Abt Associates Inc. In collaboration with: I Aga Khan Foundation I BearingPoint I Bitrán y Asociados I BRAC University I Broad Branch Associates I Forum One Communications I RTI International I Training Resources Group I Tulane University’s School of Public Health Double Trouble: Health Insurance for the Poor and Priority Services Hong Wang, MD, PhD Principle Associate/Senior Health Economist, Abt Associates Kimberly Switlick-Prose, MPH Technical Officer, Deloitte Consulting Mini-University October 8, 2010

Outline What is health insurance Why health insurance is NOT inherently pro-poor How to make health insurance pro-poor Financial means How to make health insurance pro-poor Service package design

What is health insurance? Like other forms of insurance, health insurance is a form of financial risk protection mechanism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses Two distinct features: Uncertainty of incurring medical expense Possibility of catastrophic outcomes

Why health insurance is NOT inherently pro-poor What insurances schemes do we have? What determines enrollment in health insurance? What determines the use of health care services?

Pro-poor features of HI schemes TypesHow is this HI scheme financed? Equity features Availability of scheme to the poor in developing countries Financing Vertical Equity Delivery Horizontal Equity National Health Service General taxHighDepends on system design, service delivery structure, and population health-seeking behaviors Low/Medium Social insurance Payroll taxes paid by employer and employeeMediumNot available Private health insurance Premium contribution from participants and/or their employers LowLimited availability Community financing Premium contribution from membersLow/MediumMedium

What determines enrollment in health insurance? Enrollees are risk averse There is high probability of a sickness or injury event occurring Cost of sickness or injury is high (magnitude of the loss) Price of insurance is affordable Higher household income Paul Feldstein, 2005.Health Care Economics

Evidence on the poor’s demand for health insurance Willingness to pay – poor are less willing Enrollment – fewer poor enroll Drop out – poor more likely to drop out

Impact of mutual health organizations: evidence from West Africa Slavea Chankova, Sara Sulzbach, and Francois Diop, 2008

What determines the use of health care services? Derived from demand for health* From consumption perspective From investment perspective Actual or perceived illness Economic status (income and price) Cultural-demographic characteristics Health care supply *Grossman 1972

Evidence on the poor’s use of health services (benefit) Service use in general – the poor use fewer services Reimbursement (benefit incidence) from health insurance – the poor get less

Healthcare utilization by enrollment and socio- economic characteristics in Rwanda Household or Individual Characteristics % of sick individuals who sought care at a modern health care provider Ratio (1)/(2) BeneficiariesNon- beneficiaries Income quintile Poorest Quintile 2 Quintile 3 Quintile 4 Richest 26,2 42,9 40,2 41,9 50,5 13,7 21,3 25,4 30,7 33,3 1,91 2,01 1,58 1,36 1,51 Total 41,624,71,68 EICV 2005.

China: Participation in a CBHI by income and health status Table 6. Distribution of the Net Benefits among all population by expenditure and health status Health statusL-incomeM-incomeH-incomeRatio of H/L income L-health M-health H-health Ratio of L/H health

No type of health insurance is “naturally” pro-poor The poor might not be eligible The poor are eligible but might not enroll The poor are enrolled, but might not benefit (use services)

Financial means Subsidize or exempt poor populations from premium payments, user fees, or co-payments Target poor Door-to-door enrollment (Rwanda) Cards or vouchers (India, Bangladesh, Thailand, Philippines) Determine at point-of-service or enrollment (Ghana) NGOs, community or affinity groups (India, West Africa, China) Incentives for providers to serve the poor (Argentina) How to enroll the poor and ensure they benefit from health insurance?

Benefit package design Making benefit package attractive to the poor, by offering the types of services that they need and would use Including services that are accessible to where the poor live Inclusion of priority services into health insurance benefit package How to enroll the poor and ensure they benefit from health insurance?

Priority Services: What are we talking about? Priority services are considered the most important and critical services that target specific health conditions or a specific target group. Priority services include: MCH, RH/FP, and communicable disease prevention. They also include preventive services, or services that are intended to prevent a health condition from escalating into a catastrophic case. “Catastrophic” is defined as a health care cost that is severe enough to affect one’s financial stability and/or socio-economic status.

Priority Services: Do they really belong in health insurance? Depends! Many priority services are considered “insurable” Many priority services are considered “uninsurable” Which services are insurable vs. uninsurable ? REMEMBER : Two distinct features of insurable risks: Uncertainty of incurring medical expense Catastrophic

If priority services don’t all fit, why are they still important to health insurance?

Increase use of priority services For example, insured children under 5: Twice as likely to have slept under ITNs as uninsured children (Mali) With fever, almost 5 times more likely to seek care for fever within 48 hours than uninsured children (Mali) With diarrhea, 7 times more likely to go to a modern facility than uninsured children with diarrhea (Mali) Nearly 3 times more likely to seek care upon falling ill than uninsured children (Senegal) Diop, François Pathé, Sara Sulzbach, and Slavea Chankova. September The Impact of Mutual Health Organizations on Social Inclusion, Accessto Health Care, and Household Income Protection: Evidence from Ghana, Senegal, and Mali. Bethesda, MD: The Partners for Health ReformplusProject, Abt Associates Inc.

Reduce point-of-service costs and OOP for needed services In Ghana, household spending on health fell after insurance was introduced

Other reasons to include priority services: Make health insurance more attractive to user – particularly the poor => increase enrollment and renewal Improve quality of service delivery Make health services more available Reduce long-term costs of healthcare

What are the drawbacks of including priority services? Operationally, it is very complex to include priority services (which often tend to be out-patient) Can be administratively expensive to include Health infrastructure may not be able to support Provider payment can get complicated depending on mechanism used

Summary – How to insure the poor Not enough to say they are eligible Purposefully enroll and promote service use Many options – need to tailor to each country and to different segments of the poor population Measure performance – be accountable Don’t forget the financing!

Abt Associates Inc. In collaboration with: I Aga Khan Foundation I BearingPoint I Bitrán y Asociados I BRAC University I Broad Branch Associates I Forum One Communications I RTI International I Training Resources Group I Tulane University’s School of Public Health Thank you Reports related to this presentation are available at