Health insurance and household savings: Evidence from Ghana

Abstract People save more in response to future income uncertainties, meaning health insurance could crowd out savings by reducing medical spending. This relationship has yet to be emphasised in the sub-Saharan African context, where income variability is pronounced. We quantify the relationship between health insurance and household savings using censored quantile regressions with and without instrumental variables. Data were obtained from the last two Ghana Living Standards Survey rounds: 2013 & 2017. We find a positive relationship between health insurance and household savings. Ghana’s health insurance generally reduces out-of-pocket healthcare expenditure. But insurance-induced utilisation and unofficial healthcare payments are observed, as well as falling public healthcare spending and increasing dependence on private healthcare financing. The insured perhaps save more to complement the cover provided by health insurance since complete coverage is not guaranteed. JEL classification: D91; E21; I3; I18; G22