Why Should the Poor Insure? Theories of Decision-making in the Context of Health Insurance

This article examines the tendency among low- and middle-income countries to promote community-based health insurance (CBHI) to improve access to health care among the poor. The article reviews economic and social theories of decision-making, and presents empirical findings from different socio-economic contexts to describe low-income individuals' insurance enrolment decisions. The paper finds that:

• Factors that stimulate health insurance demand include risk aversion, high income, low insurance premiums and trust in quality of health care;
• Possible reasons for non-insurance are low user fee levels, unaffordable premiums, current consumption requirements and mistrust in insurance mechanism.

The paper concludes that liquidity and behavioral constraints cause the poor to remain uninsured. Offering CBHI in response to this problem may not improve access to health care among the poor, because there are other factors at play. The paper recommends that health policy should focus on addressing concerns related to insurance design, the socio-economic situation and informational context.