The Impact of Health Insurance on Health-care Utilisation and Out-of-Pocket Payments in South Africa

Health insurance is an alternative to direct out-of-pocket (OOP) financing. It aims to improve access to care and reduce direct OOP payments. However, this may not be the case if there is high cost sharing and limited cover. This paper uses the methodology of propensity score matching to investigate the impact of private insurance via membership of a medical scheme in South Africa on health-care utilisation and OOP payments. The paper finds that insurance coverage increases the use of private health services as would be expected but there is no significant effect on the use of public services. Further, such coverage does not result in lower OOP payments for scheme members compared to non-members. This calls for a need to design health insurance, in South Africa, in the form that not only ensures adequate utilisation of health services but also provides financial protection to the insured as reflected in the current commitment for a National Health Insurance.