The challenges of universal health insurance in developing countries:
Evidence from a large-scale randomized experiment in Indonesia

Abhijit Banerjee, MIT

Amy Finkelstein, MIT

Rema Hanna, Harvard University

Benjamin Olken, MIT

Arianna Ornaghi, University of Warwick

Sudarno Sumarto, TNP2K and SMERU


April 2019



Contributory health insurance programs in developing countries face a fundamental challenge for achieving widespread coverage and financial solvency: they can mandate, but not enforce, participation. 

To assess possible ways to overcome this challenge, we designed a large-scale experiment involving almost 6,000 households in Indonesia who are subject to a nationally mandated government health insurance program.

We experimentally assessed several interventions that simple theory and prior evidence suggests could increase enrollment and reduce adverse selection: substantial temporary price subsidies, assisted registration, and information interventions.

Both temporary subsidies and assisted registration increased enrollment; moreover, enrollment among the temporarily subsidized remained significantly higher even one year after the subsidy ended.

Subsidies attracted healthier enrollees, but they stayed enrolled longer, and on net had similar levels of claims. On net, however, total coverage rates remained low.

Even the most intensive intervention – assisted registration and a full one-year subsidy - resulted in only a 30 percent initial enrollment rate; this was a substantial increase relative to the control enrollment of 8 percent, but still a far cry from universal coverage.

Our findings highlight the challenges of achieving widespread coverage for contributory health insurance programs in developing countries.