Comprehensive vs. “sliced” health microinsurance: The value of subsidy BBL FOMIN June 2014...
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Transcript of Comprehensive vs. “sliced” health microinsurance: The value of subsidy BBL FOMIN June 2014...
Microinsurance Learning and Knowledge
Comprehensive vs. “sliced” health microinsurance:The value of subsidy
BBL FOMINJune 2014
Barbara MagnoniClient Value Project ManagerMILK Project
MILK Project
Objective is to understand:
1. Does microinsurance offer value to low-income policyholders and their families, and if so, under what conditions?
2. Is there a business case for microinsurance among insurers and delivery channels, and if so, under what conditions?
Studied microinsurance programs, insurers, and delivery channels around the world, including work in 6 countries on health microinsurance
3-year project of the MicroInsurance Centre supported by the Bill & Melinda Gates Foundation
What is Health Microinsurance?
Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved
Does not necessarily imply small policies or low coverage, but low capacity to pay typically limits premium size
“Traditional” health insuranceUS health plan USD 4,250
MicroinsuranceKenya micro health USD 6.18India micro health USD 3.210.07% - 0.14% of the US premium
What is Value in Microinsurance?
3. Financial (cost savings, cash flow, financial burden)
Value can be:
1. Expected (incentives, peace of mind)
2. Service (access to services)
Insurance
Insurance
Measuring Financial Value
LoansHelp from
familySavings,
Etc…
Group client satisfaction studies are not enough
Need more rigorous sampling & measurement
Client Math: What is the added value of
insurance vis-à-vis other common coping strateges?
Measures the full cost of a shock & financial responses
Compare insured vs. uninsured
YES! YES! YES! YES! YES!YES!
YES!
Are you happy with
insurance?
How much did you spend on
each component of the funeral? How did you
pay?
FoodSeating
CeremonyBurialEtc…
Programs and ContextLocation Shock Cost in Months of Income
Kenya (Afya Yetu)
High-cost hospitalization
Kenya(Majani)
High-cost hospitalization
India(MicroEnsure)
Medium-cost hospitalization
India(Grameen Koota)
Medium-cost hospitalization
Nigeria(PharmAccess)
Management of hypertension for a 3-month period
Tanzania(MicroEnsure)
Acute illness
Guatemala(Banrural)
Routine women’s health care*Costs shown for uninsured respondents
Samples of approx. 30 insured and 30 uninsured in each study
$ $ $ $
$ $ $
$
$
$
How are these costs
financed?
Consider different levels of access and burden
53%
2%
23%
40%
53%
40%
2%
Indirect costs
Inpatient
Medicines
Outpatient - curative
Outpatient - preventive
Choices in product designH
ealth
care
Nee
ds
Hospitalization coverage
……. Chronic ….. Acute …. Pediatric ….. Gynecological ..…………
Hospital cash
Outpatient (preventive)
Pharmacy
Outpatient (curative)
“Doing the math”: Cost of hypertension in Nigeria
Transport cost
Dietary changes
Treatment & services
Other costs
Lost income
“Doing the math”: Cost of routine care in Guatemala
Labs
Transportation
Appointment
Lost income
Medicine
Annual insurance premium
“Doing the math”: Financing aHospitalization in Kenya
Income
Reduced Spending
Gifts
Informal Loans
Savings/Asset sales
Formal Loans
USD440
USD107
Financial Value of Health Microinsurance
• Complementary to other tools
• Reduces need for difficult financing mechanisms
• Can reduce cash flow pressure
• Some behavioral incentives = lower costs
Behavioral incentives from insurance
• Can increase access to quality healthcare
• But people use mostly what is covered • Can also create a “use it or lose it”
incentive – seek care sooner, more often, and more regularly
• Regular care in turn leads to other positive behavior change = financial value
Hospitalization Hospitalization
DrugsDrugs
Curative- OutpatientCurative- Outpatient
Preventative- OutpatientPreventative- Outpatient
Hea
lthca
re N
eeds
LowersDirect Costs
LowersDirect Costs
++++++
++++++
++
-/+-/+
LowersDifficult
Financing
LowersDifficult
Financing
++++++
++++++
++++
++
Postitive Behavioral Incentives
Postitive Behavioral Incentives
++
++++
++++
++++++
Value of different types of coverage
Can Subsidy Help Improve this Balance?
• Clients are thinking about financial value- not behavior!
• Subsidy can help include coverage that encourages behavioral outcomes
• Subsidy can help “sell” a product in the short-term
• In the long term, subsidy can be reduced with
– Greater familiarity from clients
– Improved quality improves
– Broader risk pool
• Can subsidy be sustainable? – Cross subsidy
– Government engagement
The MicroInsurance Centre“Developing partnerships to insure the world’s poor”
www.MicroInsuranceCentre.org
Microinsurance Learning and Knowledge