Measuring Willingness to Pay for Supplemental Health Insurances by Contingent Value Method in Kerman

Out of pocket expenditure for health services is a major issue of health system in developing countries. Health insurance is a way to confront this problem. Regarding advancements in medical diagnosis and treatment, providing an appropriate healthcare package is difficult. This study aimed to create a hypothetical market to elicit willingness to pay and demand for complementary health insurance.
We used a multi-stage sampling method to select 1023 head householders in Kerman. The Bidding Game approach was used to estimate willingness to pay; and the multiple linear regression and ordinary least square were used to elicit the demand for health insurance and its influencing factors. The variance inflation factor was used to assess collinearity; and the Breusch-Pagan test was used to review heteroscedasticity.
The average willingness to pay for complementary health insurance was 220156 Rials per se in one month. Risk aversion, household income, health insurance status, employment states and marital status affected the willingness to pay. The price elasticity was estimated about -1/54 percent. Risk aversion was the most influencial factor in the individuals’ insurance demand. Risk level had no effect in the individuals’ insurance demand.
From a policymaker’s point of view, willingness to pay can be assumed as a criterion to determine premium in health insurance. Identifying willingness to pay in risk aversion people and risk pooling can reduce exposure to large financial losses.