Chapter 3 Intra - Household Allocations of Micro Health Insurance : No Adverse Selection After All ?

This chapter analyzes adverse selection in micro health insurance. Health insurance is typically family-based to limit adverse selection within households. I investigate whether such selection occurs empirically, using the case of an individual-based micro health insurance program in rural Nigeria. The empirical analysis applies two-sample two-stage least squares and uses household fixed e↵ects to control for confounding heterogeneity at the household level. In the first stage, estimated in an uninsured control sample, both self-reported and objectively measured baseline health are significant risk factors for follow-up health expenditures. Nevertheless, in the second stage, predicted expenditures do not a↵ect intra-household insurance allocations in a treatment sample. I conclude that adverse selection within households is limited, and that individual-based enrollment potentially solves limited insurance take-up among the poor.