Impact of Private Health Insurance on Lengths of Hospitalization and Healthcare Expenditure in India: Evidences from a Quasi-Experiment Study

Indian Journal of Economics & Development 1.1 (2013)

5 Pages Posted: 11 Apr 2013

See all articles by Sukumar Vellakkal

Sukumar Vellakkal

Public Health foundation of India (PHFI)

Date Written: April 10, 2013

Abstract

The health insurers administer retrospectively package rates for various inpatient procedures as a provider payment mechanism to empanelled hospitals in Indian healthcare market. This study analyzed the impact of private health insurance on healthcare utilization in terms of both lengths of hospitalization and per-day hospitalization expenditure in Indian healthcare market where package rates are retrospectively defined as healthcare provider payment mechanism.

The claim records of 94443 insured individuals and the hospitalisation data of 32665 uninsured individuals were used. By applying stepwise and propensity score matching method, the sample of uninsured individual was matched with insured and ‘average treatment effect on treated’ (ATT) was estimated.

Overall, the strategies of hospitals, insured and insurers for maximizing their utility were competing with each other. However, two aligning co-operative strategies between insurer and hospitals were significant with dominant role of hospitals. The hospitals maximize their utility by providing high cost healthcare in par with pre-defined package rates but align with the interest of insurers by reducing the number (length) of hospitalisation days. The empirical results show that private health insurance coverage leads to i) reduction in length of hospitalization, and ii) increase in per day hospital (health) expenditure.

It is necessary to regulate and develop a competent healthcare market in the country with proper monitoring mechanism on healthcare utilization and benchmarks for pricing and provision of healthcare services.

Keywords: Health insurance, Healthcare, India

JEL Classification: I11

Suggested Citation

Vellakkal, Sukumar, Impact of Private Health Insurance on Lengths of Hospitalization and Healthcare Expenditure in India: Evidences from a Quasi-Experiment Study (April 10, 2013). Indian Journal of Economics & Development 1.1 (2013). Available at SSRN: https://ssrn.com/abstract=2247893

Sukumar Vellakkal (Contact Author)

Public Health foundation of India (PHFI) ( email )

4 Institutional Area
Vasant Kunj
New Delhi, Delhi 110070
India

HOME PAGE: http://www.phfi.org

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