Rachel Polimeni University of California, Berkeley

David LevineUniversity of California, Berkeley

Ian RamageDomrei Research and Consulting

Supported by Grants from:AFD, USAID, CEDA, Fung

Special thanks to GRET and SKY for their participation

Sky Evaluation Dissemination Meeting4-5 October, 2011

Phnom Penh, Cambodia

Goldilocks problemIf only the rich and healthy buy

insurance, then limited social benefit

If primarily those with high future health care costs buy insurance, then not financially viable

Like Goldilocks, want “Just right” mix of customers

Our analysisWho buys SKY Micro-health insurance? Is it:

Rich?Risk averse?Trust public facilities?Peer effects?High expected health care costs?

Does higher price affect self-selection?Who drops out of SKY?

MethodologyQualitative

In depth interviews with 164 householdsAll SKY insurance members or once membersNot in villages with randomized evaluation

QuantitativeOne-hour questionnaire with over 5000

householdsHalf offered large discount for insuranceAround 1500 SKY members

Statistical analysisSKY member = F(

wealthrisk aversion few other options to paypast health and health care peer effects)

Compared to 25% average uptake.

Are SKY members the rich?SKY members are slightly richer than non-

membersAnd non-members are slighly poorer:

“My family didn’t join SKY immediately because I didn’t have enough money to pay the premium.”

But very few SKY members are prosperousRecall how few “prosperous” there are in rural

Cambodia

Risk averse?“I stay with SKY in case of a serious disease.

SKY provides strong support for my family because we can never know clearly when we are going to get a serious disease.”

Risk averse?Our survey measures of risk aversion do not

predict higher uptakeScenario question of whether you would take a

riskier job for more paySelf-report not having gambled recently

(wrong sign!)

Risk averse?Many did not understand SKY

“What’s the point of joining SKY and paying every month because nobody gets sick every single month?”

Trust public facility?2 point increase in

health center quality (about 1s.d. on a 25 point scale) raises uptake 3.0 percentage points***

“I joined SKY because I preferred the services of the public provider…They provide treatment until we are better and they have enough equipment and supplies…”

“[I joined because] SKY has good services and medicine,[the health centre] is near the home, and the treatment is free.”

Lack other optionsMore uptake if limited

self-insurance options: no family who would help, no zero-interest loan, etc.

“I joined with SKY as a protection for the future when we might have a serious disease, especially because my family doesn’t have the money to pay if we get a serious disease.”

Peer effectsHaving a neighbor with a recent large health

expense raised uptake 5 percentage points (P < .10)

Peer effectsReduces uptake: “I heard people in my village say that joining SKY is not useful and that it is a waste of money.”

• Increases uptake: “I joined SKY because I saw that SKY really helps and supports its members...For example, SKY gave money to a SKY member-who had someone in their family die

Many join because friends, family, or neighbors joined SKY

High expected costs?SKY members are not the elderlyMember in poor self-reported health

12.6 percentage points more likely to join

Major health shock 2-4 months prior to meeting added 6 percentage pointsLargely due to those who used public care

Quantitative: Selection by PriceCompare utilization of households that

purchase SKY at lower price (large discount) versus the regular priceUse SKY’s data on utilization of its

members

Theory predicts:No self-selection when zero price (and all

join)Higher price induces more self-selection

of those who expect high utilization

Results: Utilization by PriceIn the 3 months following SKY purchase,

households who paid more were:11 p.p.** more likely to visit health

center11 p.p.** more likely to visit hospital 41%** higher costs at public facilities

Differences remained after controlling for baseline characteristics 11 pp**, 8.5 pp*, 33%**, respectively

ImplicationSKY is attracting people who cost at least 40% or more > average rural CambodianGood news: Helping those who need it

Challenge: How to stay in business because the resulting higher price discourages those with average expected health care costs?

Some LessonsTargeting

Not much selection of the low cost (rich or cautious & healthy)

Those with high expected health care costs buy insurance more often

The challenge, part 1 Insurance still unattractive to most in

rural CambodiaThe challenge, part 2

SKY passes high expenditures to higher prices,

further lowering demand by those with low expected costs.

OpportunitiesImproving public care important for

uptake and retentionWord of mouth referrals are importantNeed to encourage understanding of SKY

Trial period or discounts may encourage hesitant buyers

Qualitative: Why Drop?Poor quality of care

Unavailability of drugsRude staffPerceived or real poor

treatment

Did not understand insurance: drop because no one ill

Could not afford premium

Heard negative things about SKY

“I dropped out of SKY because I went to get treatment twice but health centre staff told me to buy drugs at the Pharmacy, paid for by myself.”(Kulehn)

“I dropped out of SKY…because I think that nobody was sick and the Insurance Agent did not explain clearly about SKY services.”

“…my family dropped out of SKY because my cousin had high blood pressure and received badtreatment at the Health Centre. Many families in the village lost confidence in SKY and dropped out.” (Khnau)