Financial Protection Effects of Universal Health Insurance: Evidence From Ghana's National Health Insurance Scheme

ABSTRACT National health insurance is a health financing strategy that facilitates risk‐sharing across populations and aims to achieve universal financial protection for healthcare. This article examines the effect of Ghana's National Health Insurance Scheme (NHIS) on out‐of‐pocket (OOP) healthcare expenditures. The study uses nationally representative data from the Ghana Socioeconomic Panel Survey (GSPS). Three waves were utilized in the analyses. The study addresses the issue of endogeneity related to health insurance status by employing a fixed‐effects two‐stage least squares (2SLS) approach with instrumental variables, using employment in the formal sector as the instrumental variable. The findings indicate that enrollment in Ghana's NHIS significantly reduces OOP healthcare costs, thereby offering financial protection to its members. Additionally, the results identify education, self‐assessed health, physical inactivity, and hospitalization as other key predictors of out‐of‐pocket health expenditures. The study recommends the implementation of income‐based subsidies to alleviate the financial burden on economically disadvantaged individuals and strengthening the Free Maternal Health Care Policy to address gender disparities in healthcare expenses, thereby enhancing financial protection and ensuring equitable access to healthcare. Furthermore, the National Health Insurance Authority should enforce regulations that prohibit excessive charges and ensure strict compliance with established pricing guidelines by healthcare providers.