Jack Willis

How do copayments affect the benefits of health insurance in low-income settings? We study this question in a field experiment in rural Uganda that varies copayments for hospital-based outpatient insurance. Insurance substantially increases use of high-quality hospital care, improves health, and reduces reliance on costly coping strategies. Lower copayments generate larger increases in utilization, yet health and financial-protection gains are similar across copayment levels. When net benefits, which account for selection and insurer costs, are computed from experimentally estimated outcomes, higher copayments perform better. In contrast, revealed-preference calculations based on households’ valuation favor low copayments, highlighting a tension between outcome-based and valuation-based approaches to insurance design.