The Effects of Subsidised Micro Health Insurance on Insurance Demand and Welfare Outcomes in Rural Burkina Faso

This paper evaluates the impact of a 50 percent subsidy on micro health insurance in Burkina Faso. Applying a sharp regression discontinuity design, we found, first, that the subsidy doubled insurance enrollment, implying that poor households’ price elasticity of demand for health insurance is about one. Second, being eligible for the subsidy halves the incidence of healthcare related out-of-pocket expenditures, and, third, reduces the incidence of lost days due to illness by about 40 percent. We conclude that pricing of health-related micro insurance products has large effects on both insurance take-up and household welfare in low-income contexts.