Peer-reviewed article
The law of diminishing marginal returns in health insurance: evidence on child health outcomes from Pakistan's Sehat Sahulat program.
Shahid M, Naveed HM, Song J, Yuksel S, Dincer H et al. ·
Summary
Written by AI, not yet AICS's view · claude-haiku-4-5-20251001This study examines whether Pakistan's Sehat Sahulat health insurance program improves child health outcomes following the law of diminishing marginal returns, where benefits are greatest for the poorest families. The researchers analyzed data on nearly 4,500 children under 5 using advanced econometric methods to account for wealth differences. The program was effective at reducing stunting and diarrhea among the poorest households but showed declining benefits for wealthier families, with no significant effect for the richest group. The findings suggest that pro-poor targeting of health insurance maximizes impact for vulnerable children.
Key points
- Insurance coverage is associated with reduced stunting and marked declines in diarrhea rates among the poorest households
- Benefits of the program have diminished across the overall distribution of wealth
- Health benefits become statistically insignificant for the richest quintile
- Econometric tests confirmed a clear pattern of declining marginal returns
- The Sehat Sahulat program is very effective as a tool for reducing malnutrition among poor children in Pakistan
Limitations
The study uses cross-sectional data from a single demographic and health survey, which may not fully establish causal relationships despite the use of instrumental variables. The analysis is limited to children under 5 and cannot address longer-term health outcomes or effects on other age groups.
Abstract
Background Child malnutrition remains a serious public health challenge in Pakistan. The national health insurance initiative, the Sehat Sahulat Program (SSP), aims to improve access to health care for low-income families. This study examines whether the effectiveness of SSP follows the Law of Diminishing Marginal Returns (LDMR), whereby the marginal health benefits of insurance are greatest for the poorest households and decline with increasing wealth. Methods We analyzed data on 4,499 children under 5 years of age in the Pakistan Demographic and Health Survey 2017-18. To address endogeneity and wealth-based heterogeneity, we employed an IV-Probit model and an IV-Quantile Regression (IV-QR) across wealth quintiles, using community-level internet access and distance to the nearest health facility as instrumental variables. Logistic regression was applied as a baseline model. Results Analysis reveals a strong gradient in the effectiveness of SSP program. Insurance coverage is associated with reduced stunting and marked declines in diarrhea rates among the poorest households. These benefits have diminished in the overall distribution of wealth and have become statistically insignificant for the richest quintile. Econometric tests have confirmed a clear pattern of declining marginal returns. Conclusion The Sehat Sahulat project is a very effective tool for reducing malnutrition among poor children in Pakistan. The observed pattern of diminishing returns suggests that SSP provides the greatest health benefits to the poorest households. These findings support a pro-poor targeting strategy in Pakistan to maximize the program's impact within resource constraints.
Findings the Hub has extracted
Each claim below is labelled by its type of design and links back to this report.
- Intervention
- Sehat Sahulat Program (SSP), a national health insurance initiative providing insurance coverage to low-income families
- Population
- 4,499 children under 5 years of age in Pakistan, analyzed across wealth quintiles
Key finding
Insurance coverage associated with reduced stunting in poorest households