Why is health a crucial issue for development and poverty reduction?

1. Health Insurance for the Poor in Developing CountriesbyJohannes P. JüttingDevelopment Centre, OECD, ParisPresentation 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. Costs of Illness Economic Costs Direct Costs Indirect Costs Non-economic Costs Financial Costs Time Costs Sale of Livestock Cons & Lab Pain/ Disutility Sale of Asset Waiting time Low Leisure Time Drugs Weak /Reduction in Labour supply Exclusion from Social Activities Travel time Bed Days lost due to illness Risk of being handicapped • - Reduce productive capacities • - Reduce credit worthiness • Less chance to hire out or • hire in labour Transport Risk of Death Food Low level of Productivity / income Accomodation Source:Asfaw 2003

4. Hospitalization and Impoverishment

5. Outline • 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 Health Care Providers Risk-PoolingEntity General Taxation Social Insurance PHI OOP Tax Collector Social Insurance Revenue Collector Taxes/Contributions Employers and Consumers Source: Sekhri/Savedoff (2005)

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

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

10. CBHI in Sub-Saharan Africa

11. Institutional Innovations:Communtiy-based Health Insurance (CBHI) • 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

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

13. How does it work?Example from Senegal

14. 3) Impact of CHI • 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

15. Supply and Demand of Health Insurance

16. Impact of CHI on Poverty • 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

17. Target Group of HMI # of MHI Percent Cumulative < 1,000 52 14.2% 14.2% 1,000-3,000 43 11.7% 26.0% 3,000-5,000 32 8.7% 34.7% 5,000-10,000 61 16.7% 51.4% 10,000-30,000 74 20.2% 71.6% 30,000-50,000 17 4.6% 76.2% 50,000-100,000 20 5.5% 81.7% >100,000 31 8.5% 90.2% Unknown 36 9.8% 100.0% Total 366 100.0% Target Groups of CBHI in Western and Central Africa * according to micro-survey of African insurance providers Source: La Concertation (2004: 23).

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. Summary of Findings • 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

23. Summary of Findings II • 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

24. Lessons Learned • 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

25. 5) Policy Challenges 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

26. 6) Conclusions and Outlook • 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