Association for Public Policy Analysis & Management

In 2008, the Indian government created its first large-scale public health insurance program called Rashtriya Swasthya Bima Yojana (RSBY) or, in English, the National Health Insurance Scheme. RSBY provides free health insurance coverage for hospital-based treatment, and aims to cover all 300 million people who fall below the Indian government’s official poverty line (BPL) including 9 million individuals in Karnataka alone. The rationale behind introducing public health insurance in India hinges on the growth of private hospitals: as long as some private hospitals accept the public health insurance, low income households are presumed to now have greater choice and financial access to relatively better quality services, compared to public hospitals. Relying on private hospitals is a reasonable policy design choice, given 70% of the growth in the number of hospital beds between 2000 and 2010 had occurred in the private sector. However, the physical accessibility of private or public hospitals remained limited in rural areas. Further, initial evaluations of RSBY, which focused on the design and roll-out of the health insurance scheme have highlighted the lower-than-expected utilization of the insurance. Physical access could pose a significant constraint to using the health insurance, not only due to the distance but also the road quality and seasonal disruptions in road access.

This paper investigates the extent to which proximity to newly constructed or updated highways affects RSBY utilization at private hospitals in Karnataka, India. A naive approach to evaluating the effect of highway construction would be to compare the utilization rates for households near the highway to households away from the highway, but this approach runs into obvious endogeneity issues because actual road location may be subject to various local political considerations, including the location of BPL households. Recent papers by Khanna (2016) and Adukia et al. (2017) have used data from two different road construction projects in India to measure the impact of road access on economic activity in general and school enrollment respectively. Khanna (2016) uses a straight-line approximation to the Golden Quadrilateral project, a major network of super-highways that connect historically major metro cities (Mumbai, New Delhi, Kolkata, and Chennai) to identify the effects of the Golden Quadrilateral on economic activity as measured by night-time satellite images. In this paper, I use the construction of a section of the Golden Quadrilateral in Karnataka to evaluate the role of physical road construction on the utilization of RSBY by BPL households. Following Khanna, I use a straight-line approximation to the GQ as an instrument for having the actual highway in a given subdistrict and look at its effect on the number of claims originating from that subdistrict, controlling for the number of BPL households and other subdistrict characteristics from census data. This paper also contributes more broadly to the health and development literatures by addressing the role of infrastructural constraints on the effectiveness of demand side interventions like health insurance, vouchers, and cash transfers.