Skip to main content Skip to navigation

Subsidies and the Dynamics of Selection: Experimental Evidence from Indonesia's National Health

Subsidies and the Dynamics of Selection: Experimental Evidence from Indonesia's National Health

454/2020 Abhijit Banerjee, Amy Finkelstein, Rema Hanna, Benjamin Olken, Arianna Ornaghi and Sudarno Sumarto
working papers,culture and development

454/2020 Abhijit Banerjee, Amy Finkelstein, Rema Hanna, Benjamin Olken, Arianna Ornaghi and Sudarno Sumarto

How can developing countries increase health insurance? We experimentally assessed three approaches that simple theory suggests could increase coverage and potentially reduce adverse selection: temporary price subsidies, registration assistance, and information. Temporary subsidies attracted lower-cost enrollees, in part by reducing strategic coverage timing. While subsidies were active, coverage increased more than eightfold, at no higher unit cost to the government; after subsidies ended, coverage remained twice as high, again at no higher cost. However, subsidies are not sufficient to achieve universal coverage: the most intensive intervention – a full one-year subsidy combined with registration assistance – resulted in only 30 percent enrollment.

Culture and Development