Willingness to tolerate risk and income-related cross-subsidies within health insurance: experience from Ghana, Tanzania and South Africa

Presenter: Josephine Borghi, London School of Hygiene & Tropical Medicine

Abstract

Background

A number of studies have estimated willingness-to-pay premiums for health insurance in low and middle income countries. However, there has been little examination of individual preferences for alternative health insurance designs. Cross-subsidisation of contributions from individuals of different income levels is one mechanism for achieving an equitable roll out of insurance, particularly to include the informal sector and the poor. However, little is known about whether and by how much individuals are willing to cross-subsidise risk or their views as to whether the poor should pay less.

The aim of the study was to examine individual preferences for varying degrees of cross-subsidisation and to consider whether and how these preferences vary by socio-economic status and by country context.

Methods

A nationally representative survey of 4,800 households in nine Provinces was carried out in South Africa. In Tanzania and Ghana household surveys were conducted in 6 districts in each country with a sample of 2,234 and 2,960 households respectively. Questions were included on individual willingness to contribute towards insurance cover for those who are worse off in the community and their willingness to cross-subsidise risks. In Ghana and South Africa respondents were asked to choose between 4 illustrated scenarios representing differing degrees of cross-subsidisation: 1) everyone pays the same amount (flat contribution); 2) progressive contributions but the poor don’t pay; 3) all pay progressive contributions 4) proportional contributions. In Tanzania, households were asked whether they would be willing to pay towards insurance for the poor and the maximum amount they would be willing to pay in Tanzanian Shillings (Tsh). The determinants of willingness to pay (WTP) were also examined.

Results

In South Africa, the majority of respondents (75%) expressed a willingness to pay for themselves, immediate family and other people they know. 13% felt that everyone should pay for their own health care, and rejected the concept of cross-subsidies. 11% said they would be willing to pay for a wider group of people who were badly off. Only just over half of respondents (53%) were supportive of the concept of risk cross-subsidies with far greater support among wealthier groups (64% for the highest wealth group) and current private health insurance scheme members (64% for scheme members). There was greater support for income cross-subsidies, with 62% preferring progressive contributions (either with all contributing or the poorest being exempted). Thirty percent favoured proportional contributions, while only 8% favoured flat contributions. There were substantial variations by socio-economic status.

Initial analysis in Tanzania showed that 45% of those surveyed were willing to pay for the poor. The mean annual payment they were willing to make was Tsh 9,376 or a median of Tsh 5,000, which is equivalent to the current level of contributions made by those enrolled in rural community health insurance. There was no significant variation by socio-economic group in people’s willingness to pay for the poor.

The findings of this study will be used to model alternative national scenarios for cross-subsidisation of social health insurance in each of the countries.