We use the roll-out of universal health insurance in Ghana to assess the effect of coverage on consumption at times of illness, and examine the extent to which formal health insurance reduces reliance on loans and remittances, as well as reductions on schooling and increases in child labor to cope with the economic impact of ill-health.
Our results suggest that the introduction of the national health insurance may have reduced the need for the latter. In particular, we find suggestive evidence that with health insurance, households experiencing a health shock are more likely to refrain from pulling their children out of school to put them to work.
Avoidance of these costly self-insurance mechanisms is potentially an important part of the social value of formal health insurance.
