The role of bundling in promoting sustainability of health insurance: evidence from Pakistan
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The role of bundling in promoting sustainability of health insurance: evidence from Pakistan Sadia Hussain1 · Hamna Ahmed1 Received: 17 June 2018 / Accepted: 5 March 2019 / Published online: 29 April 2019 © The Geneva Association 2019
Abstract This paper extends current literature on the impact of health microinsurance in emerging markets. Using a difference-in-differences approach, we explore the causal impact on client retention of bundling health insurance with microfinance in the context of a large-scale microfinance institution in Pakistan. We find that the programme has a significant and positive impact on client retention. Further, we find that this impact is sensitive to the age composition of the client base, with an average rate of retention higher among younger than older clients. Keywords Health microinsurance · Microcredit · Client retention · Pakistan
Introduction Insurance is beneficial in that it can reduce the vulnerability of the poor to frequent adverse shocks that impede investment and human capital (Karlan et al. 2014). Extreme weather or catastrophic health shocks entail sizeable economic costs for the poor: loss of income and assets, decrease in consumption, and high out-of-pocket medical expenditure (Binnendijk et al. 2012; Janzen and Carter 2018). The burden is magnified in a developing country like Pakistan, which has been ranked as the most dangerous country in the world for a newborn child: out of every 1000 live births 46 children are not expected to survive beyond their first month (UNICEF 2018). Skilled health workers attend to only approximately half of the
* Hamna Ahmed [email protected] Sadia Hussain [email protected] 1
Lahore School of Economics, Intersection Main Boulevard Phase VI DHA, Burki Road, Lahore, Pakistan Vol.:(0123456789)
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S. Hussain, H. Ahmed
Table 1 Comparison of health indicators Country
Births attended by skilled health staff (% of total)
Maternity mortality ratio (per 100,000 live births)
Infant mortality rate (per 1000 live births)
Afghanistan
51
396
51.5
Bangladesh
50
176
26.9
Bhutan
89
148
25.6
India
86
174
32
Iran
99
25
12.8
Nepal
58
258
27.8
Pakistan
Sri Lanka
52
–
178 30
61.2
7.5
Source World Development cross-country indicators (2017) The bold row emphasises the poor performance of Pakistan compared to other South Asian economies along the aforementioned indicators
births (Table 1 based on World Development Indicators, 2017).1 Furthermore, Pakistan has higher maternity and infant mortality rates than comparable countries in South Asia. For instance, the infant mortality rate in Pakistan is twice as high as in India and three times as high as in Bangladesh, respectively (Table 1)1. The country’s lagging performance in health indicators is in part due to an extremely low proportion of health spending of the overall GDP (Fig. 1 based on Pakistan Economic Survey 2017–2018)2. In fiscal year 2017–2018 Pakistan spent a mere 0.49% of GDP on health (Pakistan Economic Survey 2017–2018), which is much lower
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