Rebecca Thornton, University of Michigan April 2, 2009

1. Health Insurance in Nicaragua: A Randomized Evaluation Rebecca Thornton, University of Michigan April 2, 2009 Laurel Hatt & Mursaleena Islam, Abt; Barbara Magnoni, EA Consultants; Freddy Solís, ALVA Consultores; Erica Field, Harvard

2. Motivation • Health insurance can mitigate shocks faced by informal workers • Low rates of enrolling in health insurance • How does having health insurance assist informal workers?

3. This paper • What are the determinants of health insurance enrollment? • Is information enough? • How important are cost factors or convenience? • Is there adverse selection? • Can local MFIs assist in the delivery? • What is the impact of health insurance? • What happens to utilization and expenditures? • What are the determination of retention? • How does MFI status/cooperation affect retention?

4. Econometric Challenges • Most studies use cross-sectional or longitudinal data; typical strategy: • Compare demographic data and health status/utilization between those with and without insurance or compare individuals before and after having health insurance • Limitations • Difficult to quantify the most important determinants of uptake • Choice to have health insurance is endogenous • More health conscious or higher income  upward bias • Less healthy  downward bias

5. Experimental Design • “Ideal experiment” to study the impact of health insurance: randomly force individuals to have health insurance. Then measure the effects • Problem • Can’t force individuals • Couldn’t measure what affects health insurance take-up • Encouragement design: Randomly encourage some to get health insurance

6. Insurance Program • Prior to January 2007, only formal sector workers had insurance • Social Security Institute (INSS) extended health insurance to informal workers • Partner with 3 MFIs to facilitate subscription • Cost • $18 first two months (no coverage); $15 monthly in subsequent months • pre-paid plan, no reimbursement or co-pay • Coverage • Spouse eligible for maternity services • Dependent children under 12 eligible • Comprehensive: preventive, diagnostic, and curative

7. Baseline Survey • Representative sample in largest Managua markets (~June 2007) • Eligibility • Business owners ages 18-55 • Had government ID card • No formal insurance • 2 Rounds of Baseline survey to calibrate the experiment • Round 1: Randomly select eligible respondents from a sample frame • Round 2: Interview all eligible respondents from a market census

8. Randomization • Encouragement design: Lottery at end of the survey • Signing up: Government ID, photo • Travel to an institution

9. Randomization • Convenience experiment • Randomly selected individuals for door to door affiliation in one market • Conditional on not signing up already – not randomly selected at the beginning

10. Affiliation • Measure uptake of insurance • Download data from INSS • Merge with survey and lottery data – government ID

11. Follow-up Survey • Conduct a follow-up survey in 2008 of a subsample of respondents • Only interview in the 3 largest markets • Exclude those offered 2 month subsidies • 93% completion rate • Rates of attrition

12. Empirical Strategy • Uptake of insurance • Effects of having insurance • 2608 respondents interviewed at baseline and follow-up • Retention (among those who enrolled)

13. Results: Insurance Take-up • Informational brochure alone had no impact on take-up • Cost an important issue: large impact of subsidies • Other factors important: many people still do not sign up

14. Results: Insurance Take-up • Individuals significantly more likely to go to the INSS

15. Insurance Take-up: Door to door • Door-to-door offer more effective than 2 months subsidy • Adding door-to-door almost doubles take-up for subsidy winners

16. IV Results: Utilization and Expenditures

17. Other Effects • No impact on • Utilization of preventative care such as: General check up, Prenatal test, Pap Smear, Blood pressure, Blood test, Urine test • Sick days • Wait before going to MD • # times sick? • Caveats • Few people insured • Only insured for 6 months

18. Results: Retention

19. Summary of Results • Enrollment • Low rates of signing up • Informational brochure not main barrier to signing up • Costs and convenience important • No health effects, only substitution • Switch out of public clinic and costly private clinics to EMPs • Large savings in out of pocket expenditures • Savings especially large for costs of laboratory, pharmacy and private clinics with insurance • Cost of health insurance ($178) higher than baseline health expenditures ($87) • Savings did not “make up” for cost of insurance • Retention rates: less than 10%

20. Conclusions • Lessons learned • Cost and convenience important in insurance enrollment • Retention a challenge • Determinants of enrollment and retention include quality, convenience, trust/reliability, and satisfaction • Thinking about other programs • Strong institutional capacity and partnerships is essential • Quality is essential to ensure satisfaction • MFIs face challenges in delivering insurance

22. Additional slides

23. Baseline Health Behavior

24. Baseline Health Behavior • Many self-medicate and visit pharmacies • Visits to both private and public providers

25. Results: Insurance Take-up • Where did individuals enroll? (N=530)

26. Qualitative Methods • Individual Interviews (2007) • 40 randomly selected subsidy winners in Huembes market who had not signed up for insurance. • 20  survey participants who had registered for insurance • Focus Group Discussions (2008) • 9 focus group discussions stratified across those who got subsidies and did not and those who signed up and did not (73 people) • Sampled respondents by phone and visited their market stall • Discussions held at locations near each market. • All participants paid approximately 5 dollars.

29. What do we learn? • How do we contextualize the empirical findings? • Qualitative research • Won the subsidy but did not sign up • Most said intended to sign up; half said they didn’t have the time • Trouble obtaining required documentation (photos, copy of ID card, children’s birth certificates, and subscription forms) • Did not fully understand the affiliation process. • Confusion about the insurance product • Legitimacy that this was a “real” product; proof of enrollment; getting trapped paying • MFIs vs. INSS • EMPs