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Estimating Willingness to Pay

In: Health Microinsurance Implementing Universal Health Coverage in the Informal Sector

Author

Listed:
  • Alexander S. Preker
  • David M. Dror

Abstract

Actual community-based health insurance (CBHI) premium payments often fall short of Willingness-to-Pay (WTP) estimates. This study examines the gap between the estimated premiums and actual payments for CBHI by analyzing data from 3,685 households in rural India. Descriptive statistics are used to analyze the gap between the estimated premium and actual payments. Heckman two-stage sample-selection model is applied to analyze the predictors of actual payment, subject to household enrolment in CBHI. The estimated premiums were 0.50–1.26% of per-capita gross domestic product (PCGDP). The actual payments were ~50% of the estimates. The gap resulted as households enrolled fewer family members than expected. Further analysis indicates that a quadratic function (to estimate expected enrollees from the household) combining with a fixed premium (expressed as a percentage of PCGDP) can better predict actual income. Heckman analysis indicates that focusing on greater awareness and financial literacy can lead to an increase in actual payments.

Suggested Citation

  • Alexander S. Preker & David M. Dror, 2020. "Estimating Willingness to Pay," World Scientific Book Chapters, in: Health Microinsurance Implementing Universal Health Coverage in the Informal Sector, chapter 6, pages 91-134, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811208539_0006
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    More about this item

    Keywords

    Microinsurance; Health Insurance; CBHI; Community-Based Health Insurance; Health Financing; Insurance for Poor; Universal Health Coverage; Rural; Education;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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