TY  - JOUR
AU  - Pauly,Mark
AU  - Blavin,Fredric E.
AU  - Meghan,Sudha
TI  - Is There a Market for Voluntary Health Insurance in Developing Countries?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14095
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14095
L1  - http://www.nber.org/papers/w14095.pdf
N1  - Author contact info:
Mark Pauly
Health Care Management Department
The Wharton School
University of Pennsylvania
208 Colonial Penn Center
3641 Locust Walk
Philadelphia, PA  19104-6218
E-Mail: pauly@wharton.upenn.edu

Fredric E. Blavin
Ph.D. Candidate
Health Care Systems Department
The Wharton School
University of Pennsylvania
Colonial Penn Center
3641 Locust Walk
E-Mail: fblavin@wharton.upenn.edu

Sudha Meghan
Colonial Penn Center, Room 204
3641 Locust Walk
Philadelphia, PA  19104-6218
E-Mail: sudham@wharton.upenn.edu
AB  - In many developing countries the proportion of health care spending paid out of pocket is about half of all spending or more.  This study examines the distribution of such spending by income and care type, and the variation in spending about its expected value, in order to see whether voluntary private health insurance that reduces variation in spending might be able to be supplied.  Using data from the World Health Survey for 14 developing countries, we find that out of pocket spending varies by income but that most spending usually occurs in income quintiles below the topmost quintile. We use estimates of the variance of total spending, hospital spending, physician spending, and outpatient drug spending about their means to generate estimates of the risk premia risk averse consumers might pay for insurance coverage.  For hospital spending and total spending, these risk premia as a percent of expenses are generally larger than reasonable estimates of private health insurer loading as a percent of expenses, suggesting that voluntary insurance might be feasible.  However, the strong relationship between spending and income suggests that insurance markets may need to be segmented by income.
ER  -