Understanding SKY Micro-Health Insurance: Who's Buying and Why?

1. Who Buys Sky?: Rachel Polimeni University of California, Berkeley David Levine University of California, Berkeley Ian Ramage Domrei Research and Consulting Supported by Grants from: AFD, USAID, CEDA, Fung Special thanks to GRET and SKY for their participation Sky Evaluation Dissemination Meeting 4-5 October, 2011 Phnom Penh, Cambodia

2. Goldilocks problem • If 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

3. Our analysis • Who 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?

4. Methodology • Qualitative • In depth interviews with 164 households • All SKY insurance members or once members • Not in villages with randomized evaluation • Quantitative • One-hour questionnaire with over 5000 households • Half offered large discount for insurance • Around 1500 SKY members

5. Statistical analysis • SKY member = F( wealth risk aversion few other options to pay past health and health care peer effects) Compared to 25% average uptake.

6. Are SKY members the rich? • SKY members are slightly richer than non-members • And 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 prosperous • Recall how few “prosperous” there are in rural Cambodia

7. 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.”

8. Risk averse? • Our survey measures of risk aversion do not predict higher uptake • Scenario question of whether you would take a riskier job for more pay • Self-report not having gambled recently • (wrong sign!)

9. 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?”

10. Trust public facility? • 2 point increase in health center quality (about 1s.d. on a 25 point scale) raises uptake 3.0 percentage points***

11. Lack other options • More 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.”

12. Peer effects • Having a neighbor with a recent large health expense raised uptake 5 percentage points (P < .10)

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

14. Many join because friends, family, or neighbors joined SKY

15. High expected costs? • SKY members are not the elderly • Member 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 points • Largely due to those who used public care

16. Quantitative: Selection by Price Compare utilization of households that purchase SKY at lower price (large discount) versus the regular price Use 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

17. Results: Utilization by Price In the 3 months following SKY purchase, households who paid more were: 11 p.p.** more likely to visit health center 11 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

18. Implication • SKY is attracting people who cost at least 40% or more > average rural Cambodian • Good 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?

19. Some Lessons • Targeting • 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 Cambodia • The challenge, part 2 • SKY passes high expenditures to higher prices, • further lowering demand by those with low expected costs.

20. Opportunities • Improving public care important for uptake and retention • Word of mouth referrals are important • Need to encourage understanding of SKY • Trial period or discounts may encourage hesitant buyers

21. Qualitative: Why Drop? • Poor quality of care • Unavailability of drugs • Rude staff • Perceived or real poor treatment • Did not understand insurance: drop because no one ill • Could not afford premium • Heard negative things about SKY

22. END SELECTION RESULTS