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Demand for Health Insurance: study on the Feasibility of Health Insurance Schemes Community Based Groups in Addis Ababa City

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  • Israel Fekade

Abstract

This study analyzes households’ willingness to pay (WTP) for a new health insurance scheme. The data was collected from a random sample of 210 households from three community-based organizations, locally known as Iddirs. These iddirs were purposively selected from areas that are believed to constitute largely of the penurious and also informally employed groups of the society in the capital Addis Ababa. The study employs a contingent valuation procedure to elicit data on households’ WTP. Both descriptive statistics and econometric estimation techniques are applied to analyze the data. According to the descriptive analyses about 98% of the sample households are willing to pay a certain amount of money to the proposed health insurance scheme. These households on average are willing to pay a premium amounting to 11.56 birr per month to the scheme. However, the likelihood that households are willing to pay and the amount they will pay shows significant variation among the sample households. In this respect, Tobit regression analysis indicated that household income, household size, education, health status and formal employment, all have a positive and significant effect on a household’s WTP. The paper suggests the introduction of health insurance by the Ethiopian government and its provision to the urban poor so as to meet their demand for health insurance.

Suggested Citation

  • Israel Fekade, . "Demand for Health Insurance: study on the Feasibility of Health Insurance Schemes Community Based Groups in Addis Ababa City," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 23(01).
    • Handle: RePEc:ags:eeaeje:259382
    DOI: 10.22004/ag.econ.259382
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    References listed on IDEAS

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    1. Mariam, Damen Haile, 2003. "Indigenous social insurance as an alternative financing mechanism for health care in Ethiopia (the case of eders)," Social Science & Medicine, Elsevier, vol. 56(8), pages 1719-1726, April.
    2. Timothy Besley, 1995. "Nonmarket Institutions for Credit and Risk Sharing in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 115-127, Summer.
    3. Tabor, Steven R., 2005. "Community-based health insurance and social protection policy," Social Protection Discussion Papers and Notes 32545, The World Bank.
    4. Damen Haile Mariam, 2002. "Ethiopia : Potential of Traditional Social Insurance for Supporting Health Care," World Bank Publications - Reports 10790, The World Bank Group.
    5. Gustafsson-Wright, Emily & Asfaw, Abay & van der Gaag, Jacques, 2009. "Willingness to pay for health insurance: An analysis of the potential market for new low-cost health insurance products in Namibia," Social Science & Medicine, Elsevier, vol. 69(9), pages 1351-1359, November.
    6. Abay Asfaw & Joachim Braun, 2005. "Innovations in Health Care Financing: New Evidence on the Prospect of Community Health Insurance Schemes in the Rural Areas of Ethiopia," International Journal of Health Economics and Management, Springer, vol. 5(3), pages 241-253, September.
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