Abstract

Universal health coverage is a widely shared goal across lower-income countries. We conducted a large-scale, 4-year trial that randomized premiums and subsidies for India’s first national, public hospital insurance program, called RSBY. We find substantial demand (∼ 60% uptake) even when consumers were charged a price equal to the premium the government paid for insurance. We also find substantial adverse selection into insurance at positive prices. Insurance enrollment increases insurance utilization, but not healthcare utilization, implying the primary benefit of insurance is financial. Many enrollees attempted to use insurance but failed, suggesting that learning is critical to the success of public insurance. We find very few significant impacts of insurance access or enrollment on health. Although there is substantial demand for insurance, we estimate that free insurance is unlikely to be welfare-improving given the high marginal cost of public funds in India.

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