The Impact of Insurance Games on Health Insurance Enrollment: Experimental Evidence from the Philippines

This paper evaluates how playing an experimental insurance game affects real-life health insurance enrollment for the poor. Experimental insurance games not only allow individuals to learn about insurance, but also experience it. Based on a lab-in-the-field experiment in the rural Philippines involving an insurance game in 2010, complemented by a follow-up survey in 2013, I find that playing the insurance game significantly increases enrollment in the country’s social health insurance scheme, particularly in the scheme targeted towards the poorest 25 percent of the population. Two insights from behavioral economics – the role of emotions in financial decisionmaking and the role of “nudges” or behavioral policy interventions that help people overcome procrastination – can help explain the impact of the experimental game on real-life insurance enrollment. * I am grateful to Martin Eling for his invaluable support and the Institute of Insurance Economics at the University of St. Gallen for funding research assistant positions and field expenses. Special thanks to Andreas Landmann for sharing the data from the 2010 insurance game and for many fruitful discussions on the paper. I thank Christian Biener, Charlotte Cabane, Margaret Davenport, Hans Fricke, Benjamin Guin, Anthony Strittmatter, and conference participants at the American Risk and Insurance Association 2014 Annual Meeting, the Spring Meeting of Young Economists 2015, and the DIAL Development Conference 2015 for their helpful comments and discussions. 1 Conducting field experiments to understand human behavior has become increasingly popular in economic research (Harrison and List, 2004; Levitt and List, 2009; Viceisza, 2012). One of the appeals of field experiments is that they allow researchers to observe how people actually make choices (Viceisza, 2012). It is natural then to ask whether field experiments themselves affect people’s subsequent choices once the experiment is over. For this purpose, I examine the impact of a lab-in-the-field experiment involving insurance games on participants’ reallife insurance enrollment. It is plausible to imagine that participating in lab-in-the-field experiments induce changes in later behavior that are not intended by the experimenter. Research in social cognition has shown that beliefs, attitudes, goals, and behavior can be unconsciously affected as part of research processes (Machin and Fitzsimons, 2005). Psychology and marketing research has also long recognized that surveying a subject can induce later behavioral change by making certain risks or choices more salient than they would be otherwise (Zwane et al., 2011). A causal relationship between completing a household survey and subsequent behavioral change has been documented using health field experiments (Zwane et al., 2011). Such unintended consequences can be beneficial or harmful depending on the context. For example, if lab-inthe-field experiments involving insurance games give participants a favorable view of insurance in a region where insurance fraud is common, then consequent behavioral change might prove to be more harmful than beneficial. To examine the impact of a lab-in-the-field experiment on subsequent behavior change, I rely on an experiment conducted in 2010 in the rural Philippines and a follow-up survey conducted three years later in 2013. The lab-in-the-field experiment involved playing an insurance game and was designed to test the impact of different insurance products on solidarity in risk-sharing groups among rural villagers (Landmann et al., 2012). The game included a risk component and an insurance component, and lasted approximately half a day. In the process, the game also allowed participants to experience and learn about insurance. The results from the follow-up survey show that those who participated in the game in 2010 are 6.6 percentage points more likely to have enrolled in the Philippine Health Insurance (PhilHealth) scheme in 2013 compared to the enrollment rate of 45.4 percent in the control group. PhilHealth is the Philippines’ social health insurance scheme that aims to provide universal health insurance coverage. PhilHealth has five different plans, one of which—the Sponsored Program—targets the poorest 25% of the Philippines’ population. Under the 1 Harrison and List (2004) offer a comprehensive overview of field experiments. They also propose the following taxonomy of field experiments: artefactual field experiment, framed field experiment, and a natural field experiment. Artefactual field experiments are also termed lab-in-the-field experiments. 2 The insurance game was not framed in the type of insurance offered.