Independent Research and Policy Advocacy

Expanding Health Coverage through Community Based Health Insurance

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This note was first published as part of a webinar hosted by Dvara Research, USAID India, & Reimagining India’s Health System: A Lancet Citizens’ Commission on “Community Based Health Insurance: What potential does it offer to expand health coverage in India?

With large sections of the population continuing to spend significantly out of pocket, market based insurance mechanisms can offer an alternative. However, India’s indemnity based commercial health insurance with its complexity and a pre-dominant focus on hospitalisation is disconnected from consumer needs and does not account for lack of health insurance awareness and consumer behavioural biases in seeking healthcare and purchasing insurance. Community Based Health Insurance (CBHI) with its localised presence and emphasis on community participation in the design and delivery of health insurance is seen as one such mechanism through which financial protection can be offered to communities with strong social capital. Community Based Organisations (CBOs) such as microfinance institutions, cooperative societies, self-help groups, and non-governmental organisations which are spread across the country and have built trust among different communities are seen as potential conduits for CBHIs. However, the strengths of CBHI as a health financing instrument have not been completely explored and its reach remains limited. The objective of this research note is to explore the idea of CBHI, its strengths, and the barriers it faces in scaling up and expanding its reach.

The term Community Based Health Insurance (CBHI) is used to refer to a wide range of resource pooling mechanisms organised at the level of the community for provision of healthcare services. It includes mechanisms such as microinsurance, mutual health organisations, and revolving drug funds. Along with social capital, factors such as trust in CBOs, responsiveness of the scheme, and its need-based approach to addressing the health insurance needs of the communities have been found to be some of the key determinants of the willingness of communities to enrol in CBHI schemes. Broadly, there are three models of CBHI that have been identified in India – 1) provider-insurer model, 2) mutual model, and 3) partner-agent model. The mutual model, specifically, has been seen as offering the potential to overcome some of the barriers that prevent traditional commercial health insurance from reaching larger sections of the population. These include aspects such as heath seeking behaviour of consumers, health insurance awareness, range of health services offered, and affordability of health insurance products.

When viewed from a health financing lens, i.e., the mechanisms of revenue collection, pooling, and purchasing/ provisioning of services, studies show that CBHIs face barriers in diversifying their risks, operating sustainably, and fulfilling the health and financial protection requirements of the target communities on account of small/ limited size of their beneficiary pool. These barriers also require them to resolve various trade-offs. For example, while raising premium rates and scaling up can help in moving towards financial sustainability, CBHIs have to account for affordability and proximity to communities to ensure that need-based and customised products and services are made available to them.

As we look ahead and explore ways in which CBHI can help contribute to health financing in India, the following points may be considered – 1) beyond the current sources of funding available to CBHIs, there is a need to explore different mechanisms through which a sustainable CBHI model can be built. These include regulatory assistance in creating Hub & Spoke model, facilitating re-insurance, and lowering capital requirement for setting up microinsurance companies to facilitate recognition and scaling up of models such as mutuals. 2) studies on prevalent models suggest viewing CBHIs as “entry points” to other larger pools or financing arrangements outside the scheme. These include commercial pools and government financed health insurance pools.

The full note is available here.

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