Using willingness to pay data to inform the design of health insurance for the poor: evidence from micro-

lending clients in Lagos, NigeriaNovember 1, 2012

Global Symposium on Health Systems Research

Payal HathiAyodeji Ajiboye

Abt Associates, Inc.

Background• Lack of access to health insurance can lead individuals to

forgo seeking care or to incur significant out-of-pocket expenses

• Limited access to health insurance in developing countries, particularly among informal sector workers

• PATHS2 (DfID-funded Abt Associates project) is working to expand coverage of health insurance among informal sector workers – Establishing links between Health Maintenance Organizations

(HMOs) and Micro-Finance Banks (MFBs) in Lagos State, Nigeria

PPPHI Network

Willingness to pay study

• The purpose of the study was to understand:– Clients’ interest in health insurance and willingness

to pay for it– Clients’ and their households’ demographic and

socio-economic characteristics– Health seeking behavior and health expenses– Knowledge and prior experience with of health

insuranceOverall, aim of study was to inform design and implementation of insurance package

Baseline characteristicsDemographic indicators

Spouse of HH head 73%Female 90%Age 39HH size 5Ever attended school 90%Primary school 25%Secondary school 54%Married 94%Own small business 77%Savings account 99%Total savings 26,329 Naira (168 USD) Current outstanding loan 66%Total loan amount 37,945 Naira (242 USD)

HEALTH INDICATORS

Health event in last month (in HH) 14%Health event in last month (among clients) 8%Type of provider

OPD only 61%IPD only 9%OPD & IPD 1%No provider 30%

Average cost of treatment OPD visit (Naira) 5,088 Naira (32 USD)

IPD visit (Naira) 8,262 Naira (53 USD)

KNOWLEDGE/EXPERIENCE WITH HEALTH INS.

Clients who had ever heard of insurance 40%Clients who have heard of health insurance 13%Clients who have ever used health insurance 2%

Outpatient only Childbirth only Inpatient & Outpatient

Inpatient only Pharmaceuticals only

0%

5%

10%

15%

20%

25%

30% 28%

20%19% 18%

17%

Most preferred insurance package

Package preference breakdown

• Age: The childbirth package is most popular among those aged 16-29 and 30-39. In all other age groups, the outpatient package is most popular

• Wealth: Across all asset quintiles, the outpatient package is most preferred

• Health events: Those with 0-2 health events most preferred the outpatient package. Those with 3+ health events most preferred the outpatient + inpatient package

• Location: In both urban and peri-urban areas, the outpatient package was most preferred, while in rural areas, the childbirth package was most preferred

• Gender: Women most prefer the outpatient package, followed by the childbirth package. Men most prefer the outpatient + inpatient package, followed by the childbirth package.

Childbirth Pharmaceuticals only

Inpatient only Inpatient & Outpatient

Outpatient only0

200

400

600

800

1,000

1,200

972843 820 801

695

Average willingness to pay by type of coverage (Naira)

WTP for health insurance relative to health expenditure and total consumption

• On average, clients spend 2.85% of monthly consumption on health events.

• Given clients’ WTP 813 Naira per month for health insurance, they are willing to spend more than 10% of monthly consumption on health insurance.

• Clients are willing to pay almost 4 times their monthly spending on health to purchase insurance.

Monthly consumption

(n = 1,239)

Monthly health

expenditure (n = 1,239)

HE/Total Consumption

WTP for 1st choice

package (n = 1,117)

WTP/TC per respondent

WTP/HE per respondent

TOTAL 7,720 220 2.85% 813 10.53% 3.70

Incentives for enrollment

• Most popular incentives to motivate enrollment:– Education about health insurance (58%)– Free health check-up (53%)– Premium reduction (41%)– Other goods: cookware (39%), airtime (36%), bed nets (33%)– Rewards program for health visit (35%) or food (32%)

• Small presents that clients would like to be offered:– Household needs (75%)

• Large electrical appliances (33%), cash (14%), car (8%)

– Loan (8%)

Informing insurance product design

• Marketing about health insurance is critical given low knowledge and exposure

• Marketing and distribution adapted to demographics

• Overall interest in health insurance, particularly outpatient coverage

• Relatively high WTP for insurance• Premium financing• Transportation and cash support integration• Incentives for take-up

Follow-up research

Even when insurance coverage is offered at an “affordable” price with desirable benefits, there may still be low take-up

Purpose of follow-up study:• Evaluate the role of different “nudges” and their

effect on insurance take-up• Evaluate the impact of insurance coverage on access

to care, financial risk protection, health outcomes, and willingness to renew insurance

Methodological approach

• Select 1 MFB/HMO pair where new health insurance package will be offered

• Randomize the offer of incentives linked to insurance take-up– Group 1: nudge 1 (airtime?)– Group 2: nudge 2 (price reduction?)– Group 3: nudge 3 (in-depth marketing)– Group 4: offer insurance but no nudge

Methodological approach• RCT design to evaluate impact of different nudges on

take-up of health insurance• Randomized encouragement design to identify impact

of health insurance on key outcomes of interest– Cannot withhold insurance offer or mandate take-up– Use nudges to differentially incentivize take-up

• Treatment group = all individuals eligible for nudges• Control group = individuals offered insurance with no nudge

– Compare differences in outcomes between those who take-up insurance as a result of nudge, and those who do not take-up insurance in the control group

THANK YOU