who buys sky? :
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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)
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