Direct and Spillover Effects of Health Insurance on Household Consumption Patterns in Ekiti State, Nigeria

Abstract

The report by the National Bureau of Statistics in 2017 that nearly 70 percent of Nigerians were living in poverty, using the dollar per day adjusted purchasing power parity as the criterion, implies weak ability to smoothen consumption over time for a large percentage of the population whenever there is an ailment. This study is therefore designed to examine the direct and spillover effects of health insurance (HI) on both medical and non-medical consumption in Ekiti State. A structured questionnaire was randomly administered to about 1500 respondents in all the hospitals that offer health insurance services in Ekiti State. A diagnostic test was performed to show the quality of match between insured and uninsured households, and their suitability for the study. The propensity score from logit
regression at ñ#0.05 was used to predict the probability of HI participation while the propensity score matching estimator was used to determine the direct and spillover effects of health insurance. The propensity score matching coefficient for medical consumption was 0.07 and positive, showing that medical consumption increased with health insurance status. The spillover effect of HI was 24,970 and it was positive indicating that health insurance increased non-medical consumption of the insured by N=24,970 in the period of illness. This implies that health insurance increased the overall consumption of the insured households in the state.

Keywords: Direct effect, Spillover effect, Propensity Score Matching, Consumption patterns