Health insurance in Ghana

A perverse 'net' effect? The impact of health insurance on use of insecticide-treated nets (ITNs) in Ghana

March 14, 2012

Speaker: Dr. Thomas de Hoop

Incentive problems in insurance markets are well established in economic theory. One of these incentive problems is related to reduced prevention efforts following insurance coverage (ex-ante moral hazard). This prediction is yet to be tested empirically with regard to health insurance, as the health domain is often considered relatively immune to perverse incentives, despite its validation in other insurance markets that entail adverse health shocks. This paper tests for the presence of ex-ante moral hazard with reference to malaria prevention in Ghana. It investigates whether enrolment in the country’s National Health Insurance Scheme (NHIS) negatively affects ownership and use of insecticide-treated bed nets (ITNs). A panel of 400 households in the Brong Ahafo region is used for this purpose and a propensity-adjusted household fixed effects model is employed. The results provide evidence of ex-ante moral hazard especially when the level of effort and cost required for prevention is high. Different robustness checks as well as qualitative information from the surveyed communities support this finding. Implications of perverse incentive effects for the NHIS are briefly outlined.

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