1. Rachel Polimeni University of California, Berkeley David Levine University of California, Berkeley Ian Ramage Domrei Research and Consulting Supported by Grants from: AFD, USAID, CEDA, Fung Special thanks to GRET and SKY for their participation Sky Evaluation Dissemination Meeting 4-5 October, 2011 Phnom Penh, Cambodia

2. Goldilocks problem If only the rich and healthy buy insurance, then limited social benefit If primarily those with high future health care costs buy insurance, then not financially viable Like Goldilocks, want “Just right” mix of customers

3. Our analysis Who buys SKY Micro-health insurance? Is it: Rich? Risk averse? Trust public facilities? Peer effects? High expected health care costs? Does higher price affect self-selection? Who drops out of SKY?

4. Methodology Qualitative In depth interviews with 164 households All SKY insurance members or once members Not in villages with randomized evaluation Quantitative One-hour questionnaire with over 5000 households Half offered large discount for insurance Around 1500 SKY members

5. Statistical analysis SKY member = F( wealth risk aversion few other options to pay past health and health care peer effects) Compared to 25% average uptake.

6. Are SKY members the rich? SKY members are slightly richer than non-members And non-members are slighly poorer: “My family didn’t join SKY immediately because I didn’t have enough money to pay the premium.” But very few SKY members are prosperous Recall how few “prosperous” there are in rural Cambodia

7. Risk averse? “I stay with SKY in case of a serious disease. SKY provides strong support for my family because we can never know clearly when we are going to get a serious disease.”

8. Risk averse? Our survey measures of risk aversion do not predict higher uptake Scenario question of whether you would take a riskier job for more pay Self-report not having gambled recently (wrong sign!)

9. Risk averse? Many did not understand SKY “What’s the point of joining SKY and paying every month because nobody gets sick every single month?”

10. Trust public facility? 2 point increase in health center quality (about 1s.d. on a 25 point scale) raises uptake 3.0 percentage points*** “ I joined SKY because I preferred the services of the public provider … They provide treatment until we are better and they have enough equipment and supplies …” “ [I joined because] SKY has good services and medicine, [the health centre] is near the home, and the treatment is free. ”

11. Lack other options More uptake if limited self-insurance options: no family who would help, no zero-interest loan, etc. “I joined with SKY as a protection for the future when we might have a serious disease, especially because my family doesn’t have the money to pay if we get a serious disease.”

12. Peer effects Having a neighbor with a recent large health expense raised uptake 5 percentage points (P <.10)

13. Peer effects Reduces uptake : “I heard people in my village say that joining SKY is not useful and that it is a waste of money.” Increases uptake : “I joined SKY because I saw that SKY really helps and supports its members...For example, SKY gave money to a SKY member-who had someone in their family die

14. Many join because friends, family, or neighbors joined SKY

15. High expected costs? SKY members are not the elderly Member in poor self-reported health 12.6 percentage points more likely to join Major health shock 2-4 months prior to meeting added 6 percentage points Largely due to those who used public care

16. Quantitative: Selection by Price Compare utilization of households that purchase SKY at lower price (large discount) versus the regular price Use SKY’s data on utilization of its members Theory predicts: No self-selection when zero price (and all join) Higher price induces more self-selection of those who expect high utilization

17. Results: Utilization by Price In the 3 months following SKY purchase, households who paid more were:  11 p.p.** more likely to visit health center  11 p.p.** more likely to visit hospital  41%** higher costs at public facilities Differences remained after controlling for baseline characteristics  11 pp**, 8.5 pp*, 33%**, respectively

18. Implication SKY is attracting people who cost at least 40% or more > average rural Cambodian Good news: Helping those who need it Challenge: How to stay in business because the resulting higher price discourages those with average expected health care costs?

19. Some Lessons Targeting Not much selection of the low cost (rich or cautious & healthy) Those with high expected health care costs buy insurance more often The challenge, part 1 Insurance still unattractive to most in rural Cambodia The challenge, part 2 SKY passes high expenditures to higher prices, further lowering demand by those with low expected costs.

20. Opportunities Improving public care important for uptake and retention Word of mouth referrals are important Need to encourage understanding of SKY Trial period or discounts may encourage hesitant buyers

21. Qualitative: Why Drop? Poor quality of care Unavailability of drugs Rude staff Perceived or real poor treatment Did not understand insurance: drop because no one ill Could not afford premium Heard negative things about SKY “ I dropped out of SKY because I went to get treatment twice but health centre staff told me to buy drugs at the Pharmacy, paid for by myself. ” (Kulehn) “ I dropped out of SKY … because I think that nobody was sick and the Insurance Agent did not explain clearly about SKY services. ” “… my family dropped out of SKY because my cousin had high blood pressure and received bad treatment at the Health Centre. Many families in the village lost confidence in SKY and dropped out. ” (Khnau)