1 Health Insurance for the Poor in Developing Countries by Johannes P. Jütting Development Centre, OECD, Paris Presentation at the UN Department for Economic and Social Affairs (DESA) March 11, 2005, New York

2 Why is health a crucial issue for development and poverty reduction? High and often “hidden costs” of illness for the poor From estimating “needs” to analyzing channels/conditions Interesting institutional innovations world wide in coping with health risks

3 Economic Costs Non-economic Costs Direct Costs Indirect Costs Financial Costs Cons & Lab Bed Drugs Transport Food Accomodation Time Costs Waiting time Days lost due to illness Sale of Livestock Sale of Asset Weak /Reduction in Labour supply Low level of Productivity / income Pain/ Disutility Exclusion from Social Activities Risk of Death Risk of being handicapped Travel time - Reduce productive capacities - Reduce credit worthiness -Less chance to hire out or hire in labour Low Leisure Time Costs of Illness Source:Asfaw 2003

4 Hospitalization and Impoverishment

5 Outline 1)Health care financing as a key challenge 2) Institutional innovations: Community-based health insurance 3) Impact of community-based health insurance schemes: What do we know? 4) Lessons learned from successes and failures 5) Policy challenges 6) Conclusions

6 Health care financing as a key challenge Problems in developing countries −Social insurance in its current form inadequat to reach the poor −Limited total expenditure for health −Health system regressive −Out of Pocket Expenditure (OOP) remain the main source Recent innovations in health care financing Can these innovations contribute to poverty reduction?

7 Different Forms of Health Care Financing Tax Collector Risk-Pooling Entity Social Insurance Revenue Collector Employers and Consumers Taxes/Contributions Health Care Providers General Taxation Social InsuranceOOPPHI Source: Sekhri/Savedoff (2005)

8 Private Health Insurance Health Insurance Pre-payment Risk-pooling (inter-temporal and/or inter-personal)

9 Overview of community financing schemes Worldwide development From micro-finance to micro-insurance Great variety of institutional arrangements Small risk pools Subsidies Institutional Innovations: Communtiy-based Health Insurance (CBHI)

10 CBHI in Sub-Saharan Africa

11 An example: mutual health organizations in Thies (Senegal) Development out of local self help groups Operate in rural areas Coverage: Hospitalization Important provider support Co-payments Institutional Innovations: Communtiy-based Health Insurance (CBHI)

12 Characteristics of community financing schemes Community involvement Voluntary membership Non-commercial Risk-sharing Solidarity Institutional Innovations: Community-based Health Insurance (CHI)

13 How does it work? Example from Senegal

14 Data sources − Concertation (2004): Inventory in 11 francophone African countries − ILO/WHO/GTZ/OECD project using WHO national health survey data (2002) − Jütting (2005): field study in Senegal 3) Impact of CHI

15 Supply and Demand of Health Insurance

16 Who participates? – The poor? The chronic poor as well? – Social exclusion? Direct impact: access to health care and better financial protection Indirect impact: labour productivity, health outcomes, income and well-being Impact of CHI on Poverty

%366Total 100.0%9.8%36Unknown 90.2%8.5%31>100, %5.5%2050, , %4.6%1730,000-50, %20.2%7410,000-30, %16.7%615,000-10, %8.7%323,000-5, %11.7%431,000-3, % 52< 1,000 CumulativePercent# of MHI Target Group of HMI * according to micro-survey of African insurance providers Source: La Concertation (2004: 23). Target Groups of CBHI in Western and Central Africa

18 Who participates? Senegal Field Study

19 Results: Access to Health Care and Financial Protection

20 Utilization of Health Services

21 Health Care Financing Strategy

22 Participation − The poor participate, but the chronic poor are generally excluded − Risk of social exclusion (kinship, ethnic groups, religion) − Overall coverage very low Access to health care and financial protection − Some positive evidence > more studies needed (randomized experience ideally) − Strengthening of demand side − Promotion of preventive health care; education Summary of Findings

23 Broader poverty impact – So far only anecdotal evidence – More research needed Overall assessment – Very limited evidence so far – Most CBHI schemes seem to have pro poor impact for their members, but only on limited scale – Although CHI promise improvement of status quo (OOPs; user fees), donor expectations too high Summary of Findings II

24 Scheme design and management Flexibility in payment procedure and benefit package Controlling for adverse selection and moral hazard Degree of community participation Existence of a viable health care provider Quality Household and community characteristics Level of welfare in the village Perception of illness/insurance Traditional risk sharing arrangements Lessons Learned

25 Increasing poverty of CBHI impact requires: Scaling up of schemes and institutional strengthening Improvement of scheme design; e.g. link to MFI, broader coverage, modalities of paying fees Training and education Improving link to the public health sector (PPP) Linking up with PRSPs and decentralization Donor support 5) Policy Challenges

26 Improved access to health care key determinant for poverty reduction Community financing interesting option to be further explored, but......scaling up crucial for further development Improving social insurance Experimenting and evaluation of private health insurance beyond community financing 6) Conclusions and Outlook