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Innovating with micro-insurance – Uniting communities to manage health risks together
Dr Dinesh B Baliga serves as Medical Advisor in Micro Insurance Academy (MIA), to Community Based Health Insurance schemes and health strengthening projects.


Author shares, how community based healthcare insurance is the key for last mile healthcare affordability.


All over India, the level of out-of-pocket spending is around 70% of total health expenditure and only 17% of the population is covered for health insurance in India. Further 40% of the hospitalized individuals borrow money or sell assets to cover the cost of their healthcare and nearly 39 million people are pushed into poverty because of ill-health (Balarajan, Selvaraj and Subramanian 2011). Thus, health expenditure is one of the major causes of poverty in India. The government’s effort of increasing public funding for health is laudable, but, needless to mention, it puts enormous burden on the public funds. Therefore, it is imperative to explore and innovate alternative options. The sentiment of ‘innovation’, of finding newer and cost-effective ways towards development, is echoed by the honorable Prime Minister of India himself.

Following the same line of thought, our intervention aims to innovate in the space of Community Based Health Insurance (CBHI). While CBHI schemes are increasingly being implemented across the world to combat health-related vulnerabilities (Lahkar and Sundaram-Stukel 2010), however they have their own set of challenges:

1. Demand-side issues of low insurance awareness and a limited understanding of the risks faced by prospective clients, and

2. Supply-side issues of insurance packages that do not address the relevant risks, or are perceived to be too costly.

The model of the Micro Insurance Academy (MIA) is unique and innovative in addressing the challenges standing in the way of broader uptake of insurance. Our model is based on an in-depth study of the community needs and an analysis of factors, which would make CBHI schemes successful. We observe, analyze and quantify the problems from the point of view of the Base of the Pyramid (BoP)communities, taking them from a state of ‘no risk management solution’ to a state of owning and managing a fund catering to their health risks. Our program draws strength from resources available within the poor communities: strong social bonding, unity, and willingness to help each other in the face of adversity and their time and skills. The core principle of our work is studying the community’s socio-economic environment and rules-in-place through action-oriented research and a method of end-to-end ‘community involvement’.

Key innovative features of our work –

1. Customized solutions: We work with local partner organizations and existing grass-root groups like Self-Help Groups (SHGs), harnessing rather than inventing communities. MIA identifies the needs of the community through a baseline and involves the community through consultative workshops. The information and inputs gained through these interactions with the community are used to determine the priority risks and calculate premium options based on the community’s willingness to pay. To ensure complete ownership from the community and affect uptake, MIA facilitates guided sessions of ‘consensus building’ amongst the community members to reach and finalize a single benefits package.

2. Insurance awareness and education: MIA uses innovative and engaging communication tools, developed locally with the community, to spread awareness about the value of insurance.

3. Trusted governance: The scheme is governed and managed locally by unanimously selected community members. These members are trained to hold office for the scheme and manage and run it at a local level. The community owns the funds collected through the premium.

4. Voluntary and contributory participation: Participation in the scheme is voluntary and entails a contribution from the participants. Through information, education, local governance and community participation, the community members are able to take informed decisions of contributing and trusting the scheme. Therefore, this is probably a model, first of its kind, where poor communities contribute to the premium in full, without any subsidy.

5. Inclusion:This scheme is open for membership to all age groups. 57% of the enrolled members in CBHI schemesare women, and 89% of the enrolled members identify themselves as “scheduled caste/scheduled tribe” (SC/ST) (that are normally of a lower socio-economic status).

6. Women as change agents:InMIA’s CBHI model, the membership of a household in the scheme is only possible, if the SHG female member joins; she can bring other family members into membership. As the scheme is implemented through SHGs, women are the center of discussions, deliberations and consensus building exercises in choosing the benefits package. Furthermore, office bearers governing the scheme are usually women. The other strategic decision enhancing gender equality in our project relates to how the insurance is priced, and in reimbursing actual costs to those that incurred them. In calculating frequency and severity of risk for the purpose of setting premiums, we do not distinguish by gender; rather, we obtain a uniform price (for males and females, young or old) per benefit type. We apply true “community rating”, reflecting that the overall cost of all types of benefits is divided equally by all members. This is different from the commercial insurance practice to differentiate premiums by age and gender. The claims are paid to the person that submitted them, in cash if necessary, so women (that may not have a bank account) can receive payouts directly, just like men-folk.

7. Sustainability:This means that after the initial handholding, the community has the will, the capacity and the resources to operate the scheme on its own. The purpose of the handholding period is to communicate the value of risk pooling for the community, giving them the structure of governance which is trustworthy, and seeing the scheme start operations that can lead up to a stage when it can continue with its own financial resources. Towards this end,MIA’s implementation model ensures social and financial sustainability. We calculated an estimate of the ability of the CBHI MIA has been supporting in Banke, Nepal, to continue to operate sustainably even after MIA withdraws from providing support.The results demonstrate that our CBHI scheme can operate sustainably with its premium income, even without subsidies, after 5-7 years of implementation and handholding support.

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Consensus building exercise and choosing of benefit packages

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Premium collection and enrollment

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The overall impact relates to the effect of being insured in a scheme over a long period of time. MIA has been at the forefront of developing a theoretical and conceptual framework on how to measure the impact of CBHI. A baseline is conducted before the start of a project to be able to compare the results and assess impact after the intervention. Some of the key findings from our impact assessment research are:/p>

• Better financial protection through high claim ratio across our schemes (50%-85%)

• Reduced borrowing with interest to fund healthcare costs

• Improved financial position

• Improved access to healthcare and improved health-seeking behavior. Being covered by the schemes, the members are less hesitant to approach doctors and hospitals. Furthermore, trained scheme officials advise and encourage proper treatment.

• High renewal rates 40-80%, [MIA-MIS]

• Women empowerment – In 2015/16, we reached 1,252 SHGs or 12,500 women through our trainings in project areas of Bihar and Maharashtra and251 SRGs (Self reliant groups) or 34343 women in Nepal.

In conclusion, it is worth noting that through our schemes we have demonstrated that communitiesare able to manage ‘insurance businesses’ after a certain level of training and capacity development. Enabling communities to be self-reliant and taking collective action to resolve their issues locally has more value than making them being dependent on external support and subsidies.

MIA CBHI implementation sites:

Kalahandi district, Odisha; Muzaffarpur and Vaishali districts, Bihar (ongoing); Beed district, Maharashtra (ongoing); Rajnandgaon district, Chhattisgarh; Banke and Dhading districts, Nepal; Kanpur Dehat and Pratapgarh districts, Uttar Pradesh.


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