Health Insurance and the Economic Impact of Negative Health Outcomes in Ghana

In many developing countries, financial risk protection for health is underdeveloped and negative health outcomes can be impoverishing. In this study, we sought to investigate the impact of negative health outcomes on household welfare and the role of public health insurance in mitigating this impact. We used Ghana’s public-funded National Health Insurance Scheme as a case study. Data was from the sixth round of the Ghana Living Standards survey (GLSS). To address the potentially non-random nature of the Ghana health insurance scheme, a two-stage least squares (2SLS) estimation technique was used. The results suggest that longer days of illness leads to less hours of labour supply and this result was statistically significant across all specifications. We found no evidence of heterogeneous impact of negative health outcomes through health insurance coverage on hours of labour supply. However, disaggregating the results into the urban and rural, and the gender samples, we find that for rural dwellers and males who experienced longer days of illness, labour supply was less when they had access to health insurance. The findings call for policy that focuses on reforming the NHIS to ensure effectiveness and achieving its primary objectives. One option is to ensure availability of prescription drugs and to enhance the procedure for accessing services at healthcare centres to encourage participation and continuous renewal of subscription by Ghanaians.