an abrupt 5.3 to 8.4 percentage points reduction in the probability of young adults having any outpatient visit in the past month, primarily driven by lower utilisation of primary care services. The study also finds an increased likelihood of self‐treatment and the use of traditional healers, indicating a substitution effect. Further analysis shows a larger impact on those who are poor, less educated, and live in regions with higher healthcare costs.
... Despite the importance of understanding the long-run effects of temporary subsidies, there is relatively scarce evidence regarding the application and evaluation of long-run health insurance enrollment in developing countries. Notable exceptions include Banerjee et al. (2021) and Baillon et al. (2022). ...
... First, our study is related to the literature on the impacts of subsidies or price interventions on selection in health insurance in developing countries. This topic has been underexplored in the literature, with a few recent exceptions (Banerjee et al., 2021;Fischer et al., 2023;Kinnan et al., 2020). We contribute to this literature in two ways. ...
... Second, our study contributes to the literature on the sustainability of health intervention programs. This study is among the few to document evidence of the long-run effects of interventions on insurance enrollment and retention in a developing country, with some recent exceptions of (Baillon et al., 2022;Banerjee et al., 2021). 5 While the idea of promoting sustainability is attractive, it is difficult to achieve in practice. ...
We study the effects of a health insurance subsidy in Ghana, where mandates are not enforceable. We randomly provide different levels of subsidy (1/3, 2/3, and full) and evaluate the impact at 7 months and 3 years after the intervention. We find that a one‐time subsidy increased insurance enrollment for all groups in both the short and long runs, but health care utilization in the long run increased only for the partial subsidy group. We find supportive evidence that ex‐post behavioral responses rather than ex‐ante selective enrollment explain the long‐run health care utilization results.
... The ratio of the average medical cost to the average contribution was reported to have increased from 115% in 2015 to 124% in 2019, which was driven by informal workers who previously did not pay their contributions regularly; this ratio is supposed to not exceed 100% [25]. Banerjee et al. [26] stated that encouraging members in the contribution scheme to pay by implementing sanctions might turn out to be a toothless mandate and only create low program enrollment, adverse selection, and a tendency to discontinue paying NHI membership, especially among informal workers [19,20]. A lack of money to pay their contributions [19,27], unaffordable contributions [20], not needing insurance again after episodes of rare illnesses (usually among the young) [28], perceived poor service quality of providers [29], forgetting to pay [20], and providers' negative attitudes [28] are several justifications by members for their decisions to be noncompliant participants. ...
... A lack of money to pay their contributions [19,27], unaffordable contributions [20], not needing insurance again after episodes of rare illnesses (usually among the young) [28], perceived poor service quality of providers [29], forgetting to pay [20], and providers' negative attitudes [28] are several justifications by members for their decisions to be noncompliant participants. On the other Banerjee et al. [26] stated that encouraging members in the contribution scheme to pay by implementing sanctions might turn out to be a toothless mandate and only create low program enrollment, adverse selection, and a tendency to discontinue paying NHI membership, especially among informal workers [19,20]. A lack of money to pay their contributions [19,27], unaffordable contributions [20], not needing insurance again after episodes of rare illnesses (usually among the young) [28], perceived poor service quality of providers [29], forgetting to pay [20], and providers' negative attitudes [28] are several justifications by members for their decisions to be noncompliant participants. ...
... The Total Contribution Income and Health Care Spending of the NHI. Source: Adapted from Financial Aspect Social Health Security Fund 2016-2019[26]. ...
This study aimed to investigate the determinants of compliance with contribution payments to the National Health Insurance (NHI) scheme among informal workers in Bogor Regency, West Java Province, Indonesia. Surveys of 418 informal workers in Bogor Regency from April to May 2023 were conducted. Multivariate logistic regression analyses were performed to assess the factors associated with informal workers’ compliance with NHI contribution payments. The results revealed that being female, having lower secondary education or below, perceiving good health of family members, having negative attitudes toward and poor knowledge of the NHI, experiencing financial difficulties, preferring to visit health facilities other than public ones, and utilizing fewer outpatient services were significantly associated with the noncompliance of informal workers with NHI contribution payments. It was concluded that economic factors alone cannot contribute to informal workers’ payment compliance and that motivational factors (knowledge, attitudes toward the insurance system, and self-related health status) also encourage them to comply with contribution payments. Improving people’s knowledge, especially on the risk-sharing concept of the NHI, should be done through extensive health insurance education using methods that are appropriate for the population’s characteristics.
... The scheme achieved high enrolment because budget transfers from the central government to local governments were contingent upon meeting a target enrolment rate [67,68]. Furthermore, an experimental study from Indonesia found that time-limited subsidies that reduce the strategic timing of enrolment to correspond with health needs partially increase enrolment and attract lower-cost enrolees as well [69]. Also, assistance at the point of registration may increase the desired enrolment rates, as over half of households who attempted to enrol could not successfully do so [69]. ...
... Furthermore, an experimental study from Indonesia found that time-limited subsidies that reduce the strategic timing of enrolment to correspond with health needs partially increase enrolment and attract lower-cost enrolees as well [69]. Also, assistance at the point of registration may increase the desired enrolment rates, as over half of households who attempted to enrol could not successfully do so [69]. Lastly, lessons documented from several developing countries' health insurance mechanism, including automatic enrolment with adequate information about entitlements, should be considered by policy makers and implementers of current health insurance schemes and designers of future schemes while progressing towards UHC [67]. ...
... To improve the enrolment in health insurance in India, there is a need of multidimensional, comprehensive, and innovative awareness programmes at a larger scale to increase awareness and boosting peoples' understanding about the value of health insurance, type of schemes available, eligibility criteria, and enrolment benefits. For social inclusivity in enrolment, multiple areas including financial inclusion, literacy initiatives, social empowerment and skill programmes, and health insurance technology solutions need to be promoted [69]. Pro-activeness and strengthened implementation efforts at state level, devolving responsibility to appropriate authorities, and reducing administrative bottlenecks in enrolment are also imperative. ...
... Providing access to affordable health insurance might relieve some of the barriers to UHC, but the uptake of insurance remains lowparticularly among poor households (Hooley et al., 2022). Most efforts to increase enrolment so far have produced only modest effects on demand, even when premiums were highly subsidized (Banerjee et al., 2021;Capuno et al., 2016;Thornton et al., 2010;Wagstaff et al., 2016). ...
... Similarly, in a paper closely related to ours, Banerjee et al. (2021) study different treatments to 7 increase insurance coverage in Indonesia. They find that subsidies and registration assistance increased enrolment, but not an information treatment. ...
... The set-up of our weekly diaries ensures that all those events are accounted for. Note that Banerjee et al. (2021) also use high-frequency data, but . CC-BY-NC-ND 4.0 International license It is made available under a is the author/funder, who has granted medRxiv a license to display the preprint in perpetuity. ...
Objective: This study evaluates how a subsidized, mobile phone-based health insurance program affected insurance uptake, healthcare utilization and health expenditures for low-income women and their family members in Western Kenya. The program, targeting pregnant women and mothers of children below age four, addressed both demand- and supply-side constraints, providing subsidies through mobile money and support in digital registration while upgrading selected facilities and digitally training community health workers.
Methods: The research was based on a cluster-RCT conducted between 2019 and 2021 in 24 villages in Kakamega County. After a baseline survey, 240 households (more than 1,300 individuals) were interviewed every week during 18 months to collect detailed financial and health data while the program was rolled out in the treatment communities, moving to phone-based interviewing after the onset of COVID-19.
Results: The intervention had a significant impact on individual insurance uptake of 65.8 percentage points (from a baseline control mean 18.9 percent). We find weak positive impacts on formal healthcare utilization, and substantial increases in financial coverage of medical costs and associated reductions in out-of-pocket expenditures, particularly for medicines. Results are strongest for women, young children and individuals living closest to the clinics. Dynamic analyses show that impacts become increasingly pronounced over time, suggesting that women may need some time to get used to the digital insurance scheme.
Conclusion: The program not only reduced the costs of enrolment, but also eliminated other (administrative, logistical, trust) barriers. The introduction of the scheme by trusted local agents, the hands-on assistance with the digital registration procedures at women's homes, and support in retrieving the necessary documentation such as children's birth certificates, have likely all contributed to the high enrolment rates, thereby improving access to good-quality care. Digital insurance has the potential to substantially enhance universal health coverage and financial protection for poor households.
... Subsequent interventions have been similar in spirit with some variations. For instance, Banerjee et al. (2021) offer full and partial subsidies for insurance premiums in Indonesia to examine whether household behavior changes when the price is a small positive amount rather than an exact zero. They find that a full premium subsidy increases enrollment to 19 percent from a baseline of 8 percent with retention rates 4.6 and 3.9 percentage points higher in the subsidized group at 3 and 8 months after the subsidies ended. ...
... If other constraints hold back demand, it becomes difficult to interpret the price-elasticity as a measure of value. Poor information is one possibility, but interventions that include an information component typically find little impact on take-up (Capuno et al. 2016;Wagstaff et al. 2016;Thornton et al. 2010;Banerjee et al. 2021;Malani et al. 2021;. A second possibility is that there are non-price barriers to take-up such as administrative burdens arising from eligibility requirements. ...
... Interventions that offer administrative assistance with enrolling in health insurance indeed find that takeup increases, with an effect size equivalent to that of premium subsidies for six months (Capuno et al. 2016; Thornton et al. 2010;Banerjee et al. 2021;Malani et al. 2021). This is sufficiently large that a simple explanation rooted in the opportunity cost of time is unlikely. ...
... Subsequent interventions have been similar in spirit with some variations. For instance, Banerjee et al. (2021) offer full and partial subsidies for insurance premiums in Indonesia to examine whether household behavior changes when the price is a small positive amount rather than an exact zero. They find that a full premium subsidy increases enrollment to 19 percent from a baseline of 8 percent with retention rates 4.6 and 3.9 percentage points higher in the subsidized group at 3 and 8 months after the subsidies ended. ...
... If other constraints hold back demand, it becomes difficult to interpret the price-elasticity as a measure of value. Poor information is one possibility, but interventions that include an information 13 component typically find little impact on take-up (Capuno et al. 2016;Wagstaff et al. 2016;Thornton et al. 2010;Banerjee et al. 2021;Malani et al. 2021;. A second possibility is that there are non-price barriers to take-up such as administrative burdens arising from eligibility requirements. ...
... Interventions that offer administrative assistance with enrolling in health insurance indeed find that takeup increases, with an effect size equivalent to that of premium subsidies for six months (Capuno et al. 2016; Thornton et al. 2010;Banerjee et al. 2021;Malani et al. 2021). This is sufficiently large that a simple explanation rooted in the opportunity cost of time is unlikely. ...
Governments in many low- and middle-income countries are developing health insurance products as a complement to tax-funded, subsidized provision of health care through publicly operated facilities. This paper discusses two rationales for this transition. First, health insurance would boost fiscal revenues for health care, as post-treatment out-of-pocket payments to providers would be replaced by pre-treatment insurance premia to health ministries. Second, increased patient choice and carefully designed physician reimbursements would increase quality in the health care sector. This essay shows that, at best, these objectives have only been partially met. Despite evidence that health insurance has provided financial protection, consumers are not willing to pay for unsubsidized premia. Health outcomes have not improved despite an increase in utilization. The authors argue that this is not because there was no room to improve the quality of care but because behavioral responses among health care providers have systematically undermined the objectives of these insurance schemes.
... The 12 studies covered 10 countries (Table 1). Three studies were conducted in Burkina Faso [17][18][19] and one study was conducted in each of the following countries: Ghana, 20 India, 21 Indonesia, 22 Kenya, 23 Mexico, 24 Nicaragua, 25 the Philippines, 26 Senegal, 27 and Vietnam. 28 In terms of the type of insurance program, three of the studies examined the effect of their interventions on the uptake of CBHI programs, 17,19,27 six on the uptake of SHI, 18,20,21,24,26,28 and three on NHI. ...
... 28 In terms of the type of insurance program, three of the studies examined the effect of their interventions on the uptake of CBHI programs, 17,19,27 six on the uptake of SHI, 18,20,21,24,26,28 and three on NHI. 22,23,25 Method-wise, 10 of the studies were RCTs, 17,20-28 while the remaining two were quasi experiments. 18,19 Before synthesizing the studies' findings, a brief summary of each study is in order. ...
... 21 Banerjee et al 22 (2021) investigated the effect of large, temporary subsidies, at-home registration assistance, and the provision of three types of information-emphasizing the financial costs of a health episode in relation to insurance prices, the presence of a waiting period from enrollment to coverage, or the fact that insurance coverage was mandatory-on enrollment in Indonesia's JKN Mandiri program. 22 Capuno et al (2016) tested two sets of interventions-information and a 50% premium subsidy-encouraging enrollment in the voluntary component of the Philippines' social ...
Health insurance programs have the potential to shield individuals in low- and middle-income countries from catastrophic health expenses and reduce their vulnerability to poverty. However, the uptake of insurance programs remains low in these countries. We reviewed existing evidence from experimental studies on approaches that researchers have tested in order to raise the uptake. In the 12 studies we synthesized, educational programs and subsidies were the dominant interventions. Consistent with findings from previous studies on other health products, subsidies were effective in raising the uptake of insurance programs in many contexts. Conversely, education interventions-in their current forms-were largely ineffective, although they bolstered the effect of subsidies. Other strategies, such as the use of microfinance institutions and social networks for outreach and enrollment, showed mixed results. Additional research is needed on effective approaches to raise the uptake of insurance programs, including tools from behavioral economics that have shown promise in other areas of health behavior.
... The deadline may also help people overcome procrastination, thereby improving the utilization rate within the deadline and the timeliness of utilization. Although the harvesting effect indicates that the rise in utilization rate within the deadline might result from a tendency to intensively schedule visits to fulfill goals ahead of the deadline (Banerjee et al., 2021). Secondly, a strict deadline may cause those with difficulty showing up in time to miss health services, resulting in "crowding out" effects and reduced utilization rates within a fixed time (Krishna and Zhang, 1999;Zhang et al., 2019). ...
... In this study, students in the Deadline group would lose the chance to redeem vouchers after the expiration date (30 days), while students in the Control group could redeem them at any time before the end of the experiment. Therefore, it is possible that students from the Deadline group may shift forward in time a utilization decision that they would have otherwise (a phenomenon known as "harvesting") (Grecu and Sharma, 2019;Banerjee et al., 2021). Due to the deadline's influence, students may be inclined to visit the VC promptly, potentially leading to a higher utilization rate in the Deadline group within the restricted 30-day period, in contrast to the control group. ...
... Importantly, CBHI schemes have been pointed out for being confronted with low take-up and high dropout rates, jeopardizing their viability (Ekman, 2004;Soors et al., 2010;Platteau et al., 2017). Although low uptake of health insurance is not solely associated with CBHI (e.g. this is also the case for compulsory schemes where enforcement is weak; Schieber et al., 2012;Banerjee et al., 2021), threats to viability are automatically more significant when pooling is confined at the community level, limiting the capacity for risk-sharing. ...
... Recent work conducted in Indonesia to boost enrolment in the contributory portion of the nationally mandated insurance programme shows that overcoming some of these barriers is not an easy task, even when intensive interventions are implemented (e.g. offering assisted registration and free insurance for a year only resulted in a 30% initial enrolment rate; Banerjee et al., 2021). Future research should further explore the potential impacts of mandatory enrolment in CBHI on both the economic welfare and health of target populations (e.g. through modelling studies; Riumallo-Herl et al., 2018). ...
Community-based health insurance (CBHI) has been implemented in many low and middle-income countries to increase financial risk protection in populations without access to formal health insurance. While the design of such social programs is fundamental to ensuring equitable access to care, little is known about the operational and structural factors influencing enrolment in CBHI schemes. In this study, we took advantage of newly established data monitoring requirements in Senegal to explore the association between the operational capacity and structure of CBHI schemes—also termed ‘mutual health organisations’ (MHO) in francophone countries—and their enrolment levels. The dataset comprised 12 waves of quarterly data over 2017–2019 and covered all 676 MHOs registered in the country. Primary analyses were conducted using dynamic panel data regression analysis. We found that higher operational capacity significantly predicted higher performance: enrolment was positively associated with the presence of a salaried manager at the MHO level (12% more total enrollees, 23% more poor members) and with stronger cooperation between MHOs and local health posts (for each additional contract signed, total enrollees and poor members increased by 7% and 5%, respectively). However, higher operational capacity was only modestly associated with higher sustainability proxied by the proportion of enrollees up to date with premium payment. We also found that structural factors were influential, with MHOs located within a health facility enrolling fewer poor members (−16%). Sensitivity analyses showed that these associations were robust. Our findings suggest that policies aimed at professionalising and reinforcing the operational capacity of MHOs could accelerate the expansion of CBHI coverage, including in the most impoverished populations. However, they also suggest that increasing operational capacity alone may be insufficient to make CBHI schemes sustainable over time.
... Bangladesh has formulated 'Health Policy, 2011' to ensure basic health services for the people and developed 'Financial Strategy 2012-2032' to achieve UHC by 2032 [3,17]. Bangladesh is one of the rare examples of health service network from grassroots level to central level to provide health services [4,5]. Primary health care services are provided at 13,000 community clinics (CC) located at villages for every 2000 population, 5000 satellite clinics at over 5000 Unions, secondary level health services are provided at more than 500 Upazila level hospitals [15]. ...
Aim : this study aims at assessing the contribution of health insurance for the employees of selected garment factories in reducing OPP in terms of% of total costs of medical treatment, identifying the problems of health insurance and claim realisation and developing a model for the effective health insurance, which is expected to contribute in achieving Universal Health Coverage (UHC). Subject and Methods : The study has been conducted on the employees of selected garment factories which have introduced health insurance scheme for their employees and the garment factories which have not yet introduced health insurance for their employees. Both qualitative and quantitative approach has been applied to collect the data from employees, management officials of the readymade garment (RMGs) industries and concerned insurance companies to meet the objectives of the study. Questionnaire survey on the employees of the selected garment factories, in-depth interview, focus group discussions (FGDs) with the stakeholders has been conducted. Results : Health insurance of RMGs has not got momentum yet. It is at the initial stage only. At this stage, the study finds that health insurance can reduce OPP relating to benefit package, claim realization, follow up treatment etc. The employers and the employees face several problems. Moreover, monitoring and supervision need to be ensured. Conclusion : Most of the employees are not aware of their rights and terms and conditions of health insurance, despite of having such problems, health insurance can contribute to the reduction of OPP of the employees under HI. By reducing OPP, HI contributes to the expansion of health care coverage. By expanding the outreach, health insurance can contribute to achieving the goal of UHC, provided that the health insurance policies are well-designed.
... [32,33] Tailored approaches to increase the uptake of health insurance by providing subsidies, simplifying initial registration, balancing insurance premiums with financial capacity, and giving comprehensive education on its benefits are therefore important to execute. [5] e proportion of mild TBI in our study is higher than in two other Indonesian-based studies that included patients with all levels of consciousness during admission. [34,45] e authors surmise that besides the low probability of North Maluku people utilizing hospitals, [30,53] poor pre-hospital service due to an uncoordinated system with substandard equipment and meager emergency capability, combined with difficult geographical conditions might decrease the probability of moderate-to-severe TBI patients, particularly those outside Ternate, of reaching our neurosurgical facility. ...
Background
Although persisting to be a public health hazard in Indonesia, motorcycle-related traumatic brain injury (TBI) due to road traffic accidents (RTA) lacks comprehensive national data. We aim to study the epidemiological pattern of motorcycle-related TBI and analyze the determinants related to mortality in the only neurosurgical center in the rural province of North Maluku, Indonesia.
Methods
Using the North Maluku Database in Neurosurgery register, information regarding age, sex, health insurance, alcohol use, point of referral, degree of severity, brain computed tomography abnormalities, helmet use, surgery, injury-to-admission time (IAT), and relationship to the motorcycle were obtained from patients admitted to Chasan Boesoirie General Hospital, Ternate, in 2021–2022. Multivariable logistic regression analysis was performed to investigate associations with in-hospital mortality.
Results
Of all RTA-related TBI patients (n = 353), 91.8% (n = 324) were caused by motorcycle collision (mean age ± standard deviation of 30.5 ± 16.7 years old). The majority were motorcyclists (66.7%), male (64.8%), IAT >4 h (55.9%), financed by non-Jaminan Kesehatan Nasional mechanism (66.4%), not under alcohol influence (78.4%), referred from Ternate (55.2%), and suffered mild TBI (75%). Thirty patients (9.3%) succumbed to death. Moreover, 9.3% and 91.2% were ≤17 years old and helmetless. Glasgow coma scale and IAT were significantly associated with in-hospital mortality (odds ratio [95% confidence interval]: 0.58 [0.49–0.68] and 5.44 [1.00–30.34], respectively).
Conclusion
The young and productive males dominated the motorcycle-related TBI patients in North Maluku. Poor compliance with road traffic laws, as demonstrated by a considerable proportion of underage, alcohol-intoxicated, and helmetless patients, necessitated prompt actions from all related elements.
... Topics covered include family support from children and spouses in China (Chen & Fang, 2021, informal caregiving in Japan (Yuda & Lee, 2016), Universal Health Coverage (UHC) in Japan (Kondo & Shigeoka, 2013) and Indonesia (Banerjee et al., 2021), and public pension programs in Mongolia (Tanaka et al., 2025). A variety of studies also examine the interplay between informal safety nets and public social insurance programs, such as the role of LTC and informal care in Korea (Kim & Lim, 2015), and the relationship between public and private transfers around the globe (Nikolov & Bonci, 2020) as well as in the U.S. (Cox, 1987), China (Huang & Zhang, 2021), Peru (Cox et al., 1998), the Philippines (Cox et al., 2004), and Vietnam (Cox et al., 2004). ...
Does consumption smoothing among older individuals over time and across households indicate the efficiency of overall insurance mechanisms against health shocks? And what is the extent of suboptimality in various market and non-market insurance arrangements? To address these questions, we utilize panel data from the China Health and Retirement Longitudinal Study (CHARLS) spanning 2011, 2013, 2015, and 2018 to evaluate the effectiveness of both institutional and informal insurance mechanisms for older individuals in China. While conventional tests generally support consumption smoothing for essential items across time and individuals in response to adverse health shocks, our findings indicate that the welfare costs associated with these shocks are not insignificant, particularly in rural areas. These results underscore the need for strengthened long-term care, pension systems, and other social safety nets, which could enhance welfare even when consumption appears resilient to shocks.
... Development practitioners particularly value three features of shockresponsive cash transfer schemes that are deemed to be especially important in the presence of aggregate shocks. First, a registry of hard-to-target informal sector 1 Some of the challenges of social insurance programs associated with a large informal sector in developing countries are carefully examined by Banerjee et al. (2021) in the context of universal health insurance in India. 2 To expedite aid, emergency relief could issue universal payments to everyone in a crisis zone, akin to a basic income approach. Yet, a significant drawback is the modest amount distributed to each individual, which may be insufficient for their needs (Hanna & Olken, 2018) households is readily available. ...
This study examines the effects of a nationwide shock-responsive social cash transfer scheme during an aggregate shock, with a focus on highly risk susceptible informal sector households in Kenya. Leveraging primary in-person survey data in a doubly robust difference-in-differences framework, we find that households receiving shock-responsive cash transfers were less likely to encounter income loss, poverty, and food scarcity compared to households not receiving them. The scheme also reduced the likelihood of engaging in costly risk coping such as selling productive assets. When comparing different pillars of the scheme with varying degrees of shock-responsiveness, we observe that the impacts were statistically
significant only when payment cycles were pooled and the transfers were vertically scaled. The study adds to the global policy discussion on developing effective shock-responsive interventions, underscoring the merits of (adapted) social cash transfers during crises.
... A Long and Healthy Life (LHL), as represented by The Percentage of Individuals with Health Insurance (LHL2) and The Percentage of Feasible Sanitation Access in Households (LHL4), has a significant no effect on HDI. For a number of cases in developing countries, like Indonesia, LHL does not support HDI. Obstacles to health insurance (LHL2) exist in developing countries, including administrative issues in Indonesia (Banerjee et al., 2021) and tax issues in a number of developing nations (Jamal et al., 2022). Watson et al. (2021) conclude that health insurance is not a magic bullet for enhancing equity in the health sector, based on publications spanning 20 developing countries. ...
Spatial regression, particularly the Spatial Error Model (SERM), was utilized in prior studies to analyze Human Development Index (HDI) modeling. However, the studies were unable to determine which dimension among the three defined by the UN and BPS had the significant impact on HDI, as they constructed models based on the indicators used for the interpretation of the dimensions. Therefore, a comprehensive analysis combining spatial regression and Structural Equation Modeling (SEM), known as spatial SEM, was deemed necessary. This is the reason the current study aimed to develop SERM-SEM modeling holistically. The model parameters were estimated using the Generalized Method of Moments (GMM). To assess spatial dependency, the Lagrange Multiplier (LM) method was employed, with a distinct model error distribution compared to the error distribution of the traditional spatial model. The result of the LM test development showed that, under the null hypothesis, the LM test statistics followed a distribution. The results of the SERM-SEM model development were applied to HDI modeling using data in 2022 with three latent variables, namely a Long and Healthy Life (LHL), Knowledge (Know_L), and a Decent Standard of Living (DLS) (based on UN standards). The assessment of the outer model in SEM was based on the loading factor values that exceed 0.5 and their significance. This evaluation aimed to identify indicators that effectively explained or measured latent variables, so it got the revised model in SEM. These indicators are LHL2 and LHL 4 to form LHL. DLS1 and DLS3 are indicators to make up DLS, and for Know_L, they are K2 and K3. The revised SEM model was analyzed using spatial. The results of the spatial dependency test showed that the HDI model significantly led to the SERM-SEM model. Knowledge and a decent standard of living variables significantly influence HDI.
... Some LMICs provide health care benefits for persons with disabilities through noncontributory health insurance, fee waivers, or subsidies. In recent years, many LMICs have created universal health insurance programs (Banerjee et al. 2021). Persons with disabilities may be included among other social beneficiary groups (such as the poor, older persons, ethnic minority persons, etc.) eligible for noncontributory health insurance (Palmer 2014). ...
... Achieving equity in health and health care has long been at the forefront of the policy agenda in many African countries, including Kenya (Jehu-Appiah et al., 2011;Reich et al., 2016;McCollum et al., 2018;Paul et al., 2019;Banerjee et al., 2021;WHO, 2021). Nationally representative statistics from Kenya show that individuals from the lowest-wealth quintile are more likely to rate their health as very poor, but less likely to seek both public and private healthcare compared to individuals from wealthier quintiles (Ilinca et al., 2019). ...
Private sector engagement in health reform has been suggested to help reduce healthcare inequities in sub-Saharan Africa, where populations with the most need seek the least care. We study the effects of African Health Markets for Equity (AHME), a cluster randomized controlled trial carried out in Kenya from 2012-2020 at 199 private health clinics. AHME included four clinic-level interventions: social health insurance, social franchising, SafeCare quality-of-care certification program, and business support. This paper evaluates whether AHME increased the capacity of private health clinics to serve poor clients while maintaining or enhancing the quality of care provided. At endline, clinics that received AHME were 14.5 percentage points (pp) more likely to be empaneled with the National Health Insurance Fund (NHIF), served 51% more NHIF clients, and served more clients from the middle 3 quintiles of the wealth distribution compared to control clinics. Comparing individuals living in households near AHME treatment and control clinics (N=8241), AHME led to a 6.7pp increase in the probability of holding any health insurance on average. We did not find any additional effect of AHME on insurance holding among poor households. We measured quality of care using a standardized patient (SP) experiment (N=596 SP-provider interactions) where recruited and trained SPs were randomized to present as either "not poor", and able to afford all services provided, or "poor" by telling the provider they could only afford approximately 300 Kenyan Shillings (US$3) in fees. We found that poor SPs received lower levels of both correct and unnecessary services, and AHME did not affect this. More work must be done to ensure clients of all wealth levels receive high quality care.
... Empirical work is needed on the relative quantitative importance of these various potential sources of insurance loss. The limited academic literature on the causes of health insurance loss has tended to focus on the potential for strategic enrollment and disenrollment timed around health events (14)(15)(16). In other settings, such as the Supplemental Nutrition Assistance Program (SNAP), there is also evidence of inadvertent disenrollment arising from a failure to recertify eligibility (17). ...
Health insurance coverage in the United States is highly uncertain. In the post-Affordable Care Act (ACA), pre-COVID United States, we estimate that while 12.5% of individuals under 65 are uninsured at a point in time, twice as many-one in four-are uninsured at some point over a 2-y period. Moreover, the risk of losing insurance remained virtually unchanged with the introduction of the landmark ACA. Risk of insurance loss is particularly high for those with health insurance through Medicaid or private exchanges; they have a 20% chance of losing coverage at some point over a 2-y period, compared to 8.5% for those with employer-provided coverage. Those who lose insurance can experience prolonged periods without coverage; about half are still uninsured 6 mo later, and almost one-quarter are uninsured for the subsequent 2 y. These facts suggest that research and policy attention should focus not only on the "headline number" of the share of the population uninsured at a point in time, but also on the stability and certainty (or lack thereof) of being insured.
... Studies have shown that there is a problem of adverse selection, as people join the scheme only when they need access. There is no continuity in premium payments over the years (Banerjee et al., 2021). In 2017, only 30 million (43%) of the total 69 million employed in Indonesia's informal sector were enrolled in JKN. ...
... But several challenges exist for LMICs trying to scale up health insurance coverage. On the demand side, poor populations may be unable to pay insurance premiums (Msuya et al., 2007), do not trust the health system (Kamuzora & Gilson, 2007;Maluka & Bukagile, 2014), perceive the quality of care to be low (e.g., due to frequent drug stock-outs) (Linje, 2015;Macha et al., 2014), struggle to understand the benefits of health insurance (Kapologwe et al., 2017;Obrist et al., 2007;Panda et al., 2015), have limited awareness of benefit packages (Kapologwe et al., 2017;Kumburu, 2015) or are discouraged by prolonged registration processes (Banerjee et al., 2021;Kumburu, 2015). From the insurers' perspective, large informal sectors make it difficult to enroll people through employers and to calculate affordable income-based premiums (Borghi et al., 2013;Fenny et al., 2018). ...
Many low‐income countries are in the process of scaling up health insurance with the goal of achieving universal coverage. However, little is known about the usage and financial sustainability of mandatory health insurance. This study analyzes 26 million claims submitted to the Tanzanian National Health Insurance Fund (NHIF), which covers two million public servants for whom public insurance is mandatory, to understand insurance usage patterns, cost drivers, and financial sustainability. We find that in 2016, half of policyholders used a health service within a single year, with an average annual cost of 33 US$ per policyholder. About 10% of the population was responsible for 80% of the health costs, and women, middle‐age and middle‐income groups had the highest costs. Out of 7390 health centers, only five health centers are responsible for 30% of total costs. Estimating the expected health expenditures for the entire population based on the NHIF cost structure, we find that for a sustainable national scale‐up, policy makers will have to decide between reducing the health benefit package or increasing revenues. We also show that the cost structure of a mandatory insurance scheme in a low‐income country differs substantially from high‐income settings. Replication studies for other countries are warranted.
... For example, a field experiment at scale (e.g., Banerjee et al. (2019)) distinguishing between distinct behavioral foundations and/or distinct behaviorally-motivated policies (e.g., Bhargava, Loewenstein and Sydnor (2017)) could provide valuable additional insights, especially if linked to data similar to what we use in this study. For example, while Brot-Goldberg et al. (2021) show that default effects for Medicare Part D low-income enrollees are primarily due to inattention rather than switching costs, it is unclear whether the better choices we document for higher-SES consumers are due to increased attention, relative to lower-SES consumers, or due to better active decisions once paying attention. ...
While citizens in rich countries have indisputably become healthier and richer on average, there is a general sense that this progress has not benefited everyone equally and that health and economic inequality has increased. This thesis contributes to the literature on the measurement and causes of such trends in inequalities by using newly available administrative data in the low countries Belgium and the Netherlands to document and analyze three separate dimensions of contemporary health and economic inequality. The first chapter analyzes the evolution of migrants' descendants' educational outcomes and incomes in the Netherlands, with a focus on second and third generations migrants from Morocco, Suriname and Turkey. While gaps between natives' and migrants' descendants remain large, gaps are generally smaller for later generations, and are overall decreasing. Moreover, using migrant-of-entry fixed effects, a positive effect of the length of stay of migrant families in the Netherlands on the test scores of migrants' children is established and continues after fifty years. I complement these findings with a discussion of migrants' mobility patterns and the role of intermarriage in economic integration. The second chapter concerns the choice quality of insurance contracts by individuals in the Netherlands. We study a specific attribute of the health insurance purchase decision all Dutch inhabitants make: the choice of the size of the deductible. We find that individual choice quality is strongly correlated with the education level and professional sector. Moreover, there is a strong correlation between the decision quality of an individual and those of his/her connections, as we find within-firm, location and family impacts on decision making. We document that such inequality in choice quality leads to substantial difierences in financial outcomes, and evaluate alternative policies. The third chapter analyzes the distributional pattern of mortality in Belgium during the first wave of the Covid-19 pandemic in 2020. Using population-wide administrative data, we find that there is a significant negative income gradient in excess mortality, with excess deaths in the bottom income decile more than twice as high as in the top income decile. However, compared to the inequality in mortality in normal times, the income gradient in all-cause mortality is only marginally steeper.
National Health Insurance (JKN) is tasked with the responsibility of providing access to healthcare services for all citizens through Badan Penyelenggara Jaminan Sosial (BPJS/Social Security Agency) policy in Indonesia. Therefore, this research aimed to analyze the impact of BPJS Kesehatan policy on the access of the lower-class community to healthcare services. A survey method was used in the lower-class community and analyzed quantitatively and qualitatively. The results showed that (a) BPJS policy facilitated ease of access to healthcare services but the process was not free for the community, (b) access was provided to basic and referral healthcare services without achieving equitable and high-quality standards for citizens, (c) the existence of differentiated services based on VIP, as well as Classes 1, 2, and 3 indicated the effects of some healthcare policies on financial capability, and (d) Services in Community Health Center (Puskesmas) and hospitals were affordable for low-income population in terms of cost, social support, and physical accessibility.
Are application hassles, or “ordeals,” an effective way to limit public program enrollment? We provide new evidence by studying (removal of) an auto-enrollment policy for health insurance, adding an extra step to enroll. This minor ordeal has a major impact, reducing enrollment by 33 percent and differentially excluding young, healthy, and economically disadvantaged people. Using a simple model, we show adverse selection—a classic feature of insurance markets—undermines ordeals’ standard rationale of excluding low-value individuals since they are also low-cost and may not be inefficient. Our analysis illustrates why ordeals targeting is unlikely to work well in selection markets. (JEL D82, G22, H75, I13, I18)
Purpose
This study examines the role of contributory social security and the regulatory framework extending social protection for workers in the informal economy.
Design/methodology/approach
A quantitative investigation of social insurance, regulatory mechanisms and social protection is worth studying in a developing country like India. The mediating role of contributory social security and the moderating effect of the regulatory framework in the association between employment relations and employment-based social protection are examined using structural equation modelling with the help of smart PLS software.
Findings
The results ascertain the growing necessity of contributory insurance for workers in the informal economy as it plays a mediating role, while a robust regulatory framework strengthens the marriage between dimensions of employment relations and social protection in the informal economy.
Research limitations/implications
The study contributes to the literature on informal employment relations, informal economy and regulatory framework. The study results from the specific sector and region could raise questions about generalisability and suitability in other contexts.
Practical implications
The emergence of contributory social security in developing countries offers pathways for both government and private insurance providers. Further, it has potential implications for labour adminstration, policymakers and the state by establishing the effect of a robust regulatory framework to extend social security for the excluded working class in the informal economy.
Originality/value
This empirical study carried out an inclusive approach with the involvement of all employers, workers and governmental agencies is argued to be the solution for the social protection of the working poor.
Social protection programs have become increasingly widespread in low- and middle-income countries, with their own distinct characteristics to match the environments in which they are operating. This paper reviews the growing literature on the design and impact of these programs. We review how to identify potential beneficiaries given the large informal sector, the design and implementation of redistribution and income support programs, and the challenges and potential of social insurance. We use our frameworks as a guide for consolidating and organizing the existing literature and also to highlight areas and questions for future research. (JEL E26, H23, I13, I32, I38, O12, O16)
We study how choice quality relates to socioeconomic factors, using population-wide data on health insurance choices and utilization in the Netherlands. We document a striking choice quality gradient with respect to socioeconomic status, finding that those with higher income, higher education, and training in quantitative fields make meaningfully better choices. Household income for the top 5 percent of decision-makers, in terms of surplus captured, is almost three times higher than for the bottom 5 percent. When jointly including all factors, education degree and field of study are more important predictors of choice quality than income and other financial variables. (JEL D31, G22, G52, I13, L15)
In comparative studies, covariate balance and sequential allocation schemes have attracted growing academic interest. Although many theoretically justified adaptive randomization methods achieve the covariate balance, they often allocate patients in pairs or groups. To better meet the practical requirements where the clinicians cannot wait for other participants to assign the current patient for some economic or ethical reasons, we propose a method that randomizes patients individually and sequentially. The proposed method conceptually separates the covariate imbalance, measured by the newly proposed modified Mahalanobis distance, and the marginal imbalance, that is the sample size difference between the 2 groups, and it minimizes them with an explicit priority order. Compared with the existing sequential randomization methods, the proposed method achieves the best possible covariate balance while maintaining the marginal balance directly, offering us more control of the randomization process. We demonstrate the superior performance of the proposed method through a wide range of simulation studies and real data analysis, and also establish theoretical guarantees for the proposed method in terms of both the convergence of the imbalance measure and the subsequent treatment effect estimation.
We experimentally analyze the effects of an intervention to induce the renewal of identification cards on access to a government social program in Panamá. On‐time renewals and access to government transfers increased by 10 and 3.6 percentage points, respectively. Simple reminders about expiration dates generated larger effects than also enabling individuals to renew their documents through an online platform, which users struggled to use despite its being designed to simplify the process. The results suggest that increasing access to identity documentation can reduce exclusion errors in social programs and that simply granting access to e‐government platforms may not necessarily improve public service delivery.
There is mounting evidence on the importance of health insurance for children's health and well‐being. However, many disadvantaged families do not enroll their eligible children in social health insurance programs. This study examines the effectiveness of interventions aimed at increasing social health insurance enrollment for disadvantaged migrant children in Guangzhou, China. We conducted a two‐stage randomized controlled trial with a 3 × 2 design: (1) randomly assigning parents to a control group or one of two treatment groups, where they received digital information on eligibility or eligibility plus comparative benefits and costs; and (2) nudging half of the parents with text message reminders about the enrollment deadline. Informing parents about eligibility alone did not have any impact. However, providing information on eligibility plus comparative benefits and costs increased enrollment in social health insurance in Guangzhou by over 44% (9.4 percentage points). Nudging produced no significant impact. Exploiting treatment group assignment as an instrument for coverage, we were unable to detect any positive effects of having social health insurance in the first year after the intervention.
Tax-financed public health insurance programs are a newer, but increasingly important form of social policy across developing countries, including India. With the scope of stemming the flow of people into poverty, public health insurance focuses on the vulnerable and provides them an avenue to seek quality health care without incurring exorbitant costs. Although enrollment in the program and its effectiveness in reducing out-of-pocket health expenditures remain low, it is expected that the importance of health insurance will increasingly become recognized everywhere. As the demand for health care increases, the key to its effectiveness could reside in the prioritizing of health as an important policy goal—recognizing health as a citizenship “right,” increasing budgetary allocation for health, improving the quality of health care infrastructure, and putting into place effective regulations to check unscrupulous practices by private health care providers—with the scope of equitable access to universal health care and overall improved health outcomes.
Governments in many low- and middle-income countries are developing health insurance products as a complement to tax-funded, subsidized provision of healthcare through publicly-operated facilities. We discuss two rationales for this transition. First, health insurance would boost fiscal revenues for healthcare, as post-treatment out-of-pocket payments to providers would be replaced by pre-treatment insurance premia to health ministries. Second, increased patient choice and carefully designed physician reimbursements would increase quality in the healthcare sector. Our essay shows that, at best, these objectives have only been partially met. Despite evidence that health insurance has provided financial protection, consumers are not willing to pay for unsubsidized premia. Health outcomes have not improved despite an increase in utilization. We argue that this is not because there was no room to improve the quality of care but because behavioral responses among healthcare providers have systematically undermined the objectives of these insurance schemes.
Lower-middle income countries (LMICs) have invested significant effort into expanding insurance coverage as a means of improving access to health care. However, it has proven challenging to fulfill these ambitions. This study investigates to what extent variables associated with the enrollment decision (stay never-insured or enroll) differ from variables associated with the dropout decision (stay insured or drop out). A cross-sectional survey that included 722 households from rural districts in Tanzania was conducted and multinomial logistic regressions were performed to determine the associations between independent variables and membership status (never-insured, dropouts, or currently insured). Both the decision to enrollment and the decision to drop out were significantly associated with the presence of chronic disease and perceptions about the quality of services provided, insurance scheme management, and traditional healers. The effect of other variables, such as age, gender and educational level of the household head, household income, and perceptions about premium affordability and benefit-premium ratios, varied across the two groups. To improve voluntary health insurance coverage, policymakers must simultaneously increase the enrollment rate among the never-insured and reduce the dropout rate among the insured. Our conclusions suggest that policies to increase insurance scheme enrollment rates should differ for the two uninsured groups.
Temporary randomized controlled trials are susceptible to transitory effects that would not result from a permanent treatment. We find a large and statistically significant “deadline effect”—a surge in spending in the final treatment year—in the RAND Health Insurance Experiment, identified by random allocation to three‐ or five‐year enrolment terms. Participants facing lower coinsurance rates show larger spending surges. Partialing out the price–deadline interaction reduces in magnitude estimates of the permanent price elasticity of drug spending (and in some specifications of outpatient and supplies spending). This implies higher optimal coinsurance rates and illustrates the importance of experimental design to identifying parameters of interest in randomized controlled trials. Corriger les effets transitoires dans les essais contrôlés randomisés : Données probantes de l'expérience sur l'assurance‐maladie RAND. Les essais contrôlés randomisés temporaires sont vulnérables aux effets transitoires qui ne découleraient pas d'un traitement permanent. Nous constatons un grand « effet lié à l'échéance » statistiquement significatif – une recrudescence des dépenses au cours de la dernière année de traitement – dans l'expérience sur l'assurance‐maladie RAND, déterminé par la répartition aléatoire à des durées de participation de trois ou cinq ans. Les participants ayant des taux de coassurance inférieurs présentent des recrudescences des dépenses supérieures. Supprimer le biais de l'interaction entre le prix et l'échéance réduit la magnitude de l'estimation de l'élasticité permanente du prix des dépenses en médicaments (et pour certaines spécifications des dépenses en milieu ambulatoire et en fournitures). Cela laisse entendre des taux de coassurance optimaux et illustre l'importance du plan expérimental afin de déterminer les paramètres d'intérêt des essais contrôlés randomisés.
Flooding is the most costly natural disaster faced by US households, yet policymakers are puzzled by the low take-up rates for flood insurance. Leveraging novel transaction-level data, this paper studies the influence of social interactions on households’ insurance decisions. I show that households increase flood insurance purchases by 1–5 percent when their geographically distant friends are exposed to flooding events or to campaigns for flood insurance. These exogenous shocks to far-away friends should not affect local households’ own insurance decisions except through peer effects. I provide evidence suggesting that social interactions facilitate learning through information dissemination and attention triggering.
Low insurance take‐up in low‐income populations is not easily explained by the standard single‐period expected utility model of insurance that overlooks the relevance of time preference when liquidity is constrained. We design field survey instruments to elicit quasi‐hyperbolic time preferences, as well as prospect theory risk preferences, and use them to examine whether time preferences explain health insurance behavior of low‐income Filipinos. Consistent with theory, those with stronger parameterized time preference are less likely to insure and the partial association is most pronounced at low wealth where liquidity is most likely to be constrained. Among those with better understanding of insurance, lower take‐up is also associated with present bias. We do not find that insurance is significantly associated with risk preferences.
Health insurance enrollment in many Sub‐Saharan African countries is low, even with highly subsidized premiums and exemptions for vulnerable populations. One possible explanation is low service quality, which results in a low valuation of health insurance. Using a randomized control trial in 64 primary health care facilities in Ghana, this study assesses the impact of a community engagement intervention designed to improve the quality of healthcare and health insurance services on households living nearby the facilities. Although the intervention improved the medical‐technical quality of health services, our results show that households' subjective perceptions of the quality of healthcare and insurance services did not increase. Nevertheless, the likelihood of illness and concomitant healthcare utilization reduced, and especially households who were not insured at baseline were more likely to enroll in health insurance. The results show that solely increasing the technical quality of care is not sufficient to increase households' subjective assessments of healthcare quality. Still, improving technical quality can directly contribute to health outcomes and further increase health insurance coverage, especially among the previously uninsured.
Even when heavily subsidized, a substantial portion of people choose to forgo purchasing health insurance coverage. In this note, I introduce an explanation for this phenomenon which does not assume choice errors, incorrect beliefs, differently priced uncompensated care, or information asymmetries. When individuals are incapable of freely trading off health and wealth and the initial allocation of goods is suboptimal from their perspective, the standard result of demand for actuarially fair insurance in a single good world does not generalize to the health insurance context. Thus, people might not purchase full health insurance coverage even if it is priced at actuarially fair levels. I argue that this situation is particularly likely to occur in the low‐income population, and hence it is relevant for the achievement of universal health coverage.
This report presents findings from select areas in Indonesia on the state of birth and marriage certificate ownership, especially in poorer households. It discusses the extent to which having legal identity documents is critical to the welfare and social development of women and children in Indonesia. It also identifies the challenges faced by citizens, especially women living in poverty, vulnerable children and people with disabilities, in obtaining a birth, marriage or divorce certificate in Indonesia.
Delivering chlorine to those who use it
In developed countries, a consumer's valuation of a health product can be measured by his or her willingness to pay for it. But poorer individuals, especially those in developing countries, might want and need a product yet be unable to pay for it with money. Dupas et al. demonstrate that a nonprice voucher mechanism can be used to deliver chlorine for water treatment to people in Kenya who are too poor to pay for it, but who use it when they get it (see the Perspective by Olken). Having to redeem the vouchers screens out people who would accept the free chlorine solution but not use it.
Science , this issue p. 889 ; see also p. 864
The low quality of health care in developing countries reduces the poor's incentives to use quality health services and their demand for health insurance. Using data from a field experiment in India, I show that randomly offering insurance policyholders a free preventive checkup with a qualified doctor has a twofold effect: receiving this additional benefit raises willingness to pay to renew health insurance by 53%, doubling the likelihood of hypothetical renewal; exposed individuals are 10 percentage points more likely to consult a qualified practitioner when ill after the checkup. Both effects are concentrated on poorer households. There is no effect on health knowledge and healthcare spending. This suggests that exposing insured households to quality preventive care can be a cost-effective way of raising the demand for quality health care and retaining policyholders in the insurance scheme. Copyright
We address the role of "psychological frictions" in the incomplete take-up of EITC benefits with an IRS field experiment. We specifically assess the influence of program confusion, informational complexity, and stigma by evaluating response to experimental mailings distributed to 35,050 tax filers who failed to claim $26 million despite an initial notice. While the mere receipt of the mailing, simplification, and the heightened salience of benefits led to substantial additional claiming, attempts to reduce perceived costs of stigma, application, and audits did not. The study, and accompanying surveys, suggests that low program awareness/understanding and informational complexity contribute to the puzzle of low take-up.
Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, the authors explain, is that, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself. Thaler and Sunstein invite us to enter an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. Using colorful examples from the most important aspects of life, Thaler and Sunstein demonstrate how thoughtful "choice architecture" can be established to nudge us in beneficial directions without restricting freedom of choice. Nudge offers a unique new take-from neither the left nor the right-on many hot-button issues, for individuals and governments alike. This is one of the most engaging and provocative books to come along in many years. © 2008 by Richard H. Thaler and Cass R. Sunstein. All rights reserved.
Using data from a two-year pricing experiment, we study the impact of subsidy policies on weather insurance take-up. Results show that subsidies increase future insurance take-up through their influence on payout experiences. Exploring mechanisms of the payout effect, we find that for households that randomly benefited from financial education, receiving a payout provides a one-time learning experience that improves take-up permanently. In contrast, households with poor insurance knowledge continuously update take-up decisions based on recent experiences with disasters and payouts. Combining subsidy policies with financial education can thus be effective in promoting long-run insurance adoption. (JEL G22, G52, G53, Q54)
How much are low-income individuals willing to pay for health insurance, and what are the implications for insurance markets? Using administrative data from Massachusetts' subsidized insurance exchange, we exploit discontinuities in the subsidy schedule to estimate willingness to pay and costs of insurance among low-income adults. As subsidies decline, insurance take-up falls rapidly, dropping about 25 percent for each $40 increase in monthly enrollee premiums. Marginal enrollees tend to be lower-cost, indicating adverse selection into insurance. But across the entire distribution we can observe (approximately the bottom 70 percent of the willingness to pay distribution) enrollees' willingness to pay is always less than half of their own expected costs that they impose on the insurer. As a result, we estimate that take- up will be highly incomplete even with generous subsidies. If enrollee premiums were 25 percent of insurers' average costs, at most half of potential enrollees would buy insurance; even premiums subsidized to 10 percent of average costs would still leave at least 20 percent uninsured. We briefly consider potential explanations for these findings and their normative implications.
I take advantage of regulatory and pricing dynamics in Medicare Part D to explore interactions among adverse selection, inertia, and regulation. I first document novel evidence of adverse selection and switching frictions within Part D using detailed administrative data. I then estimate a contract choice and pricing model that quantifies the importance of inertia for risk sorting. I find that in Part D switching costs help sustain an adversely-selected equilibrium. I also estimate that active decision making in the existing policy environment could lead to a substantial gain in annual consumer surplus of on average 600 per capita-20 percent to 30 percent of average annual spending.
Many health care treatments are not urgent and may be delayed if patients so choose. Because insurance coverage is typically
determined by the treatment date, individuals may have incentives to strategically delay treatments to minimize out-of-pocket
costs. The strategic delay of treatment—a particular form of moral hazard— can be an important source of subsequent adverse
selection, in which ex ante identical individuals select insurance coverage based on their differing accumulation of previously
delayed treatments. This paper investigates these forces empirically in the context of the missing market for dental insurance.
Using rich claim-level data, my analysis reveals that approximately 40% of individuals strategically delay dental treatments
when incentivized to do so, and this flexibility in delaying treatment can explain why the market for dental insurance has
largely unraveled. More generally, the counterfactual analysis suggests features such as open enrollment periods and contracting
on pre-existing conditions may be helpful tools in overcoming adverse selection in insurance contexts where the timing of
uncertainty is not contractible.
This paper shows that adding a small application cost to a transfer program can substantially improve targeting through self-selection. Our village-level experiment in Indonesia finds that requiring beneficiaries to apply for benefits results in substantially poorer beneficiaries than automatic enrollment using the same asset test. Marginally increasing application costs on an experimental basis does not further improve targeting. Estimating a model of the application decision implies that the results are largely driven by the nonpoor, who make up the bulk of the population, forecasting that they are unlikely to pass the asset test and therefore not bothering to apply.
Using data from employer-provided health insurance and Medicare Part D, we investigate whether health care utilization responds to the dynamic incentives created by the nonlinear nature of health insurance contracts. We exploit the fact that because annual coverage usually resets every January, individuals who join a plan later in the year face the same initial ("spot") price of health care but a higher expected end-of-year ("future") price. We find a statistically significant response of initial utilization to the future price, rejecting the null that individuals respond only to the spot price. We discuss implications for analysis of moral hazard in health insurance. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology 2015.
Increasing demand for better quality data and more investment to strengthen civil registration and vital statistics (CRVS) systems will require increased emphasis on objective, comparable, cost-effective monitoring and assessment methods to measure progress. We apply a composite index (the vital statistics performance index [VSPI]) to assess the performance of CRVS systems in 148 countries or territories during 1980-2012 and classify them into five distinct performance categories, ranging from rudimentary (with scores close to zero) to satisfactory (with scores close to one), with a mean VSPI score since 2005 of 0·61 (SD 0·31). As expected, the best performing systems were mostly in the European region, the Americas, and Australasia, with only two countries from east Asia and Latin America. Most low-scoring countries were in the African or Asian regions. Globally, only modest progress has been made since 2000, with the percentage of deaths registered increasing from 36% to 38%, and the percentage of children aged under 5 years whose birth has been registered increasing from 58% to 65%. However, several individual countries have made substantial improvements to their CRVS systems in the past 30 years by capturing more deaths and improving accuracy of cause-of-death information. Future monitoring of the effects of CRVS strengthening will greatly benefit from application of a metric like the VSPI, which is objective, costless to compute, and able to identify components of the system that make the largest contributions to good or poor performance.
Copyright © 2015 Elsevier Ltd. All rights reserved.
This paper investigates consumer inertia in health insurance markets, where adverse selection is a potential concern. We leverage a major change to insurance provision that occurred at a large firm to identify substantial inertia, and develop and estimate a choice model that also quantifies risk preferences and ex ante health risk. We use these estimates to study the impact of policies that nudge consumers toward better decisions by reducing inertia. When aggregated, these improved individual-level choices substantially exacerbate adverse selection in our setting, leading to an overall reduction in welfare that doubles the existing welfare loss from adverse selection.
This paper analyzes Thailand's 2001 healthcare reform, "30 Baht". The program increased funding available to hospitals to care for the poor and reduced copays to 30 Baht (~$0.75). Our estimates suggest the supply-side funding of the program increased healthcare utilization, especially amongst the poor. Moreover, we find significant impacts on infant mortality: prior to 30 Baht poorer provinces had significantly higher infant mortality rates than richer provinces. After 30 Baht this correlation evaporates to zero. The results suggest that increased access to healthcare among the poor can significantly reduce their infant mortality rates.
We analyse nine low-income and lower-middle-income countries in Africa and Asia that have implemented national health insurance reforms designed to move towards universal health coverage. Using the functions-of-health-systems framework, we describe these countries' approaches to raising prepaid revenues, pooling risk, and purchasing services. Then, using the coverage-box framework, we assess their progress across three dimensions of coverage: who, what services, and what proportion of health costs are covered. We identify some patterns in the structure of these countries' reforms, such as use of tax revenues to subsidise target populations, steps towards broader risk pools, and emphasis on purchasing services through demand-side financing mechanisms. However, none of the reforms purely conform to common health-system archetypes, nor are they identical to each other. We report some trends in these countries' progress towards universal coverage, such as increasing enrolment in government health insurance, a movement towards expanded benefits packages, and decreasing out-of-pocket spending accompanied by increasing government share of spending on health. Common, comparable indicators of progress towards universal coverage are needed to enable countries undergoing reforms to assess outcomes and make midcourse corrections in policy and implementation.
There is an emerging consensus among macro-economists that differences in technology across countries account for the major differences in per-capita GDP and the wages of workers with similar skills across countries. Accounting for differences in technology levels across countries thus can go a long way towards understanding global inequality. One mechanism by which poorer countries can catch up with richer countries is through technological diffusion, the adoption by low-income countries of the advanced technologies produced in high-income countries. In this survey, we examine recent micro studies that focus on understanding the adoption process. If technological diffusion is a major channel by which poor countries can develop, it must be the case that technology adoption is incomplete or the inputs associated with the technologies are under-utilized in poor, or slow-growing economies. Thus, obtaining a better understanding of the constraints on adoption is useful in understanding a major component of growth.
This article presents the results from an experimental evaluation of a voluntary health insurance program for informal sector workers in Nicaragua. Costs of the premiums as well as enrollment location were randomly allocated. Overall, take-up of the program was low, with only 20% enrollment. Program costs and streamlined bureaucratic procedures were important determinants of enrollment. Participation of local microfinance institutions had a slight negative effect on enrollment. One year later, those who received insurance substituted toward services at covered facilities and total out-of-pocket expenditures fell. However, total expenditures fell by less than the insurance premiums. We find no evidence of an increase in health-care utilization among the newly insured. We also find very low retention rates after the expiration of the subsidy, with less than 10% of enrollees still enrolled after one year. To shed light on the findings from the experimental results, we present qualitative evidence of institutional and contextual factors that limited the success of this program.
We assessed aspects of Seguro Popular, a programme aimed to deliver health insurance, regular and preventive medical care, medicines, and health facilities to 50 million uninsured Mexicans.
We randomly assigned treatment within 74 matched pairs of health clusters-ie, health facility catchment areas-representing 118 569 households in seven Mexican states, and measured outcomes in a 2005 baseline survey (August, 2005, to September, 2005) and follow-up survey 10 months later (July, 2006, to August, 2006) in 50 pairs (n=32 515). The treatment consisted of encouragement to enrol in a health-insurance programme and upgraded medical facilities. Participant states also received funds to improve health facilities and to provide medications for services in treated clusters. We estimated intention to treat and complier average causal effects non-parametrically.
Intention-to-treat estimates indicated a 23% reduction from baseline in catastrophic expenditures (1.9% points; 95% CI 0.14-3.66). The effect in poor households was 3.0% points (0.46-5.54) and in experimental compliers was 6.5% points (1.65-11.28), 30% and 59% reductions, respectively. The intention-to-treat effect on health spending in poor households was 426 pesos (39-812), and the complier average causal effect was 915 pesos (147-1684). Contrary to expectations and previous observational research, we found no effects on medication spending, health outcomes, or utilisation.
Programme resources reached the poor. However, the programme did not show some other effects, possibly due to the short duration of treatment (10 months). Although Seguro Popular seems to be successful at this early stage, further experiments and follow-up studies, with longer assessment periods, are needed to ascertain the long-term effects of the programme.
Private transfer payments are modeled as outcomes of a constrained social choice pro blem facing donors. The approach is applied to a large household leve l data set for Java and hypotheses are tested concerning the performa nce of the "moral economy" as a social security system. Transfer be havior is found to be very different between rural and urban areas. W hile transfer receipts and outlays are income inequality reducing in rural areas, this is not the case in urban areas. There is also evidence of transfers being targeted to disadvantaged households such as the sick, elderly, and (for urban areas) the unemployed. Copyright 1988 by MIT Press.
I. Introduction, 488. — II. The model with automobiles as an example, 489. — III. Examples and applications, 492. — IV. Counteracting
institutions, 499. — V. Conclusion, 500.
Studies of risk in developing economies have focused on consumption fluctuations as a measure of the value of insurance. A common view in the literature is that the welfare costs of risk and benefits of social insurance are small if income shocks do not cause large consumption fluctuations. We present a simple model showing that this conclusion is incorrect if the consumption path is smooth because individuals are highly risk averse. Empirical studies find that many households in developing countries rely on inefficient methods to smooth consumption, suggesting that they are indeed quite risk averse. Hence, social safety nets may be valuable in low-income economies even when consumption is not very sensitive to shocks.
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