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Universal health coverage is a central goal in many low-income countries. We conducted a large, four-year randomized trial of premiums and subsidies for India’s first national public hospital insurance program, RSBY. Demand was substantial (~60% uptake) even at prices equal to the government’s premium cost, but enrollment showed strong adverse selection. Insurance increased claims but not healthcare use, implying primarily financial benefits. Many enrollees failed when attempting to use coverage, underscoring the importance of learning. We find little effect on health outcomes. Given India’s high marginal cost of public funds, universal free insurance is unlikely to raise welfare.
