Health Insurance, a Friend in Need? Evidence from Financial and Health Diaries in Kenya

51 Pages Posted: 5 Sep 2017

See all articles by Xin Geng

Xin Geng

International Food Policy Research Institute (IFPRI)

Vera Ide

PharmAccess Foundation

Wendy Janssens

VU University Amsterdam - Department of Development Economics

Berber Kramer

International Food Policy Research Institute (IFPRI)

Marijn van der List

PharmAccess Foundation

Date Written: July 28, 2017

Abstract

Health insurance can protect consumption from health shocks, but it can also crowd out informal transfers. This paper examines whether health insurance improves consumption smoothing in the face of health shocks, and to what extent results depend on households’ access to informal transfers as a risk coping strategy. Using high-frequency panel data on health and finances collected in rural Kenya, we show that mobile money users have stronger access to informal transfers than nonusers. We further find that health shocks induce nonusers of mobile money to lower their non-health expenditures by approximately 25 percent in weeks when they are uninsured. These same households are able to smooth consumption in weeks with insurance coverage, due to lower out-of-pocket health expenditures. In contrast, mobile money users are able to smooth consumption when experiencing health shocks even in the absence of health insurance, due to an inflow of informal transfers. For this group, health insurance improves healthcare utilization and does not crowd out the inflow informal transfers during weeks with health shocks. These findings have implications for the design of health insurance and mobile health financing products.

Keywords: Kenya, East Africa, Africa South of Sahara, Africa, Health Insurance, Mobile Money, Remittances, Informal Risk-Sharing

JEL Classification: D14, I13, O15

Suggested Citation

Geng, Xin and Ide, Vera and Janssens, Wendy and Kramer, Berber and van der List, Marijn, Health Insurance, a Friend in Need? Evidence from Financial and Health Diaries in Kenya (July 28, 2017). IFPRI Discussion Paper 1664, Available at SSRN: https://ssrn.com/abstract=3013326

Xin Geng (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

United States

Vera Ide

PharmAccess Foundation

Amsterdam
Netherlands

Wendy Janssens

VU University Amsterdam - Department of Development Economics ( email )

Netherlands

Berber Kramer

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Marijn Van der List

PharmAccess Foundation ( email )

Amsterdam
Netherlands

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