The word ‘Safety net’ is of unique relevance to micro insurance. When we think of safety nets, we think of ‘fall’ proof material which has our back when it’s our turn to take a blow. A bouncing castle comes to mind, and no matter how many times kids throw themselves on the castle, they bounce back unhurt, unperturbed, and ready to jump again. It is precisely the absence of comparable safety nets in real life, which hold back economically weaker sections of the society from withstanding tough times and recovering therefrom. Since they mostly depend on daily wages to sustain themselves and their families, a day off from work can directly create a dent in their income. Periods of bad health therefore leave them vulnerable to both physiological and socio-economic hazards. For the poor, accessing health services means a disproportionately large amount of out of pocket expenditure. While many may not attend to their sickness immediately, fearing the costs involved, they often end up expending a hefty sum on hospitalization, which could have been avoided if medical care was sought at the right time.

The need for ‘Safety nets’ for economically weak sections of  the society, is the promise that microinsurance hopes to fulfill, and though health microinsurance remains relatively challenging, there are a growing number of pilots around the world, especially in developing nations, which are attempting to overcome the hurdles that exist in extending financial inclusion to the poorest communities.

One such experiment is being undertaken by the CARE Foundation through the CARE Hospital and outreach network, with research and design inputs from the Centre for Insurance and Risk Management (CIRM) at the Institute for Financial Management and Research (IFMR), supported by the Microinsurance Innovation Facility at ILO. The model is piloted in Yavatmal district in the Vidarbha region of Maharashtra. Though the project is in its infancy, the ambition is to test the viability of a managed primary care model financed through health microinsurance over a period of three years. The product being piloted, is an out patient care cover, which will have CARE Hospitals assume the role of a managed care provider. Both health care and insurance services are delivered using a community based technology leveraged outreach model through grass root community workers trained as ‘Village Health Champions’ (VHCs) equipped with hand held devices, enabling doctors at the hub to remotely attend to the patient in the village, thus averting the need for travel to a clinic, and the loss of wage therefrom. If the illness requires greater medical attention, patients ,are referred to the ‘CARE Arogya Clinic’ located at Yavatmal for further investigations and treatment and to CARE hospitals at Nagpur and Hyderabad, for speciality and superspeciality care, respectively. The whole system is intricately woven from primary to tertiary levels of care.

‘CARE Arogya Kendra’ signpost at Yavatmal, Maharashtra

A training session for ‘Village Health Champions’ (VHCs) in progress at Yavatmal, Maharashtra.

The innovation that is the backbone of this model, has come at a price. Insurers have traditionally been reluctant to be the risk bearer for out patient products primarily because of apprehensions about gate keeping, adverse selection, moral hazard and prohibitive transaction costs. Currently, the hospital provides the scheme and bears the financial risk under the policy. The  goal ultimately is however to refine product features, its pricing, and the delivery model to demonstrate financial and operational viability and replicability to insurers and care providers willing to take this experiment to scale. 

Though the pilot currently offers only a cashless out patient cover that includes consultation, drugs and diagnostics, it is envisaged that a bundled product offering a seamless integration of domiciliary, ambulatory and hospital care will be piloted over the project period. Yavatmal incidentally is also the first district in Maharashtra to pilot the Rashtriya Swasthya Bima Yojana (RSBY). The CARE experiment if successful, will also be a case for influencing social insurance programmes like the RSBY to explore financing out-patient care in the long term. A confluence of holistic care provision and health financing will mean better access to health care services for the poor. It is then that ‘Safety nets’ for the poor shall take a whole new meaning.

In the next blog, I will write about another interesting pilot that hopes to cut the gordian knot for retailing microinsurance in rural markets. Until then!