The Effects of Health Insurance on Demand for Healthcare Services in Tanzania

ABSTRACT: Consistent healthcare financing systems within a particular nation or community have been regarded as vital for making universal healthcare access. This study intended to examine the influence of health insurance on the demand for healthcare services and the influence of socio-economic, demographic and hospital-related factors on demand for health care services in Tanzania context. The study employed secondary data, which were analysed by descriptive statistics and the results were presented in tables and percentages. Econometric analysis was also done using binary probit regression model to determine the factors influencing demand for health care services in Tanzania. The instrumental variable was applied to address the problem of endogeneity of health insurance. The regression results revealed that gender, education level, household size, income, treatment cost, perceived health quality and health insurance type were significant and positively linked with demand for health care services. However, marital status was also significant but negatively associated with the demand for healthcare services. The study concluded that, despite of the efforts made by the government and other stakeholders on emphasis over having health insurance, the enrolment to health insurance schemes is still low although it has been noted to significantly influence the demand for health care services. Lastly, the paper recommends that the government and other stakeholders are required to formulate or strengthen the formulated policy in practice, purposively to improve access, affordability and the quality of health care services. Governmental and non-governmental organizations (NGO`s) and other stakeholders should put more effective strategies to improve coverage but also reduce the financial burden caused by illness. Also, the government needs to subsidize the healthcare sector, especially to the poor and provide subsidies to private healthcare facilities, improvement of insurance type, specifically, the NHIF which needs to increase coverage. Furthermore, health care managers should educate other people and make a clear observation on factors that make individuals demand for health care because they have a great role in the health care sector as well as strategies to improve household`s income to meet the health needs in Tanzania.