Health Insurance Technology in Ethiopia: Willingness to Pay and Its Implication for Health Care Financing

Birku Reta Entele¹ and Nnaemeka Vincent Emodi^2,

¹Department of Technology Management, Economics and Policy Program, Room 312, Building 37, 1 Gwanak-ro, College of Engineering, Seoul National University, Seoul, 151-744, South Korea

²College of Business, Law and Governance, James Cook University, P. O. Box 6811, Cairns Qld 4870, Australia

Cite this paper

Birku Reta Entele and Nnaemeka Vincent Emodi. Health Insurance Technology in Ethiopia: Willingness to Pay and Its Implication for Health Care Financing. American Journal of Public Health Research. 2016; 4(3):98-106. doi: 10.12691/AJPHR-4-3-4

Abstract

Low-income households in rural areas of Ethiopia are facing catastrophic out-of-pocket health care expenditure due to lack of proper financing mechanism complemented with unexpected health related shock. However, to smooth their health care consumer spending, they need to have a cost-effective health insurance. This study analyzes' Households Willingness to Pay (WTP) for health insurance and the potential market for this cost effective health insurance products. The data used in this study was collected from rural households in East Shewa zone, Adama Woreda, which constitutes about 500 household heads respondents. The Contingent Valuation Method (CVM) with double bounded dichotomous choice (DBDC) elicitation method was used to estimate respondents WTP for proposed health insurance technology. The result of the study shows that households' average WTP (considering their ability to pay) is higher than their cost of public health care and self-treatment per year at a national level on average. Variables such as farm income, frequent visit to the health center, age, education, and insurance cost (premium) are significant determinants of households' willingness to pay. For the hypothetical health insurance scenario, households do have enough willingness to pay to cover cost for public health care consumption expenditure if the payment mode is planned, conducive and once per year. The study implies valuable information for policy makers and concerned stakeholders such as the Ministry of health and different private insurance provider in health care financing.

Keywords

Health insurance, willingness to pay, logit model, Ethiopia

Copyright

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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