Arianna Ornaghi and co-authors study challenges for universal healthcare in developing countries

In the American Economic Review, they examine policy tools that might boost enrolment in contributory healthcare plans.

Over the last ten years, many developing countries have introduced contributory health insurance programmes aimed at reaching universal health coverage. While the programmes subsidise the poor, everyone else must pay a premium. Collecting these is difficult, because a large fraction of the population works in the informal sector, which is outside the tax net. Enrolment rates are low, and often the least healthy are most likely to enrol. Hertie School Assistant Professor of Economics Arianna Ornaghi has recently been involved in research assessing policy tools that might help mitigate these issues for developing countries trying to introduce healthcare programmes.

In a paper published in the September 2021 issue of the American Economic Review, Abhijit BanerjeeAmy FinkelsteinRema HannaBenjamin A. OlkenArianna Ornaghi and Sudarno Sumarto  examine a variety of policy tools that can be used to overcome these challenges. The researchers used a large-scale randomised control trial in Indonesia, a country that introduced a contributory health insurance system in January 2015. The experiment tested three ways to potentially increase enrolment of non-poor informal workers: large, time-limited subsidies, assistance with the registration process, and different types of information.

The study, “The Challenges of Universal Health Insurance in Developing Countries: Experimental Evidence from Indonesia's National Health Insurance”, finds that large, time-limited subsidies are effective at increasing enrolment. Importantly, this was true not only during the study period, but also after subsidies ended: households that randomly received subsidies were almost twice as likely to enrol compared to those that didn’t, even after the subsidy was discontinued. Also, subsidies induced healthier households to enrol.

Registration assistance also increased enrolment, but many more people tried to enrol online than were successful. In fact, many who tried also failed because of issues with the underlying civil registry data. This suggests that weak administrative capacity might be a key impediment to the success of these types of programmes in developing counties.

Finally, information had no impact on enrolment, suggesting that it was direct experience with health insurance that helped households understand its value.

Find the full paper here.

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