The Role Of Pregnancy In Micro Health Insurance: Evidence Of Adverse Selection From Pakistan

With increasing interest from commercial players in developing insurance markets to meet the needs of low‐income people, efforts to find sustainable products have expanded rapidly yet remain elusive. This is particularly true in the domain of health insurance, where the general challenges of offering voluntary private health insurance are often exacerbated by poor underlying health services and a lack of public health programs. In an effort to identify new opportunities to expand health insurance protection to underserved markets, we analyze a rich data set from a micro health insurance program in Pakistan. Observing that pregnancy‐related care accounts for 40 percent of all claims and 36 percent of the total claims amount, we focus much of our attention on understanding the role of pregnancy in micro health insurance. We find evidence of extensive adverse selection related to pregnancy claims, both with regard to original coverage purchase and with regard to renewal. In many countries, pregnancy health care is provided by or paid for by the government. We encourage consideration of this possibility, leaving the remaining health care needs for market‐based health insurance.