Selection and Behavioral Responses of Health Insurance Subsidies in the Long Run: Evidence from a Field Experiment in Ghana

TL;DR

This study uses a field experiment in Ghana to examine how different levels of health insurance subsidies influence long-term enrollment and healthcare utilization, revealing that partial subsidies foster sustained enrollment and increased utilization through experiential learning.

Contribution

It provides novel evidence on the long-term effects of partial versus full subsidies on insurance behavior and utilization, highlighting the role of learning behavior.

Findings

Both partial and full subsidies increase long-term enrollment.

Long-term healthcare utilization rises only with partial subsidies.

Learning behavior explains differences in utilization between subsidy groups.

Abstract

We conduct a randomized experiment that varies one-time health insurance subsidy amounts (partial and full) in Ghana to study the impacts of subsidies on insurance enrollment and health care utilization. We find that both partial and full subsidies promote insurance enrollment in the long run, even after the subsidies expired. Although the long run enrollment rate and selective enrollment do not differ by subsidy level, long run health care utilization increased only for the partial subsidy group. We show that this can plausibly be explained by stronger learning-through-experience behavior in the partial than in the full subsidy group.