Prices Matter: Comparing Two Tests of Adverse Selection in Health Insurance (original) (raw)
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2020
Information asymmetries or community-rating can lead to adverse selection into health insurance. We use a multi-armed RCT that varies insurance premiums to study selection into a health insurance program in India called Rashtriya Swasthya Bima Yojana (RSBY). Limited fiscal capacity in low and middle income countries (LMICs) may necessitate charging premiums, which may exacerbate adverse selection. Moreover, the degree of selection may differ in LMICs due to limited healthcare supply and knowledge, and constraints that interact with selection in a priori ambiguous ways, e.g., liquidity. We find mixed evidence on selection into the program. While those who purchase insurance when premiums are high use insurance more, they are no higher risk than those who purchase at lower prices. To interpret these findings we appeal to a literature in development economics that studies why price sometimes increases utilization of a product. That literature suggests three explanations: selection, pri...
Health Policy, 2009
Objectives: This paper examines the determinants of the insured's decision to use their health insurance card when seeking outpatient and inpatient health care in Vietnam. Methods: Uses Vietnam's latest Household Living Standard Survey data and randomintercept logistic regression to assess the influence of the observed individual, household and commune/ward factors on the insured's decision to access health insurance benefits while controlling for the unobserved commune/ward-specific factors. Results: Compared to the compulsory enrollees, the voluntary enrollees and the beneficiaries of the Health Care Fund for the Poor are less likely to use their card when seeking inpatient care. An individual's likelihood of accessing insurance benefits varies inversely with income and the level of education, suggesting that the outpatient care provided to the insured is of inferior quality. Conclusions: Although health insurance has the potential of increasing access and reducing the financial burden of health care utilization, Vietnam's experience clearly suggests that these benefits may not be fully realized as long as the quality of care remains low and the high opportunity costs of accessing insurance benefits deter the insured from accessing benefits.
Evaluating pricing health insurance in lover-income countries: A field experiment in India
2024
Universal health coverage is a widely shared goal across lower-income countries. We conducted a large-scale, 4-year trial that randomized premiums and subsidies for India's first national, public hospital insurance program, RSBY. We find roughly 60% uptake even when consumers were charged premiums equal to the government's cost for insurance. We also find substantial adverse selection into insurance at positive prices. Insurance enrollment increases insurance utilization, partly due to spillovers from use of insurance by neighbors. However, many enrollees attempted to use insurance but failed, suggesting that learning is critical to the success of public insurance. We find very few statistically significant impacts of insurance access or enrollment on health. Because there is substantial willingness-to-pay for insurance, and given how distortionary it is to raise revenue in the Indian context, we calculate that our sample population should be charged a premium for RSBY between INR 500-1000 rather than a zero premium to maximize the marginal value of public funds.
2019
How can developing countries increase health insurance? We experimentally assessed three approaches that simple theory suggests could increase coverage and potentially reduce adverse selection: temporary price subsidies, registration assistance, and information. Temporary subsidies attracted lower-cost enrollees, in part by reducing strategic coverage timing. While subsidies were active, coverage increased more than eightfold, at no higher unit cost to the government; after subsidies ended, coverage remained twice as high, again at no higher cost. However, subsidies are not sufficient to achieve universal coverage: the most intensive intervention-a full one-year subsidy combined with registration assistance-resulted in only 30 percent enrollment.
Research Papers in Economics, 2017
Though the impact of cost-sharing on health care demand is well documented in developed countries, evidence from developing countries is rare. This paper’s contribution is to analyse the impact of increasing coinsurance in a developing nation, Vietnam, by exploiting a quasi-natural experiment in that country. In 2007, the Vietnam government reintroduced a 20 percent coinsurance for individuals who hold voluntary health insurance policies. As individuals with compulsory health insurance were exempt from this re-imposition of coinsurance, this policy change may be regarded as a quasi-natural experiment. To exploit this change, we use a difference-in difference approach to examine whether the increase in coinsurance effectively reduced the demand for health care services among those affected. We find it has no statistically significant effect on the quantity of health care demanded. We however find that those who were under 18 or in low income households reduced their health care use a...
Who Took out Additional Supplementary Health Insurance? A dynamic Analysis of Adverse-Selection
I n s t i t u t e f o r R e s e a r c h a n d I n f o r m a t i o n i n H e a l t h E c o n o m i c s no 150-January 2010 According to economic theory, individuals choose their insurance cover levels in virtue of anticipated health expenditures. Thus, they partially reveal their health risks. Yet, on the French health insurance market this hypothesis, known as 'adverse-selection', has only been tested on the supplementary health insurance purchase decision. However, the supplementary health insurance market is extremely heterogeneous, at least in the same way as beneficiaries' health risk levels. Between July 1st 2003 and December 31st 2006, a mutual insurance fund for state employees (Mutuelle générale de l'équipement et des territoires) offered existing holders of its supplementary cover ('MGET basic') an additional health coverage ('MGET+'). This particular context, where individuals covered from the same supplementary health insurance decide to pu...
Though the impact of co-payments on health care demand is well documented in developed countries, evidence from developing countries is rare. In this paper, we contribute to this scarcity by analysing the impact of increasing co-payments in a developing country, namely Vietnam. In 2007, the Vietnam government reintroduced a co-payment of 20 percent for individuals with voluntary health insurance. Because individuals with compulsory health insurance and the uninsured were exempted from the increase in co-payments, this policy can be regarded as a quasi-natural experiment. We use a difference-indifference approach to examine whether the increase in co-payment effectively reduces the demand for health care services. We find it has no significant negative impact on health care demand. This finding holds with different control groups, outcomes and estimators.