Results from a health insurance experiment in Burkina Faso suggest that when incentives are poorly designed, health insurance kills.
A study finds that expanding a voluntary community-based health insurance scheme in a low-income setting in Burkina Faso increased average population mortality by more than 20 percent relative to the sample mean. The effect was largest among the elderly. Though expanding insurance did not improve health, it did decrease the likelihood of catastrophic health expenditure by about 30 percent.
The authors conclude that the most plausible mechanism through which insurance affected population health is a “decline in (perceived) quality of care and resulting decrease in facility attendance.” Compared to those who were uninsured, those who were insured reported “less appropriate” facility hours, less staff availability, and poorer cleanliness.
Like the Accountable Care Organization model being promoted in our country, the insurance plan assumed that per patient lump sum transfers were superior to fee-for-service charges because they would incentivize health facilities “to engage in prevention, improve efficiency of service delivery and minimize the cost of treatment.” However,
these incentives appear to have had strong negative repercussions: by paying health centers a flat per capita payment for each person enrolled in their catchment area rather than service- or delivery-based payments, the insurance scheme removed the out-of-pocket service fees previously captured by health facilities…that constituted direct performance incentives for health workers…[leading to] low health-worker satisfaction and increased resistance of health worker [sic] to provide friendly, comprehensive, and high-quality care to the insured enrollees.
The program was not well liked by the local population. Take-up rates were below 10 percent. The expected annual net present value cost of individual treatment was close to or lower than the insurance premium, and given that providing care on a credit-basis was common practice for primary-care facilities,
not buying insurance may be the rational optimal choice, at least for individuals with sufficiently low risk-aversion and short-term financing options.