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What An Experiment In India Might Teach Us About Health Care Incentives

United under a huge insurance marketplace experiment, a team of economists and scholars work to learn more about how people use health care

What is the best way to improve access to healthcare in poorer parts of the world? Will people value and utilize free insurance the same way they would a cash payment? What effects will health insurance have on families, households, and economic dependencies within households and villages? These are difficult questions, and UChicago’s Anup Malani and a team of economists, statisticians, anthropologists, and other social scientists are leading an initiative to use real-world experiments to seek answers.

In effort to support this research, Indian government has given Malani et al. permission to extend the Rashtriya Swasthya Bima Yojna (RSBY) social insurance program to a randomized groups of formerly ineligible citizens.

The results of the experiment will test how people utilize health insurance delivered through differing mechanisms, and measure the various rippling impacts that each mechanism can have on their lives and the lives of their families and neighbors. What they learn might hold important insights into optimizing policies aimed at lowering medical costs while improving access to medical services all over the world.

Anup Malani, the Lee and Brena Freeman Professor at the University of Chicago Law School and a lead investigator on the study, has worked with his team and government administrators in India to create a randomized control trial within an initial expansion of the current RSBY program. The test rollout offers health insurance to households just above the poverty line.

Working in the Gulbarga and Mysore districts in the Indian state Karnataka, the project team divided participants into four randomly selected groups: one group receives completely free insurance, another receives a cash payment and an opportunity to buy insurance on a marketplace, the third group receives only the opportunity to buy insurance without a cash subsidy, and a control group receives no intervention, meaning their current opportunities for healthcare are unmodified. Of the 11,000 new households being enrolled, 40 percent will be placed in the free insurance group, since that's the policy currently being considered by Indian legislators; the remaining 60 percent will be split equally among the other groups.

A two-stage randomization scheme–designed in collaboration with Kosuke Imai of Princeton–will help researchers track spillover effects of insurance to family members and other uninsured members of their village. This will provide richer data to study how cash payments through the program might affect informal credit or insurance markets—relatives or community members willing to make small short-term loans or simply give them the money they need to get by—that uninsured individuals sometimes rely on to finance unexpected health care expenditures.

Planned since 2012 the Indian insurance market study is the second largest study of its kind in history, according to Malani. It will run for 30 months; Malani expects to have data in hand for analysis by 2017. It will yield data useful for answering all sorts of questions that social scientists are itching to answer.

What is the effect of having a public health insurance option? What incentives do hospitals have to participate? Are incentive schemes not working? Why would government hospitals not want to participate? What cultural differences between regions might affect the use of such programs? How does gender influence health care decision making within families or the broader healthcare marketplace?

With the potential to shed light on such a wide range of questions, Malani has recruited equally wide-ranging expertise from diverse backgrounds.

  • Cynthia Kinnan at Northwestern University wants to know whether new access to insurance will change how households finance their healthcare expenditures, and how those changes might shape the overall picture of their investment and consumption decisions.

  • Gabriella Conti at the University College London seeks to learn more about the link between access to insurance, health care utilization, and in turn, the impact of utilization on the health of individual citizens.

  • Anuj Shah of the University of Chicago Booth School of Business is curious whether the increased stability health insurance provides reduces the likelihood of individuals suffering from health shocks and the stress of uncovered health care expenditures, thus improving the cognitive capacity of the insured. the in which having insurance affects the cognitive capacity of household members.

  • Alessandra Voena, an assistant professor in economics at UChicago, hopes to observe how providing health insurance—rather than an unconditional cash transfer—can alter the distribution of consumption and health care between the men, women and children within a given household.

"I'm very excited to be involved in this project," says Voena. "It's a very diverse team of researchers. We all bring in different expertise and interests."

Voena is especially interested to see how different healthcare policies generate spillover effects —typically hard to track—that cascade from targeted individuals to their families and beyond. "How much care is going to reach certain members of the household if insurance is available for free?" asks Voena. "Maybe we'll see more health care reaching people that would normally not receive as much treatment. The health status of some members of the family might be an important determinant. Imagine the primary earner has a condition, versus the young daughter."

Stefen Ecks at the University of Edinburgh and Vani Kulkarni at Yale University, two medical anthropologists recruited to the project via the Neubauer Collegium, are also helping craft the surveys used in the course of the study, bridging the cultural gaps in what the team of researchers wants to know and what individuals living in these regions of India will actually understand. The Neubauer Collegium seeks to promote a dialogue on research methodology between differing disciplines, and the logistical challenges that Malani et al faced in crafting their survey offered a perfect opportunity for collaboration in that vein, which the Collegium happily facilitated. "Economists don't generally do open-ended surveys. Anthropologists don't think about statistical concerns, like sample size," Malani explains. “We have a lot we can learn from one another.” It's a collaborative process pushing economists out of their comfort zone, he says for the better.

Malani hopes the experiment will address a need for bigger, more systematic studies of the healthcare market forces, but is also strongly encouraged by the potential of gaining richer, deeper datasets by collaborating with many to capitalize on rare research opportunities like this. “We don’t have a lot of opportunities like this, which is why we’re inviting people with all kinds of different questions,” says Malani. Lots of opportunities open up in broad, inclusive collaborations.

The institute is proud to support his efforts to extend work in this area.

 

—Mark Riechers