Abstract
BackgroundAlthough most community-based health insurance (CBHI) schemes are voluntary, problem of adverse selection is hardly studied. Evidence on the impact of targeted subsidies on adverse selection is completely missing. This paper investigates adverse selection in a CBHI scheme in Burkina Faso. First, we studied the change in adverse selection over a period of 4 years. Second, we studied the effect of targeted subsidies on adverse selection.MethodsThe study area, covering 41 villages and 1 town, was divided into 33 clusters and CBHI was randomly offered to these clusters during 2004–06. In 2007, premium subsidies were offered to the poor households. The data was collected by a household panel survey 2004–2007 from randomly selected households in these 33 clusters (n = 6795). We applied fixed effect models.ResultsWe found weak evidence of adverse selection before the implementation of subsidies. Adverse selection significantly increased the next year and targeted subsidies largely explained this increase.ConclusionsAdverse selection is an important concern for any voluntary health insurance scheme. Targeted subsidies are often used as a tool to pursue the vision of universal coverage. At the same time targeted subsidies are also associated with increased adverse selection as found in this study. Therefore, it’s essential that targeted subsidies for poor (or other high-risk groups) must be accompanied with a sound plan to bridge the financial gap due to adverse selection so that these schemes can continue to serve these populations.
Highlights
Most community-based health insurance (CBHI) schemes are voluntary, problem of adverse selection is hardly studied
Dror et al [19] examined the Micro Health Insurance Units in Philippines and concluded that there was no adverse selection as the morbidities among the insured and uninsured was same as concluded by De Allegri et al [20] for the CBHI scheme in Burkina Faso
We first examined the change in adverse selection over time and second, we evaluated the effect of targeted subsidies on adverse selection
Summary
Most community-based health insurance (CBHI) schemes are voluntary, problem of adverse selection is hardly studied. We studied the effect of targeted subsidies on adverse selection. Adverse selection has been studied extensively in the context of high-income countries [12,13,14,15,16]. There are few studies from low and middle income countries that have analyzed adverse selection in CBHI schemes in detail. Dror et al [19] examined the Micro Health Insurance Units in Philippines and concluded that there was no adverse selection as the morbidities among the insured and uninsured was same as concluded by De Allegri et al [20] for the CBHI scheme in Burkina Faso. Resende and Zeidan [21] did not find adverse selection in the Brazilian individual health insurance market
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