Expanding health insurance to increase health care utilization: Will it have different effects in rural vs. urban areas?

Objectives: This study investigates the importance of medical fee and distance to health care provider on individual's decision to seek care in developing countries. Methods: The estimation method used a mixed logit model applied to data from the third wave of the Indonesian family life survey (2000). The key variables of interest include medical fee and distance to different types of health care provider and individual characteristic variables. Results: Urban dweller's decision to choose health care providers are sensitive to the monetary cost of medical care as measured by medical fee but they are not sensitive to distance. For those who reside in rural area, they are sensitive to the non-medical component cost of care as measured by travel distance but they are not sensitive to medical fee. Conclusions: As a result of those findings, policy makers should consider different sets of policy instruments when attempting to expand health service's usage in urban and rural areas of Indonesia. To increase access in urban areas, we recommend expansion of health insurance coverage in order to lower out-of-pocket medical expenditures. As for rural areas, expansion of medical infrastructures to reduce commuting distance and costs will be needed to increase utilization. (C) 2010 Elsevier Ireland Ltd. All rights reserved.