Expanding health insurance to increase utilization: Does distance still matter

This dissertation examines the factors that affect the use and choice of health care facilities in Indonesia, a country in South East Asia that is currently implementing a social health insurance program. Policy makers believed that the expansion of insurance coverage would greatly increase the use of medical services, particularly among the poor and among rural populations.;However, despite massive efforts to expand health insurance coverage, the problem of low use of medical care services in Indonesia still persists.;This dissertation explores some of the factors that may explain an individual’s medical care provider choice. My study examines factors affecting demand for ambulatory care services of insured and uninsured individuals by using discrete choice analysis. Data are drawn from the 2000 Indonesia Family Life Survey (IFLS3) funded by the US National Institute of Aging and the National Institute of Child Health and Human Development. The analysis suggests that distance to a medical provider and the price of medical care have different effects for different populations. Uninsured people who live in rural areas are more sensitive to the distance to the nearest medical facility, while uninsured people who live in urban areas are more sensitive to the price of medical services. In addition, for the higher income groups the effect of distance and price upon use of medical services seems to diminish, indicating that these factors pose less of a constraint to richer families. Among those covered by insurance, the effect of distance and price does not appear to be significant. These findings suggest that reducing the cost of medical care to the individual (through insurance) diminishes the individual’s sensitivity to distance and price. One implication is that expanding health insurance will benefit urban dwellers more than rural populations since the former are relatively more sensitive to price.