Working Paper: NBER ID: w26204
Authors: Abhijit Banerjee; Amy Finkelstein; Rema Hanna; Benjamin A. Olken; Arianna Ornaghi; Sudarno Sumarto
Abstract: To assess ways to achieve widespread health insurance coverage with financial solvency in developing countries, we designed a randomized experiment involving almost 6,000 households in Indonesia who are subject to a nationally mandated government health insurance program. We assessed several interventions that simple theory and prior evidence suggest could increase coverage and reduce adverse selection: substantial temporary price subsidies (which had to be activated within a limited time window and lasted for only a year), assisted registration, and information. Both temporary subsidies and assisted registration increased initial enrollment. Temporary subsidies attracted lower-cost enrollees, in part by eliminating the practice observed in the no subsidy group of strategically timing coverage for a few months during health emergencies. As a result, while subsidies were in effect, they increased coverage more than eightfold, at no higher unit cost; even after the subsidies ended, coverage remained twice as high, again at no higher unit cost. However, the most intensive (and effective) intervention – assisted registration and a full one-year subsidy – resulted in only a 30 percent initial enrollment rate, underscoring the challenges to achieving widespread coverage.
Keywords: health insurance; randomized experiment; Indonesia; universal coverage; adverse selection
JEL Codes: I13; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| one-year full subsidy (H20) | health insurance enrollment (I13) |
| half-subsidy treatment (H23) | health insurance enrollment (I13) |
| assisted registration (K16) | health insurance enrollment (I13) |
| temporary subsidies (H23) | health insurance enrollment (I13) |
| temporary subsidies (H23) | adverse selection (D82) |
| information treatments (C22) | health insurance enrollment (I13) |
| assisted registration plus full subsidy (H53) | health insurance enrollment (I13) |