Healthcare Delivery: Insurance and Finance
This post is part of my continuing series about financially sustainable models that provide healthcare to the poor.
In developing countries, there is a strong correlation between access to finance and access to healthcare. Getting the poor to bank, and bank profitably, could push rural finance and healthcare past a tipping point: from philanthropy with a hint of business logic to real commerce with a hint of compassion. To test this assumption, a number of new initiatives are using private sector strategies to increase the availability of both.
One such model in Africa is piloting an approach to health insurance arising from principles of solidarity and mutual assistance. With support from USAID, groups called Mutual Health Organizations (MHOs) are being set up in 11 countries to provide affordable general and reproductive healthcare to women. Their structure is similar to microfinance self-help groups (SHGs), where women make monthly or semi-annual contributions that are pooled to cover future expenses of its members. The Organizations also leverage their combined bargaining power to negotiate better rates for a predetermined set of health services provided by affiliated clinics and hospitals.
Enrollment numbers are growing exponentially. In Rwanda alone, membership grew from 88,000 to more than 200,000 in just three years. The rapid growth is partly attributable to the fact that, unlike many government or NGO health initiatives, Mutual Health Organizations are viewed as legitimate because they are completely indigenous, often stemming from local solidarity networks that already exist.
Although MHOs are financially fragile for at least five years, research shows that they are increasing access to healthcare services in poor countries. In Rwanda, pregnant members were up to 65 percent more likely to visit modern healthcare providers than pregnant non-members. Efforts are now being made to coordinate the involvement of the government, donors, and non-governmental organizations (NGOs) whose support is critical to the survival of young MHO.
Also in Africa, a consortium comprising AAR, K-Rep Bank and K-Rep Development Agency has initiated an innovative, private sector driven, commercially viable and replicable health financing scheme. The project has made great strides in developing two key products in Kenya: the Afya Card and the Afya Loan. The Card is a family based health plan designed to provide for basic healthcare needs for the entire family. The Loan product makes the Card affordable, giving clients the ability to pay for the health plan in flexible installments.
Insurance plans are also being offered to the poor. ICICI, India’s second largest bank, has made providing financial services to the poor an integral part of their long-term growth strategy. Through its rural banking division, the company is offering a wide variety financial services that meet both the needs and income levels of its clients, predominantly farmers and day laborers that are particularly vulnerable to injury, illness, and exploitation. For example, ICICI sells personal-accident insurance at its rural branches for $2 a year, with a payout of about $2,200 in case of death and half that in case of debilitating injury. By stepping in where government and NGO programs have failed, the bank is helping to address the root causes of poverty.
Also in India, the Jana Suraksha Scheme is providing affordable life insurance specifically designed for the lower income group in rural areas of Andhra Pradesh. The product is being offered by Aviva Life Insurance, a joint venture between Dabur, India’s leading producer of traditional healthcare products, and Aviva, the world’s sixth largest insurance Group. In partnership with Laskshmi Vilas Bank, the scheme has also been extended to SHGs, giving the female members special credit protection against their loan in the eventuality of an unfortunate incident.
Expenses from illness, injury or death can leave a family permanently indebted. Through a combination of cross-sector partnerships and income appropriate solutions, the examples above provide affordable options that give the poor greater control in managing these risks.