The Effect Of Parents’ Insurance Enrollment On Health Care Utilization: Evidence From Ghana Gissele Gajate-GarridoClement Ahiadeke IFPRI ISSER-University of Ghana IFPRI ISSER-University of Ghana "Leaders in Development" Seminar Series February 27, 2013

Research question What is the impact of parental participation in the National Health Insurance Scheme (NHIS) on health care utilization in Ghana?

Contributions to the literature  This paper is the first attempt to look at the impact of parental participation in the NHIS on both curative and preventive health care utilization in Ghana using information from the whole country.  It uses exogenous variation in insurance participation to correct for the potential endogeneity  The variation comes from the variability in membership rules of the District Mutual Health Insurance Schemes (DMHIS) located in every district in Ghana

Summary of findings  Insurance membership increases the probability of parents:  Seeking higher quality, but not greater quantity of prenatal services  Becoming more active users of child curative care (covered by the NHIS)  Becoming more active users of child preventive care (not covered by the NHIS)  These findings are consistent with the idea that when curative services become available for free, parents become more proactive towards other kinds of health care utilization practices (sibling hypothesis, access hypothesis, information hypothesis)

Summary of findings  IV estimates are larger than OLS ones indicating underlying heterogeneity in returns to NHIS participation  “Compliers” have much higher returns to participating in the NHIS than the average participant  We verify the exogeneity of the instrument using pre scheme data.  We also collect data on barriers to health care access in districts, as well as challenges to participate in a DMHIS so we can control for district characteristics that determine both membership rules and health care seeking behaviors

Outline  Motivation  The NHIS and the district membership rules  Data  Identification Strategy  Specification  Results and Discussion  Instrument Strength and Validity  Conclusion

Motivation  Access to and utilization of health services continues to be a main concern in poor countries such as Ghana.  Delaying medical treatment or choosing self-treatment can generate serious health consequences (Hadley 2002).  Young children are particularly susceptible to negative health shocks that can generate nutritional deficits and cognitive disabilities.  Early experiences are particularly important for future skill development and establishment of mental potential (Knudsen, Heckman, Cameron and Shonkoff 2006 and Heckman 2007).  If implemented correctly health insurance systems could provide an effective solution to this challenge.

The NHIS  The National Health Insurance Act (Act 560) which created Ghana’s National Health Insurance Scheme (NHIS) was passed in Yet, the scheme became operational only in March 2004 (Hsiao & Shaw 2007).  Before this scheme was implemented Ghana had a “cash and carry system” of health delivery. Under this system, patients – even those who had been brought into the hospital on emergencies – were required to pay money at every point of service delivery.

The NHIS  The most popular insurance plan is the District-Wide Mutual Health Insurance Scheme 1 which operates in every district in Ghana. This is the insurance scheme analyzed in this paper.  It covers over 95% of disease conditions that afflict Ghanaians and around 40% of our sample is enrolled in it.  People pay an annual fee according to their income, yet the government subsidizes pensioners, the old (70+), the core poor or indigent and the children and dependents below 18 of parents that participate in the system. 1 97% of people with an insurance plan are registered in a DMHIS (DHS 2008)

District Mutual Health Insurance Schemes  The law establishes that the District Mutual Health Insurance Schemes (DMHIS) are autonomous entities.  Each scheme in each district is completely independent of any other in the country with independent boards of directors.  Schemes do not pool risks together in any way.  Hence membership rules vary across different DMHIS.  This source of exogenous variation is used for identification of parental participation in the NHIS

Membership rules  The existence of exceptions that allowed children to benefit from the NHIS without their parents being registered  this could increase child participation in the scheme.  The verification methods employed by the DMHIS to ensure parents were registered in the NHIS in order for their children to benefit  Easier methods, more participation.

Membership rules  The amount of money paid to renew insurance cards both for adults and children vary across districts  Districts with higher renewal fees would probably discourage participation of marginal participants.  The waiting periods for both adults and children when registering  Longer wait, less participation.

Data  The 2008 Ghana Demographic and Health Survey (GDHS) is the main source of data for this study. This survey is carried out by the Ghana Statistical Service and the Ghana Health Service.  This is a national survey designed to collect information on housing and household characteristics, education, maternal health and child health, nutrition, family planning and gender.

Data  In addition we carried out a census of all the District Mutual Health Insurance Schemes (DMHIS) in existence in The census contains information on the membership rules in each of the 145 DMHIS licensed by  This census also contains district level information on health services delivery in the community during  Despite the availability of a health insurance program, families might not decide to join if they perceive the services they could access through this system as deficient.

Outcomes analyzed  Curative child health care utilization  If mothers chose to deliver at a health facility  If they treat their children with antimalarial medication when they are sick with either a fever or cough  If they seek advice from a health provider when their children experience a fever or cough

Outcomes analyzed  Quantity and quality of maternal health services  Number of prenatal visits sought  If pregnant women were told about pregnancy complications during prenatal visits  If they had urine and blood samples taken during pregnancy  Preventive child health care utilization.  Vaccination rates (for yellow fever, BCG, DPT/HepB/ Influenza 2)  If the child slept under a mosquito bed net the previous night.

Descriptive Statistics by insurance participation Source: DHS 2008 Not registered in the DMHIS Registered in the DMHIS NMeanN DiffP-value Child Gender (male) ** Child Age (in years) ** Child is a twin Mother's educational attainment *** Mother currently pregnant Children born in the last 5 years *** Number of living children ** Mother’s Age (in years) ** Mother currently working * Household head is male Wealth Index *** Type of place of residence (0 rural, 3 urban) *** Population in millions (region) *** # of facilities per 100,000 people (region) Distance to doctor (km) ** Distance to private hospital (km) ** Dummy for poor regions

Descriptive Statistics by insurance participation Source: DHS 2003 and 2008, P-values are reported from t-test on the equality of means for each variable. * p<.10; ** p<.05; *** p<.01 Not registered in the DMHIS Registered in the DMHIS NMeanN DiffP-value Curative child health care Delivery at health facility *** Anti-malarial medication taken for fever/cough *** Seek medical treatment - child has fever/cough *** Quantity and quality of maternal health care Number of prenatal visits *** Told about pregnancy complications *** Urine sample taken during pregnancy *** Blood sample taken during pregnancy *** Preventive child health care BCG rate *** DPT/HepB/ Influenza 2 rate *** Yellow fever vaccine rate Child slept under mosquito net ***

Identification Strategy  One of the main difficulties in identifying the effect of joining a health insurance scheme on child health care utilization is selection bias or omitted variable bias.  Omitted variable bias is an issue because people who participate less in formal health insurance systems may do so because, for example, of their wealth or education level which in turn could affect child health care use. To address this concern we include a wide range of covariates as controls.  Nonetheless, unobserved characteristics that cannot directly be controlled for remain a concern.

Identification Strategy  For example the household level of risk aversion could induce parents to choose to enroll in a health insurance plan and also affect their ability to care for their child.  Moreover, a household could decide to spend more or less in health inputs (such as health insurance) according to the health capital of their children. Parents with healthier children might participate more (favorable selection) in health insurance schemes. Conversely, parents with frailer children might decide to enroll more frequently (adverse selection).

Identification Strategy  To address this endogeneity problem we use an instrumental variable approach. The exogenous variation in the decision to join the National Health Insurance system comes from the variations in the membership rules in each DMHIS.  We would expect parental participation to be higher in districts where membership rules are less stringent or more straightforward.

Testing the IV’s exogeneity  Before the creation of these offices, government officials in the different DMHIS could have chosen to establish their membership rules to make them less stringent in districts that had:  Lower child health care utilization rates or worse maternal health care  Higher poverty, malaria or fertility rates  To test this hypothesis we use the 2003 DHS data (the best health indicators available in Ghana at the time the NHIS was created and before the district rules were actually established) and run regressions for each instrument chosen on each of the outcomes examined in the paper, as well as on district level poverty, malaria and fertility rates.  The results show the instruments chosen are indeed exogenous.

Testing the IV’s exogeneity  The results could also be biased by the existence of district characteristics that determine both membership rules and health care seeking behaviors.  Higher barriers to access health care in a district as well as greater challenges to participate in a DMHIS could also imply lower health care utilization rates. E.g.  Low quality/quantity health care  Poor road network  High rate divorce/single parenthood  Lack of education/preference for traditional medicine  To discard such a hypothesis we test that the results obtained are not affected after introducing both barriers affecting children's access to health care in 2008, as well as challenges to participation in the DMHIS. The results confirm that the IV coefficients are not biased.

Specification  First stage (1)  I ij is a dummy indicating whether mother i is registered in the DMHIS in district j,  Z 1j to Z 3j = membership rules in district j  X t c, X t M, X t H, X t R = child, mother, household and community characteristics  Second stage (2)  C ij = child or maternal health care utilization choice   ij = unobserved attributes related to both the mother and the child such as resilience, maternal risk aversion, initiative and determination.  Robust standard errors are used.

Results OLS and IV Estimation - Impact of NHIS participation on child health care practices Source: DHS 2008 and DMHIS 2008 Census. Note: The estimations include the following controls: child’s gender and age, mother’s age and educational attainment, the number of children born in the last 5 years, the number of living children older than 5, whether the mother is currently pregnant and whether she is currently working, sex of the household head, the household’s wealth level, the place of residence, the population level in each region (in millions), and a dummy if the household belongs to one of the three poorest regions in Ghana, the distance from the district to the nearest doctor and the nearest private hospital (in km), the number of facilities per 100,000 people in each region. The first 2 estimations (delivery at a health facility) also include as a control if the child was a twin, but do not include a control for whether the mother is currently pregnant. Instruments chosen for specification 2: the existence of an exception for children born out of wedlock; the renewal fees for non-exempt adults and the renewal fees for children. Instruments chosen for specification 4 and 6: the existence of an exception for children born out of wedlock; the existence of non-standard verification method and the renewal fees for non-exempt adults. Robust standard errors in parentheses, * significant at 10%; ** significant at 5%; *** significant at 1%. Child health care utilization Delivery at health facility Anti-malarial medication taken Seek medical treatment OLSIVOLSIVOLSIV (1)(2)(3)(4)(5)(6) NHIS Participation (0.020)***(0.134)**(0.035)(0.161)**(0.037)***(0.162)*** Other ControlsYES N R2R

OLS and IV Estimation-Impact of NHIS participation on maternal health care practices Source: DHS 2008 and DMHIS 2008 Census. Note: The estimations include the following controls: if the child was a twin, mother’s age and educational attainment, the number of children born in the last 5 years, the number of living children older than 5, whether the mother is currently working, sex of the household head, the household’s wealth level, the place of residence, the population level in each region (in millions), and a dummy if the household belongs to one of the three poorest regions in Ghana, the distance from the district to the nearest doctor and the nearest private hospital (in km) as well as the number of facilities per 100,000 people in each region. Instruments chosen for all specifications except 3 and 4: the existence of an exception for children born out of wedlock; the renewal fees for non-exempt adults and the renewal fees for children. Instruments chosen for specifications 1 and 2: the existence of a non-standard verification method; the renewal fees for non-exempt adults and the renewal fees for children. Robust standard errors in parentheses, * significant at 10%; ** significant at 5%; *** significant at 1%. Maternal health care Number of prenatal care visits Told about pregnancy complications Urine sample taken during pregnancy Blood sample taken during pregnancy OLSIVOLSIVOLSIVOLSIV (1)(2)(3)(4)(5)(6)(7)(8) NHIS Participation (0.529)(0.878)(0.023)*(0.136)**(0.015)***(0.090)***(0.019)***(0.092)*** Other ControlsYES N R2R

OLS and IV Estimation-Impact of NHIS participation on preventive child health care practices Preventive child health care practices Vaccination rates Child slept under a mosquito bed net BCGDPT/HepB/ Influenza 2Yellow fever vaccine OLSIVOLSIVOLSIVOLSIV (1)(2)(3)(4)(5)(6)(7)(8) NHIS Participation(0.008) **(0.074) **(0.014) *(0.102) **(0.015) *(0.110) **(0.020) **(0.121) ** ControlsYES N R2R Source: DHS 2008 and DMHIS 2008 Census. Note: The estimations include the following controls: child’s gender and age, mother’s age and educational attainment, the number of children born in the last 5 years, the number of living children older than 5, whether the mother is currently pregnant and whether she is currently working, sex of the household head, the household’s wealth level, the place of residence, the number of facilities per 100,000 people in each region, the population level in each region (in millions), and a dummy if the household belongs to one of the three poorest regions in Ghana. Instruments chosen for all specifications except 7 and 8: the existence of an exception for children born out of wedlock; the renewal fees for non-exempt adults and the renewal fees for children. Instruments chosen for specifications 7 and 8: the existence of a non-standard verification method; the renewal fees for non-exempt adults and the renewal fees for children. Robust standard errors in parentheses, * significant at 10%; ** significant at 5%; *** significant at 1%.

Discussion  The OLS coefficients are biased downwards: parents with frailer children could decide to enroll more frequently in the NHIS to provide their children with more curative care.  Adverse selection means underlying heterogeneity in returns to NHIS participation.  IV estimates are substantially larger than OLS estimates because IV calculates local average treatment effects (LATE) in contrast to average treatment effects (ATE).  Membership rules variances do not affect participation decisions of all parents. Parents that to begin with have positive health behaviors are probably not discouraged to join the NHIS by slight variations in membership rules.

Discussion  On the other hand, a subgroup of parents did decide to participate in the NHIS merely because the membership rules in their district were less stringent, but would not have participated otherwise. These are probably parents that are not so keen on health practices.  The IV estimation measures the impact of participating in the NHIS on the health care behaviors of these “compliers”.  If “compliers” have much higher returns to participating in the NHIS, then our IV estimates will be larger than the average marginal return to NHIS membership.

Compliers are more likely to …  Have children born out of wedlock  they have a higher cost of becoming members of the NHIS (single income household). Hence, reductions to membership costs and easier access would motivate these parents much more than the average parent to enroll and take advantage of the health services provided by the system.  Have children who are frailer at birth  a frailer baby would benefit much more from both preventive and curative care if his/her parents have access to health insurance, which means they would be much more active users of these services.

Compliers are more likely to …  Live in a district with lower levels of education and a higher reliance on traditional medicine  they would probably be less eager consumers of professional health services unless prompted by easier access to insurance services.  Live in districts with poor road networks  with health insurance parents can afford more expensive health facilities closer to home. Hence parents who live in areas with particularly bad transportation networks might value access to health insurance much more than the average parent and use health services more frequently.

Instrument Strength and Validity  The instruments chosen are relevant for all specifications:  They are significant at a 1% level and display a non- immaterial effect on the probability of being covered by the NHIS.  The signs of the coefficients are in line with expectations.  They are strong according to Stock et al. (2002)  The F statistic ensured that the maximal bias of the IV estimator relative to OLS is no larger than 5%.  The results of over identification tests are consistent with instrument exogeneity.

Dependent variable:Covered by NHIS Sample defined by the availability of the second stage variable Seek medical treatment / medicine Delivery at health facility Pregnancy complications Urine/ Blood sample BCG DPT/H/I 2/ Yellow fever Mosquito net Exception for children born out of wedlock(0.036) *** (0.023) *** (0.027) *** (0.020) *** Renewal fees adults (0.002) *** (0.001) *** Renewal fees for children (0.008) *** (0.009) *** (0.007) *** Non-standard verification method(0.045) *** (0.032) *** (0.025) *** N Partial R 2 of excluded instrument F-test for weak identification Hansen J statistic  2 P- value First stage estimation - Impact of membership rules on the probability of being covered by the NHIS Source: DHS 2008 and DMHIS 2008 Census

Conclusion  The main objective of this research paper is to look at the impact of parental participation in the NHIS on health care utilization in Ghana.  This is the first attempt to look into this particular outcome.  This study overcomes the difficulties in identifying the effect of joining a health insurance scheme on child health care utilization by using an instrumental variables approach.  The instrumental variable estimations show positive and statistically significant coefficients which are much bigger than the ones obtained using OLS regressions.  The results are consistent with coefficients biased downwards in the initial estimations.

Conclusion  This paper calculates local average treatment effects (LATE) in contrast to average treatment effects (ATE).  Since “compliers” have much higher returns to participating in the NHIS, IV estimates are larger than the average marginal return to NHIS membership.  This is not a shortcoming of this paper, because, for policy evaluation purposes, it might be more relevant to calculate the average return to NHIS participation for the group who will be impacted by changes in membership rules than to calculate the average marginal return for the whole population.