Financial Protection Effect of Health Insurance: Evidence from the Ghana National Health Insurance Scheme

Ghana's National Health Insurance Scheme was adopted in 2003 to address the problem of high user fees imposed in the health facilities. This study assesses whether the Scheme has achieved its goal of helping the people to reduce out-of-pocket health payment and avoid catastrophic expenditure.

We use data from a household survey conducted in two rural districts Offinso and Nkoranza in 2007, more than two years after the onset of the National Health Insurance Scheme. Ordinary least squares and two-part models are used to assess insurance effect on out-of-pocket health payment. We also conduct a probit estimate of the likelihood of catastrophic health expenditures, defined at different thresholds relative to household income and non-food consumption expenditure. The analysis controls for chronic and self-assessed health conditions, which typically drive adverse selection in insurance.

Although the benefit package of insurance is generous, insured people still incurred out-of-pocket payment on care from informal sources and on uncovered drugs and tests at health facilities. Nevertheless, they paid significantly less than the uninsured. Insurance has shown to have a protective effect against financial burden of health care, reducing significantly the likelihood of incurring catastrophic payment. The effect is particularly large among the poorest quintile of the sample. This study shows that with strong political commitment, a poor country can achieve financial protection against health care cost for its population, in particular the most vulnerable group