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Who Buys Sky? :. Rachel Polimeni University of California, Berkeley David Levine University of California, Berkeley Ian Ramage Domrei Research and Consulting Supported by Grants from: AFD, USAID, CEDA, Fung Special thanks to GRET and SKY for their participation.

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Who buys sky

Who Buys Sky?:

Rachel Polimeni

University of California, Berkeley

David Levine

University of California, Berkeley

Ian Ramage

Domrei Research and Consulting

Supported by Grants from:


Special thanks to GRET and SKY for their participation

Sky Evaluation Dissemination Meeting

4-5 October, 2011

Phnom Penh, Cambodia

Goldilocks problem
Goldilocks problem

  • If only the rich and healthy buy insurance, then limited social benefit

  • If primarily those with high future health care costs buy insurance, then not financially viable

  • Like Goldilocks, want “Just right” mix of customers

Our analysis
Our analysis

  • Who buys SKY Micro-health insurance? Is it:

    • Rich?

    • Risk averse?

    • Trust public facilities?

    • Peer effects?

    • High expected health care costs?

  • Does higher price affect self-selection?

  • Who drops out of SKY?


  • Qualitative

    • In depth interviews with 164 households

    • All SKY insurance members or once members

    • Not in villages with randomized evaluation

  • Quantitative

    • One-hour questionnaire with over 5000 households

    • Half offered large discount for insurance

    • Around 1500 SKY members

Statistical analysis
Statistical analysis

  • SKY member = F(


    risk aversion

    few other options to pay

    past health and health care

    peer effects)

    Compared to 25% average uptake.

Are sky members the rich
Are SKY members the rich?

  • SKY members are slightly richer than non-members

  • And non-members are slighly poorer:

    • “My family didn’t join SKY immediately because I didn’t have enough money to pay the premium.”

  • But very few SKY members are prosperous

    • Recall how few “prosperous” there are in rural Cambodia

Risk averse
Risk averse?

  • “I stay with SKY in case of a serious disease. SKY provides strong support for my family because we can never know clearly when we are going to get a serious disease.”

Risk averse1
Risk averse?

  • Our survey measures of risk aversion do not predict higher uptake

    • Scenario question of whether you would take a riskier job for more pay

    • Self-report not having gambled recently

      • (wrong sign!)

Risk averse2
Risk averse?

  • Many did not understand SKY

    • “What’s the point of joining SKY and paying every month because nobody gets sick every single month?”

Trust public facility
Trust public facility?

  • 2 point increase in health center quality (about 1s.d. on a 25 point scale) raises uptake 3.0 percentage points***

Lack other options
Lack other options

  • More uptake if limited self-insurance options: no family who would help, no zero-interest loan, etc.

  • “I joined with SKY as a protection for the future when we might have a serious disease, especially because my family doesn’t have the money to pay if we get a serious disease.”

Peer effects
Peer effects

  • Having a neighbor with a recent large health expense raised uptake 5 percentage points (P < .10)

Peer effects1
Peer effects

  • Increases uptake: “I joined SKY because I saw that SKY really helps and supports its members...For example, SKY gave money to a SKY member-who had someone in their family die

  • Reduces uptake: “I heard people in my village say that joining SKY is not useful and that it is a waste of money.”

High expected costs
High expected costs?

  • SKY members are not the elderly

  • Member in poor self-reported health 12.6 percentage points more likely to join

  • Major health shock 2-4 months prior to meeting added 6 percentage points

    • Largely due to those who used public care

Quantitative selection by price
Quantitative: Selection by Price

Compare utilization of households that purchase SKY at lower price (large discount) versus the regular price

Use SKY’s data on utilization of its members

Theory predicts:

No self-selection when zero price (and all join)

Higher price induces more self-selection of those who expect high utilization

Results utilization by price
Results: Utilization by Price

In the 3 months following SKY purchase, households who paid more were:

11 p.p.** more likely to visit health center

11 p.p.** more likely to visit hospital

41%** higher costs at public facilities

Differences remained after controlling for baseline characteristics

11 pp**, 8.5 pp*, 33%**, respectively


  • SKY is attracting people who cost at least 40% or more > average rural Cambodian

    • Good news: Helping those who need it

    • Challenge: How to stay in business because the resulting higher price discourages those with average expected health care costs?

Some lessons
Some Lessons

  • Targeting

    • Not much selection of the low cost (rich or cautious & healthy)

    • Those with high expected health care costs buy insurance more often

  • The challenge, part 1

    • Insurance still unattractive to most in rural Cambodia

  • The challenge, part 2

    • SKY passes high expenditures to higher prices,

    • further lowering demand by those with low expected costs.

  • Opportunities

    • Improving public care important for uptake and retention

    • Word of mouth referrals are important

    • Need to encourage understanding of SKY

      • Trial period or discounts may encourage hesitant buyers

    Qualitative why drop
    Qualitative: Why Drop?

    • Poor quality of care

      • Unavailability of drugs

      • Rude staff

      • Perceived or real poor treatment

    • Did not understand insurance: drop because no one ill

    • Could not afford premium

    • Heard negative things about SKY