MR Microinsurance_2012_03_29.indd - International Labour ...

Willingness to pay for health microinsurance
WTP can be very helpful to practitioners and policymakers in designing an
insurance product that suits the target population.
One way to estimate WTP is by following the revealed preferences (RP)
method introduced first by Samuelson (1938). RP is a predictive modelling
approach to WTP that is based on studying actual purchasing behaviour, not of
the product we are interested in, but of other, related products from which we
wish to identify the value people place on – or would be willing to pay for – a
product for which no purchasing information exists. The first applications of
the RP approach were made in the 1940s to predict the amount that could
be charged for entry to National Parks in the United States; at that time, there
was no pricing information because National Parks were new, and this is
the case for microinsurance today. People’s travel costs were used to infer
the WTP. In the context of our investigation, we could not find any
published study reporting estimation of WTP for health microinsurance
(HMI) using the revealed preferences method, which leaves open the key
question of what a suitable inference or anchor to estimate WTP for health
insurance would be.
The alternative option, called stated preferences (SP), is to ask people what
they would be willing to pay for insurance cover that they do not yet have and
that is perhaps not even on the market. There are several ways to value non-market
goods. One of the most frequently used, called contingent valuation (CV),
consists of using survey methods to present respondents with hypothetical scenarios
about an intervention under evaluation (or insurance product in this
case). Respondents are required to think about the contingency of an actual market
for the benefits, and indicate the maximum amount they would be willing to
pay for them.
WTP is presumably mediated by ability to pay and by individual and cultural
aspects that determine the perceived benefit. We wanted to examine the evidence
for this, and embarked on a systematic review of the literature. When this had
been completed (in 2010), we found several studies that were reported from a
number of countries in Asia and in Africa on WTP for health insurance among
the poor in LICs (the target population for microinsurance). This chapter
contains a comparison of the findings of these studies, notably the features
that emerged as explanatory variables for WTP, some of which are dependent
on time and context, while others seem to describe major determinants of WTP
for health insurance among the poor in LICs. The paper ends with a synthesis of
the findings that point to the way estimates of WTP could be obtained, whilst
at the same time highlighting the limitations inherent to methods used to
elicit WTP.
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