Demand for Health Insurance: Financial and Informational role of Informal Networks

Titir Bhattacharya, Tanika Chakraborty and Anirban Mukherjee
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Titir Bhattacharya: University of Warwick
Tanika Chakraborty: Indian Institute of Management Calcutta
Anirban Mukherjee: University of Calcutta

No 2mq5v, SocArXiv from Center for Open Science

Abstract: In response to a remarkably high out of pocket (OOP) health expenditure in India, various state and the national governments in India, tried to introduce public health insurance programs. Despite being free, the take up and utilization of these programs remain low. In this paper, we seek to explain this puzzle by studying the role of informal networks in explaining insurance-adoption behavior in the context of the Arogyasri health insurance program introduced in the erstwhile state of Andhra Pradesh between 2007 and 2008. We use household panel data from the Young Lives Survey (YLS) to empirically study how the adoption of Arogyasri among poor households respond to their membership in informal networks. In this context, we differentiate between two types of network – financial network and information network. We find that adoption and utilization are significantly higher for households with access to informal financial networks. However, adoption and utilization increases much more for households outside informal networks, after they experience health shocks. Information sharing role of informal networks do not seem to affect the decision to adopt insurance. We also provide a simple theoretical framework to discuss the potential mechanisms underlying our empirical results.

Date: 2024-10-29
New Economics Papers: this item is included in nep-dev, nep-hea and nep-net
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:2mq5v

DOI: 10.31219/osf.io/2mq5v

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