Growing Interest in Micro-Health Insurance

This article was originally drafted by the Strategic Foresight Group for the newsletter “Asian Horizons” as part of the Rockefeller Foundation’s Searchlight Process. For more Searchlight content on futurechallenges.org, please click here.

There is a growing interest by the government and public institutions to participate in the micro-health insurance sector in Bangladesh. Although micro-health insurance has existed in various forms in the country since the last decade, very few programs were financially self-sustainable in the early part of the decade. Increasing participation by the government and growing efforts to increase cost recovery and financial viability could expand the reach of micro-health insurance in the coming years, thereby helping poor populations to access important hospital services.

In 2011, the government announced a new health insurance scheme which is in process of being implemented from early 2012. Under this scheme, poor people will be given a health insurance card to cover medical expenses. The government will pay the insurance premium from general taxes. The pilot stage covers about 600,000 people in Rangunia, a sub-district of the Chittagong district and Debhat, a sub-district of Satkhira. The government is planning this scheme to be a combination of India’s Rashtriya Swasthya Bima Yojna (RSBY) and Rajiv Arogyashri Health Insurance. Initially, secondary health services along with some tertiary care will be provided to poor people holding health cards in listed public and private hospitals. The treatment will be free of cost for the patients covered by the insurance scheme.

Government and public institutions are also partnering with international organizations to advance efforts in the micro-health insurance sector. In 2010, the Government of Bangladesh, Palli Karma-Sahayak Foundation (PKSF), and the Asian Development Bank (ADB) launched a USD 2 million project titled ‘Developing Inclusive Insurance Sector’.  The project includes micro-health insurance as a large component and is targeted at protecting 20,000 poor and vulnerable households from risks to health, life and livestock. In 2009, the Rajshahi City Corporation formed a Public-Private Partnership with the German Technical Cooperation (GTZ) and the local Rickshaw Pullers Association (RPA) to launch a health micro-insurance scheme for the city’s rickshaw pullers. Pragati Life Insurance Ltd., a Bangladeshi public limited company, also started a pilot micro-insurance scheme in 2009, offering life insurance with selected hospitalization coverage in partnership with 6 local NGOs. Currently, the scheme covers about 26,000 Bangladeshis living on less than USD 2 a day. The pilot project is funded by the Gates Foundation and the International Labor Organization (ILO).

In 2006, a local NGO, Sajida Foundation started ‘Health, Education and Life Security Program’ (HELP), a micro-insurance program including health, life and disaster insurance. At an annual premium of USD 3, up to 5 members of a family can receive designated hospital service benefits. Doctors are also available for free consultation at 62 microfinance branches across the country. The foundation has also started using ICT (mobile phones) to expand the micro-health insurance program.

The future of micro-health insurance is likely to depend on the success of government initiatives and on the restructuring of existing NGO programs which struggle with long-term financial self-sustainability. At present, only the micro-health insurance schemes managed by the Dhaka Community Hospital and the Society for Social Services operate at 100% cost recovery and are not cross-subsidized by other services provided by the NGO. There are initial efforts to experiment with the design of micro-health insurance schemes such as shortening the term of the scheme, restructuring claims management and expanding coverage to include lower middle-class homes. New government programs are likely to extend micro-health insurance to the segment of population not covered by micro-finance institutions which often tie microfinance loans to the insurance scheme. At present benefits are largely limited to people availing of microfinance products. Success of micro-insurance for health could also aid adoption of other micro-insurance products like crop insurance and disaster insurance in the country. Foundations could potentially partner with local micro-finance institutions to design and implement new micro-health insurance programs.