PROJECT

INSURANCE EFFECTS AND HEALTH CARE UTILIZATION: EVIDENCE FROM GHANA'S M-INSURANCE REVOLUTION

Researcher: Francis Annan, PhD Student in Sustainable Development

Fueled by the rapid increase of mobile phone use in developing countries, “Mobile-insurance"—insurance products which are delivered on digital mobile networks—have become commonplace and sparked much interest among development agencies and practitioners recently as a prevalent way to help societies manage their risks and vulnerability. But in the wake of rising healthcare costs and vital policy discussions over health reforms and insurance in these countries, e.g., universal health insurance coverage, excessive utilization of healthcare is an important subject. One crucial concern is the ability to pin down how the new innovative and health-related M-insurance markets create incentives that lead to over-utilization. In addition to potential over-utilization on the margin, the interaction between M-insurance and healthcare utilization allows us to identify incentive or asymmetric information issues in insurance markets.

Because variations in hospital admissions and utilization are jointly determined by both supply and demand incentives, in general it is difficult to empirically estimate the causal effect of insurance on hospitalizations and healthcare utilization. This project relies on a quasi-experiment to study the impact of M-insurance on hospital admissions and healthcare utilization. The project exploits the exogenous introduction of the new innovative M-insurance on cell phone platforms in Ghana that is most likely not correlated with unobserved determinants of supply. This is combined with matched administrative records on mobile activity and healthcare to examine the impact of M-insurance on general utilization in healthcare. Results from the project will have broader implications for both healthcare expenditure and financial inclusion policies in Ghana.