Information and Healthcare: A Randomized Experiment in India

Health shocks have often been identified as being one of the most sizable and least predictable reasons for pushing families into poverty. National health insurance schemes are an effective way of insuring against the economic costs of illness and mitigating the potentially large welfare losses to the poor following such shocks. Health outcomes of beneficiary households may also be expected to improve if insurance facilitates access to better quality healthcare. 

But such public schemes are often however found to be ineffective due to lack of information among the target population regarding their existence as well as their effective usage.We therefore propose a two-pronged research agenda – firstly, to examine whether health insurance indeed improves health outcomes and reduces poverty and secondly, if information dissemination leads to increased uptake and utilization of health insurance.

The Government of India introduced a National Health Insurance Scheme in 2007 targeted at the below-poverty-line population of India.  The programme covers hospitalisation expenses up to Rs. 30,000 for a household of five and is available on a cashless basis. Households have to pay Rs 30 per annum in order to enrol but the premium is being borne by the Central and State governments in a 75:25 ratio. The state government would identify an insurance company to implement the project, which would then identify a list of hospitals that would provide the cashless service as part of the programme. Each household will be issued a smartcard by the insurance company that will contain biometric information of the registered household members. The programme has a window of five years.

The programme is currently being rolled out in Karnataka. LSE and ISEC are working together to design a randomized experiment that rides on the back of this programme to address the research questions presented above.

Too many government poverty alleviation schemes in India have failed because of lack of awareness amidst the target population. Hence as part of our intervention, we plan to randomize information campaigns at the village level in order to test whether information campaigns designed to increase awareness among the BPL population about the forthcoming scheme does indeed improve uptake and utilization. We also plan to use information provision as an instrument for health insurance to measure its impact on health and economic outcomes.