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INDIVIDUAL DEMAND FOR HEALTH INSURANCE WHEN HEALTH CARE IS WIDELY ACCESSIBLE

INDIVIDUAL DEMAND FOR HEALTH INSURANCE WHEN HEALTH CARE IS WIDELY ACCESSIBLE. Arpah Abu- Bakar , Angappan Regupathi , Syed M Aljunid. 2013 China International Conference on Insurance and Risk Management 17-20 July Kunming, China. OUTLINE. Motivation of the Study Research Objectives

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INDIVIDUAL DEMAND FOR HEALTH INSURANCE WHEN HEALTH CARE IS WIDELY ACCESSIBLE

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  1. INDIVIDUALDEMAND FOR HEALTH INSURANCE WHEN HEALTH CARE IS WIDELY ACCESSIBLE Arpah Abu-Bakar, AngappanRegupathi, Syed M Aljunid 2013 China International Conference on Insurance and Risk Management 17-20 July Kunming, China

  2. OUTLINE • Motivation of the Study • Research Objectives • Hypotheses • Research Methodology • Findings • Conclusion and Recommendations

  3. Motivation • Why Individual Demand? • Most previous studies focus on household demand • Why Malaysia? • Different Health Care System • Public Health Care is Widely Accessible but • High private spending on health care [OOP cost is the highest source of financing] • Multi-ethnicity & Multi-religion Society

  4. Motivation • Why Current Empirical Evidence? • The Government is looking for a mechanism to reduce its financing burden • “…health financing scheme to meet health care cost.” (7th Malaysia Plan) • “provide consumer with a wider choice in the purchase of health services from both the public and private sector.” (8th Malaysia Plan) • Towards achieving better health through consolidation of services…between the public and private sectors (9th Malaysia Plan) • Promoting private health care. (10th Malaysia Plan)

  5. Objectives • To determine the factors that affect the individual demand for private health insurance • To predict the likelihood of a person buying health insurance, given the person’s characteristics

  6. HYPOTHESIS

  7. DATA • National Health & Morbidity Survey III; Cross sectional data (2006) • Data Screening • 34,539 respondents answered Module B, 18.8% owned some type of MHI • Module B: Health Expenditure, Hospitalization, Private Health Insurance • 14,233 cases with no missing values; Split to two data set. Further split into Salaried & Non-salaried individuals • N = 4997 to fit the model and N = 5119 to test the model

  8. METHODS • Unit of Analysis • An individual who can purchase health insurance for him/herself • Logistic Regression • DV – Either own or do not own HI • Base Category - Malay male individuals, not married, have good health, live in urban area. Have tertiary education and work in the public sector.

  9. Race-Religion Original Categories for Race and Religion Malays Non-Malay Muslims Non-Muslims

  10. Risk Attitude Scales for Safety Behaviors Risk Attitude Smokers vs Non Smokers Safety Behaviors

  11. Results

  12. Performance Criteria Classification table 64.6% of individuals correctly classified as owners 78.9% of individuals correctly classified as non-owners Hosmer and LemeshowTest Chi-Square is not significant Cox & Snell’s R sq = .217; Nagelkerke R sq = .316

  13. Findings: Hypothesis vs Results

  14. Results

  15. Prediction Model • Reduced-Form Model • Measure the Predictive Power of the Model using the 2nd half of the data set • Chi-square test shows that there is a significant association between the predicted purchased of HI and the actual purchase of HI • This model is useful for predicting potential HI buyers

  16. CONCLUSION • Those who are likely to buyare high income earners, older and more educated individuals, female, non-Muslims, public servants and risk averse individuals • Efforts to increase health insurance ownership • Awareness program • Programs to increase individual income level • Using prediction model to predict health insurance potential buyers

  17. Limitations • Cross-sectional data • Out-of-pocket cost • Number of in-patient/out-patient visits • Potential duplicate HI ownership

  18. Thank you! • Main references • Propper, C. (1989). An Econometric Analysis of the Demand for Private Health Insurance in England and Wales. Applied Economics, 21(6), 777-792. • Manning, W. G., Newhouse, J. P., Duan, N., Keeler, E. B., & Leibowitz, A. (1987). Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment. The American Economic Review, 77(3), 251-277. • Liu, T. C., & Chen, C. S. (2002). An Analysis of Private Health Insurance Purchasing Decisions with National Health Insurance in Taiwan. Social Science and Medicine, 55, 755-774. • Correspondence: Arpah Abu-Bakar Banking and Risk Management Department College of Business, Universiti Utara Malaysia arpah@uum.edu.my / arpahabubakar@gmail.com

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