Quality Health Care and Willingness to Pay for Health Insurance Retention: A Randomized Experiment in Kolkata Slums

The low quality of health care in developing countries reduces the poor's incentives to use quality health services and their demand for health insurance. Using data from a field experiment in India, I show that randomly offering insurance policyholders a free preventive checkup with a qualified doctor has a twofold effect: receiving this additional benefit raises willingness to pay to renew health insurance by 53%, doubling the likelihood of hypothetical renewal; exposed individuals are 10 percentage points more likely to consult a qualified practitioner when ill after the checkup. Both effects are concentrated on poorer households. There is no effect on health knowledge and healthcare spending. This suggests that exposing insured households to quality preventive care can be a cost‐effective way of raising the demand for quality health care and retaining policyholders in the insurance scheme. Copyright © 2016 John Wiley & Sons, Ltd.