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HEALTH MICROINSURANCE

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East African Experience Dr. Nelson Gitonga Insight Health Advisors May 2010. WHY MICRO HEALTH INSURANCE? There is a viscous cycle between health status and ... – PowerPoint PPT presentation

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Title: HEALTH MICROINSURANCE


1
HEALTH MICROINSURANCE
  • East African Experience
  • Dr. Nelson Gitonga
  • Insight Health Advisors May 2010.

2
WHY MICRO HEALTH INSURANCE?
  • There is a viscous cycle between health status
    and poverty
  • Lack of resources is one of the biggest barrier
    to accessing health services for the poor and low
    income earners
  • In Kenya 38 of the ill who who did not seek care
    cited lack of money as key barrier (Kenya
    Household Health Expenditure Survey 2007)
  • Out-of-pocket spending on health only worsens
    poverty
  • WHO estimates 125 million households globally
    spend over 50 of annual income on health
  • Catastrophic healthcare expenses drives about 25
    million households into poverty each year
  • Poor households identify Illness/Injury, Death of
    family member as the most common causes of
    decline in wellbeing (Narayan et al 1999)

3
WHAT IS MICRO HEALTH INSURANCE?
  • Definition
  • Low cost voluntary private insurance products
    and services targeted at the poor and low income
    earners as a means of protecting them from
    vulnerability arising from risk events

4
WHAT DO WE KNOW ABOUT MICRO HEALTH INSURANCE?
  • Some basic facts
  • Health insurance is one of the many products
    offered by micro-insurance
  • The low income earners participating in
    micro-insurance usually come from largest
    economic sectors in East Africa informal and
    agriculture
  • Most common model for micro-insurance is a
    Partnership Model
  • The risk carrier (insurer) partners with a
    distribution financing channel (MFIs and other
    community agricultural organisations) and a
    network of low cost health providers (often
    public, FBO and small private providers)
  • Donors subsidize premiums/contributions in some
    cases to facilitate affordability and fast uptake
    of the products

5
HOW CAN MICRO HEALTH INSURANCE HELP?
  • Micro-insurance can play a key part in poverty
    alleviation, income protection, and health
    status
  • Reaching low income earners frequently left out
    by conventional private health insurance and
    public pay-roll based health insurance schemes
  • Acting as the primer for future expansion of
    public/social health insurance and offer useful
    lessons for planning universal coverage
  • Offering more sustainable health insurance than
    community insurance since its risk is managed
    professionally and can be bundled with other
    insurance and financial services
  • When combined with other micro-insurance products
    and microfinance services, its an essential part
    of providing broad vulnerability protection to
    the poor and low income earners.

6
HOW TO DESIGN A MICRO HEALTH INSURANCE PLAN
Insight Health Advisors
7
WHAT ARE KEY PROCESSES TO IMPLEMENT MICRO HEALTH
INSURANCE?
  • Marketing Distribution of products and services
    by agent organisation (MFI, farmers organisation,
    community group etc)
  • Recruitment of members and payment of
    contributions (If MFI is involved they may
    finance the contributions). Contributions maybe
    annual or monthly.
  • Accessing services from selected panel of
    healthcare providers (access control through
    lists, ID, referrals, photo or biometric cards)
  • Interface between provider and insurer through
    managed care principles.
  • Processing of claims and payment (Fee for
    service, fixed reimbursements and capitation).
  • Client relations and insurance cover renewal
    process.
  • Financial and business management of scheme

8
CHALLENGES WITH MICRO-INSURANCE
  • Without subsidies will not be affordable for the
    very low income earners and absolute poor.
  • Presents high financial risk for insurer (e.g.
    high transaction and admin costs, low retention,
    fraud, financial and social volatility and of
    target groups)
  • Problems associated with adverse selection and
    moral hazard since it is voluntary insurance
  • Difficult to build sufficiently large risk pool
    for sustainability
  • Lack of technical ICT and management skills to
    manage the schemes
  • Shortage of health workers and poor health
    infrastructure
  • Weak or restrictive regulatory framework
  • Lack of understanding of insurance concept (risk
    pooling) among targeted groups

9
EXAMPLES FROM EAST AFRICA
  • Existing micro-insurance schemes
  • Kenya
  • CIC Insurance with various MFIs (some initial
    donor support).
  • British American Insurance with KTDA (Kenya tea
    development authority) (some initial donor
    support).
  • UAP Insurance with Equity bank.
  • Various MFI initiated schemes -Faulu Kenya
  • Uganda
  • Microcare Insurance (Closed down?) (some initial
    donor support)
  • NB In all the above cases thorough and
    systematic reviews and case studies are needed to
    distil the valuable lessons learned

10
EXAMPLES OF MICRO HEALTH INSURANCE
CIC/MFIs Microcare/CBOs UAP/MFI
Inception date Model 2001 Partnership of Insurer btwn MFIs (Faulu, KADET, KWFT, K-REP) and co-op societies. 2000 Insurer/HMO working directly with CBOs and MFIs. Mid 2008 Partnership of insurer with Equity Bank (Commercial bank and MFI)
Target Group Geographical Coverage Clients and members of participating organisations in rural and urban areas Formal and informal sector /community organisations in urban and rural areas. MFI members. Bank Clients across the country. Initial pilot selected urban areas.
Benefits Outpatient (OP) Inpatient (IP) IP cover including HIV/AIDS and chronic conditions. Also sold public IP insurance cover NHIF. Comprehensive IP and OP cover, each unique to the group insured. Includes HIV/AIDS health promotion. OP and IP cover including HIV/AIDS, chronic conditions maternity. Fixed reimbursements and capitation used.
11
EXAMPLES OF MICRO HEALTH INSURANCE
CIC/MFIs Microcare/CBOs UAP/MFI
Membership Characteristics 13,000 members (2008 - all micro-insurance products - 260,000) 85,000 members (2007) 2,000 (2009)
Average Premium /Contribution 80 p.a. (for a family of 5, shared IP cover limit 7,000 p.a. (2007-2008). NHIF option 26 p.a. per family. 30 to 300 p.a. For IP and OP cover. From 90 to 280 per person p.a. for IP and OP cover ranging from 1,000 to 13,000 p.a. (2008)
Comments Claims and admin costs higher than anticipated, hence financial loss. Challenge of MFIs marketing insurance. Microcare collapsed in 2008. Possible causes Low premiums compared to risks, financial risk mngt, adverse selection, member provider fraud, rapid growth. Unique bancassurance model. Bank finances premiums. Uptake good but slower than expected. Profitable in 2nd Year.
12
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Box 29775 00202 Nairobi ngrgachoka_at_gmail.com
254 202 504 628
Thank you! Please contact me through the
Network for Africa if you have more Questions at
www.network4africa.com
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