Making insurance healthier

Some countries with national health insurance plans face a basic problem: even with mandates, not enough people sign up, and the ones who do tend to have worse-than-­average health, burdening the system. 

Now a study led by MIT economists points to possible solutions. The study was conducted in Indonesia, which introduced its program in 2014 but had seen fewer than 20% of targeted participants enroll after a year. In the experiment, people received either subsidies, signup assistance, or information about the program’s benefits.

Unsurprisingly, subsidies (already offered to the poorest citizens) were the most effective measure, increasing enrollment by 18.6 percentage points. But even once the subsidies ended, people who received them were twice as likely to pay for coverage as people who’d never received one.

In the second group, assistance with registration increased participation by 3.5 percentage points. But it also emerged that more than half the people who attempted to enroll ultimately failed, suggesting that the sheer challenge of navigating the sign-up process is a more serious issue than previously understood. Meanwhile, results from the third group showed that simply providing information had little impact. 

The findings have implications for many countries attempting to set up universal health insurance systems. “One of the lessons of this paper is the importance of the infrastructure of the state,” says Professor Benjamin Olken, a coauthor of the paper detailing the experiment. “Investments in that underlying infrastructure are not the most exciting thing, but they are really critical.”