Health insurance, a friend in need? Impacts of formal insurance and crowding out of informal insurance

Xin Geng, Wendy Janssens, Berber Kramer*, Marijn van der List

*Corresponding author for this work

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Abstract

Health insurance can improve health-seeking behaviors and protect consumption from health shocks but may also crowd out informal insurance. This paper therefore examines whether impacts of health insurance depend on households’ access to informal insurance, as proxied for by mobile money usage. Based on high-frequency financial diaries data collected in rural Kenya, we find that households with weaker access to informal insurance cope with uninsured health shocks by lowering subsequent non-health expenditures by approximately 25 percent. These same households are able to smooth consumption when health shocks are insured, due to lower out-of-pocket health expenditures. In contrast, households with access to informal insurance are able to smooth consumption even in the absence of formal health insurance. For this latter group, health insurance increases healthcare utilization at formal clinics and does not crowd out gifts and remittances during weeks with health shocks. These findings provide guidance for insurance schemes aiming to target the most vulnerable populations.

Original languageEnglish
Pages (from-to)196-210
Number of pages15
JournalWorld Development
Volume111
DOIs
Publication statusPublished - Nov 2018

Funding

Xin Geng, Wendy Janssens and Berber Kramer certify that they have NO affiliations with or involvement in any organization or entity with any financial interest (such as honoraria; educational grants; participation in speakers’ bureaus; membership, employment, consultancies, stock ownership, or other equity interest; and expert testimony or patent-licensing arrangements), or non-financial interest (such as personal or professional relationships, affiliations, knowledge or beliefs) in the subject matter or materials discussed in this manuscript. Marijn van der List reports the following details of affiliation or involvement in an organization or entity with a financial or non-financial interest in the subject matter or materials discussed in this manuscript: she has been employed by the PharmAccess Foundation, which funded data collection and is implementing the TCHP (the program studied in the paper). Her affiliation with PharmAccess has not influenced the findings and the content of this paper, and the opinions expressed in this paper are not necessarily those of PharmAccess. We gratefully acknowledge the PharmAccess Foundation and the Health Insurance Fund for funding and facilitating our research, and the Netherlands Organisation for Scientific Research (NWO Veni Grant no. 451-10-002) for funding of Janssens’ research time. In particular we thank Vera Ide for her initial contributions to the paper; Annegien Wilms, Yano Edward, Sicco van Gelder, and Hielko Bartlema for their collaboration; David Pap and Lukasz Marc for excellent program and data management; Mike Murphy for his outstanding research assistance; and Hilda Kiritu and Hulda Kibera from Ipsos Synovate Kenya for managing data collection. Three anonymous referees and participants in the NOVAfrica Conference on Economic Development in Africa provided helpful suggestions. We are grateful for our respondents’ time, patience and dedication to the study. This work was undertaken as part of the CGIAR Research Program on Policies, Institutions, and Markets (PIM), which is led by IFPRI and funded by CGIAR Fund Donors. This paper has not gone through IFPRIs standard peer-review procedure. The opinions expressed here belong to the authors and do not necessarily reflect those of PIM, IFPRI, or CGIAR. Appendix A

FundersFunder number
CGIAR
Health Insurance Fund
PharmAccess Foundation
TCHP
Nederlandse Organisatie voor Wetenschappelijk Onderzoek451-10-002

    Keywords

    • Africa
    • Financial diaries
    • Health insurance
    • Informal insurance
    • Kenya

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