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Demand for Health Insurance: Financial and Informational role of Informal Networks

Author

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  • Bhattacharya, Titir

    (University of Warwick)

  • Chakraborty, Tanika

    (Indian Institute of Management Calcutta)

  • Mukherjee, Anirban

    (University of Calcutta)

Abstract

In response to a remarkably high out of pocket (OOP) health expenditure in India, various state and the national governments in India, tried to introduce public health insurance programs. Despite being free, the take up and utilization of these programs remain low. In this paper, we seek to explain this puzzle by studying the role of informal networks in explaining insurance-adoption behavior in the context of the Arogyasri health insurance program introduced in the erstwhile state of Andhra Pradesh between 2007 and 2008. We use household panel data from the Young Lives Survey (YLS) to empirically study how the adoption of Arogyasri among poor households respond to their membership in informal networks. In this context, we differentiate between two types of network – financial network and information network. We find that adoption and utilization are significantly higher for households with access to informal financial networks. However, adoption and utilization increases much more for households outside informal networks, after they experience health shocks. Information sharing role of informal networks do not seem to affect the decision to adopt insurance. We also provide a simple theoretical framework to discuss the potential mechanisms underlying our empirical results.

Suggested Citation

  • Bhattacharya, Titir & Chakraborty, Tanika & Mukherjee, Anirban, 2024. "Demand for Health Insurance: Financial and Informational role of Informal Networks," SocArXiv 2mq5v, Center for Open Science.
    • Handle: RePEc:osf:socarx:2mq5v
    DOI: 10.31219/osf.io/2mq5v
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