Can community owned mutual micro insurance provide healthcare for all?

Kumar Shailabh, Executive Director, Uplift Mutuals shares an alternate healthcare financing model and outlines its benefits in a country like India where over 70 per cent of healthcare expenditure is done out-of-pocket

Kumar Shailabh, Executive Director, Uplift Mutuals shares an alternate healthcare financing model and outlines its benefits in a country like India where over 70 per cent of healthcare expenditure is done out-of-pocket

201604ehm13In the summer of 2002, a self-help group of women in the slums of Pune were sitting in front of an insurance salesperson, who was explaining to them, a health insurance product. The group had recently lost a member to a bypass surgery done too late and the consequent financial indebtedness that the family of the deceased member was facing. On completing his presentation, the insurance professional asked the women if they had questions for him. One of the members who had been listening attentively asked him as to what will happen to their money when they are not sick. The insurance professional in his wisdom replied that they will benefit financially (exponentially in relation to the premiums paid) when they fall ill similarly when they don’t fall ill, he stands to benefit from the one time premiums they paid. Looking at other group members, the woman said “then there is no incentive to remain healthy because when we are healthy, you are the one making money!”

This profound insight by the woman member stumped the organisation who was scouting for a relevant health insurance product to offset financial indebtedness that a poor household faces when a health shock occurs. They thought maybe a more relevant product needs to be found out and in order to do this they first needed to understand healthcare financing needs of poor households. Consequently, a survey of poor households was commissioned in the slums of Pune. What came out of the survey results was even more surprising-only a very small percentage of the studied population wanted health financing, majority of the poor households were ready to pay to know where they could get a good doctor, a good treatment at a good cost. There were multiple cases found where the households had spent astronomical amounts of money on seemingly low cost treatments. The organisation knew that health insurance products in the market did not answer most of the needs identified and something else would have to be designed to meet the needs of the poor households that including health financing should promote being healthy and provide access to quality health care that was also affordable. The organisers were worried about the design of the available insurance products not matching with what they had found from the field, the fine print of exclusions and the opaque claims process. They were also acutely aware of the fact that there would be no control on the year on year rise in premiums and as years pass the households may not be able to afford the same.

Thus was born the idea of creating a mutual model and it was named as Uplift Mutual.

In a country where 70 per cent of the total health expenditure is made by households and 25 per cent is financed by governments at various levels1, out of pocket expenses, remain the dominant form of health care financing. Healthcare expense remains one of the major reasons why India’s poor  remain in debt. While the past decade saw several public health financing schemes mop up impressive enrolments through the public private partnership model (where the risk is carried by commercial insurers and premiums subsidised by the government) access to and affordability of quality healthcare for all, especially the poor, remains a work in slow progress. Voluntary health insurance permeation in the country remains low and limited (to salaried class) as awareness about insurance and distribution and transaction costs of offering voluntary insurance especially to the poor continues to remain high.

For poor households with a daily income of $ 2-6 primarily employed in the informal sector with little or no access to social security schemes, health is not a prime concern till a destabilising event happens. Lack of correct information on care facilities and proper guidance on healthcare issues forces poor households to rely on unscrupulous medical care providers. This leads the family into further poverty as they either borrow money or mortgage/ sell their assets to meet health expenses. The Mission statement of the National Rural Health Mission estimates that a single event of hospitalisation leads to over 25 per cent of families slipping below the poverty line in India.

Amidst all this and the demand to universalise health care through public financing (which again is supply led), there are efforts on ground, where households-(demand led) poor households have organised themselves to setup and manage their own health financing needs through what is known as health mutuals.

Uplift Mutuals is one such pioneer of this bottoms-up, grassroots, and demand led approach in healthcare financing.

Using an eco-system approach, Uplift Mutuals has learnt over the years, that in order to build sustainable, efficient and effective healthcare financing mechanism for the poor, it’s essential that poor households are both customers and managers of such a scheme. That such a scheme should facilitate access to quality care at affordable prices by design. That such schemes should focus not only on the curative aspects of care but build in preventive and promotive aspects of healthcare because there are limits to financing-especially by the poor. That such schemes should invest in building outpatient services as frontline service and gate keeping mechanism and seek complementarities with public healthcare.  That such schemes should be well planned, developed and designed and be run professionally using data for making informed decisions.

The mutual model of Uplift provides for a member designed and managed healthcare financing model where on becoming a member households not only share their health financing risks,  participate in the governance of the scheme at different points, but also share prevention, guidance and a multi layered network of healthcare providers.

Unlike most healthcare financing arrangements that have a top to down approach, in the mutual model the contribution to the scheme, which events will be financed and what will not be is decided by members participating to it. So whether it’s charging the same contribution irrespective of age or covering events like caesarian is done by members.

In a highly unregulated and opaque healthcare sector in terms of pricing and quality like ours, it makes sense to invest in removing asymmetries of information. Bearing in mind that poor households need access to quality healthcare at affordable prices along with health financing, the mutual model has invested in creating a multilayered access that includes local referral service, outpatient services, a 24X7 helpline, and a network of preferred providers. For the very first time these households get access to a range of health access services that help them to navigate the complex and often confusing healthcare sector in India. Member households have saved lakhs of rupees by going to the most appropriate healthcare provider, thanks to these services.

In the Mutual model emphasis on members understanding of the scheme and their participation in the governance of the same is crucial for its sustainability as they manage the scheme and take decisions. Uplift invests in training its members on managing the scheme at various levels and different points of the scheme. This helps them to understand the intricacies of how a health financing scheme works and makes them informed customers. A major critique of  bottoms-up or demand led models of healthcare financing has been that they are informally managed and perhaps that has been the reason why very few have survived over a period of time or been able to replicate. At Uplift, data driven decision making, design and delivery has been at the core of its operations. Uplift partnership with TEITO (an IT  company) ensured that it entire operations are run systematically and hence an elaborate management information system(MIS) has been setup over the years that has allowed households to take technically sound decisions. This MIS in now converted into a cloud based system and has allowed Uplift to replicate its health mutual in even far-flung tribal populated areas like Dungarpur (Rajasthan).

Women members play the risk sharing game as part of designing their health financing scheme, Dungarpur, Rajasthan.

While there have been many bottoms up models of healthcare financing in the past (according to an ILO study in 2008 there were over 50 such schemes, The International Cooperative and Mutual Insurance Federation (ICMIF) in association with the Insurance Institute of India will soon publish a landscape study including the current status of such schemes in India), very few have survived while others have chosen to co-opt with social security schemes. In a country where policy making is about large numbers, arguments of scale have been constantly used to compare such models against mainstream and state sponsored insurance models, however there has been very little interest in understanding such schemes or supporting them on a continuous basis or at a large scale.

Such demand led models are nevertheless relevant in a country like ours as according to a recent ICMIF study there are over six lakh cooperatives and roughly 240 million households as cooperative members. If a universal healthcare (and financing) programme has to be built in this country grassroots-people participating- models will need to be part of such design in order for them to be impactful and sustainable solution, which would otherwise be heavy for the state exchequer in the long run. A two level model, where low cost but high frequency health risks are managed by such community based health mutuals and high cost low frequency health risks are borne out of dedicated public funds seems to be both impactful and sustainable design.

It is essential that the demand side of health care financing is organised in a manner that it provides access and affordability to all including poor households and for such a system to evolve in the country health mutuals can play a critical role.

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