HEALTH INSURANCE PART-2
Item
- Title
- HEALTH INSURANCE PART-2
- extracted text
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Developing and Costing State-Flexible
Essential Health Package (EHP) for India
C o r-'i H - 2—B.
Key Output
•
Developed a draft framework for a State-flexible Essential Health Package for 34 prioritized health
categories.
•
492 health care services across promotive, preventive, curative, rehabilitative and palliative care were
identified under four broader categories: 1) Women's and Child Health, 2) Communicable diseases, 3)
Non- Communicable diseases and 4) Selected broader determinants of health.
•
System Costs estimated at different levels of care at select health facilities for the District of
Mallapuram in Kerala State.
•
Unit costing and estimation of treatment cost for 80 health conditions. (This included estimated
treatment cost for 25 conditions contributing to 70% of DALYs).
•
Integrated care-pathway developed for the management of four Diseases (Cardiovascular Disease,
Diabetes, Tuberculosis and Anaemia) with associated cost-effectiveness framework which could be
adapted and modified at the State level.
Introduction
Essential Health Package (EHP)
In many countries considering or in various stages of implementing
Universal Health Coverage, Essential Health Packages (EHPs) are
often promoted as an effective way to reduce health inequity
while improving health service delivery by focussing on effective
interventions and levels at which they should be available. Overall
EHPs aim to enhance universality, health outcomes, equity and
access by concentrating scarce resources on interventions
which provide the best 'value for money'. EHPs are intended
to be a guaranteed minimum - An EHP in ,a low-middle-income
country could consist of a limited list of public health and clinical
Werventions which will be provided at primary and/or secondary
level care. In contrast, in richer countries packages are often
described according to what they exclude. In addition to the,
"content or 'scope' of the package, there are also decisions to
be made about the level at which the services under EHP will be
delivered, and the 'shape' of the delivery model".2 To deliver the
services outlined in an EHP, human resources, drugs, equipment
and other infrastructure required to deal with interventions within
the package should be available. Universal Health Coverage (UHC)
is defined in the 12"1 plan document as "Ensuring equitable access
for all Indians to affordable, accountable and quality health services
from public and private sector where the government is the
guarantor and enabler, although not necessarily the only provider,
of health and related services". The vision for UHC also addressed
the wider social determinants of health through inter-sectoral co
ordination of various ministries as an important pre-requisite for
Our approach to developing an Essential Health Package (EHP)
not only considers disease management but also address broader
determinants of health. However,currently, there is no global
consensus on the methodology for development of EHPs. Countries
around the world have adopted different approaches in defining
health packages, some have framed benefit packages as defined
set of healthcare services while others have incorporated broader
determinants of health (water, sanitation, education, nutrition etc.)
as part of basic population wide health services. Since health is
a State Govt, responsibility in India, it was imperative to develop
an "Essential Health Package" that was flexible enough to address
State health priorities. A National Essential Health Package could
also serve as a guide for States to eventually formulate State
specific health packages based on disease burdens, health system
achieving Universal coverage.
capacity and resource availability.
Objectives
1.
This exercise provides a frame work for the development
of an Essential Health Package that is flexible to State
health needs.
2.
To estimate Unit Level Costs for delivering the health
services identified under the Essential Health Package.
3.
Integrative care-pathways mapped for management of
select diseases.
DALYs lost based on Global Burden of Disease - WHO Data repository (2012)z
Service Delivery Seminar Series, Draft Technical Brief No. 2,3 July 2008: Essential Health Packages: What Are They For? What Do They Change?
Burden of Disease
Framework for Design of
Essential Health Package
A framework for an EHP summarized in Figure 1 was developed
based on a review of published literature and Central and State
level expert consultations with multiple stakeholders. The EHP
framework was developed around the following dimensions:
(1) needs assessment through synthesis of global experiences,
national and state level policies and programs and disease
burden; (2) priority setting through a feasibility study to identify
specific health conditions and corresponding services and (3)
establishing linkages between various components of the health
system demonstrated as care pathways proposed for select health
One of the challenges in estimating disease burden in India was
the presence of multiple data sources. These include, government
reports (reported cases), individual studies (region specific
studies), WHO data repository and other large scale surveys
like NSSO (based on nationally representative samples). Many
of these studies and health matrices differed in methodological
assessments. After a review of a range of data sources and detailed
expert consultations, a consensus was built on using the following
sources of disease burden data -NCMH projections for 2015, Global
Burden of Disease (GBD) data repository(WH0(2012), NFHS-3
(2004-2005), along with reported figures from National Census and
the Crime Bureau of India, for priority setting.
conditions (CVD, Diabetes, TB and Anaemia).
Costing Estimations at National and
Methodology
The study involved two phases of evidence collation and synthesis.
The first phase dealt with identification and development of
National Essential Health Package for India. This exercise involved
global review of evidence from 14 countries on methodologies and
approaches for developing an EHR This was complemented by
a national and sub-national level situation analysis of the Indian
health system on health services, disease burden and availability
of public health infrastructure.
34 broad health categories were identified that comprised of 492
health services in consultation with experts from Centre and States
(academia, civil society, government officials, medical, allied health
and health economics).
Regional level3
A costing exercise was undertaken for estimating unit costs
for treatment of 80 health conditions. Unit level costing was
undertaken using standard treatment protocols and expert opinion.
The costing exercise included five sets of cost components (drug^|
health workforce, diagnostics, including estimation of system
costs) for following services: Inpatient EtOutpatient Care, Operation
Theatre per hour and Delivery Room Utilization per delivery. The
estimation for the system cost was drawn from Malappuram
district in Kerala State. Our cost estimates suggests the following:
1.
India need to spend ? 1195.78 per capita to treat 25 priority
health conditions contributing to 70% of DALYs lost (As per
GBD-WHO (2012) estimates) assuming 70% of total population
access public health facility.
2.
Estimated cost for provisioning of 80 select conditions
assuming 70% of total population will access public health
facilities will be ? 1626.38 per capita.
The second phase involved:
1.
Unit cost estimation for treatment of 80 health conditions;
2.
Care pathways for population level management of selected
health conditions along with a framework for cost estimation.
Note: While preventive and promotive services are mentioned in our
framework they have not been costed in the exercise above. Two
challenges faced in this exercise were: the 1) Lack of availability of
accurate and complete data on existing preventive and promotive
services 2) Paucity of evaluation and impact assesments of
preventive and promotive services in hospitals and school health
programs
Figure 1: Framework for development of EHP
Utilizing Unit Cost Estimates for
Priority Setting
The Cardio Vascular Disease +
Diabetes Pathway
The calculated unit cost for treatment of 80 health conditions can
In this pathway Diabetes and Cardio Vascular Disease has been
combined into one in order to ensure that when population level
screening is done, given the high level of overlap between the risk
factors for both these conditions, it does not have to be repeated
be used for estimating resources required for management of
selected health condition at State as well as National level. We
have attempted development of disease management pathway for
for each disease type and that the need for confirmatory laboratory
four health conditions. Of these conditions we have populated the
tests is minimised.
pathway for Cardio Vascular Disease (CVD + Diabetes) with data
This is a complex pathway and has a number of steps.
from Census (Age Distribution), Age specific prevalence data on
CVD from NCMH projections for 2015 and unit cost for treatment
The path for management of CVD can be graphically represented as
of various Cardio Vascular Diseases along with co-morbidities as
shown below in Figure 2 and Figure 2b (with a link to the Diabetes
Management Pathway). The first part is the full pathway, while the
second includes the Diabetes Treatment Protocol which is a sub
pathway of the overall CVD + Diabetes Pathway.(For this exercise
calculated above. We have also estimated some of preventive and
promotive health services like counselling, preventive screening
(Non-Laboratory Based), and used CGHS purchase rate for
we have used treatment cost of managing Diabetes which can
be altered by State Authorities while developing State specific
laboratory based screening.
policies).
Care Pathways for select Health Conditions
In order to arrive at the cost associated with the entire Pathway,
the conditional probability data needs to be supplemented with
well-defined Care Pathway needs two inputs:
following costing data:
The precise definition of a disease or a treatment related
condition that could occur in a population.
2.
The conditional probability associated with that condition,
since it could manifest itself along any one of the pathways
that the disease or the treatment strategy could take.
With these two inputs clearly defined, the Care Pathway can be
used to answer a number of very important health systems related
questions:
1.
Cost of managing a specific disease in a population.
2.
The infrastructure requirements associated with that specific
3.
The quantum and types of human resources required to handle
The conditional probabilities taken together with the associated
costs produce a cost of ? 320.14per capita required for entire
population. It is important to note here that population level
(non-invasive) screening plays a key role. It has a high cost of
as much as Rs.65 per adult that is older than 35 years but allows
care to be focussed only on high risk individuals so that the high
cost laboratory test of Rs 199.40 can be deployed in parsimonious
manner. And, since the screening can be carried out by local
village youth, it also ends up minimising the need for scarce skilled
manpower (such as trained lab technicians).
disease.
the burden of disease in a population
Figure 2: Care pathway for Management of CVD 8 Diabetes
0.44
School Education,
— Children Below 21 Yrs
r? 8i65
Anti - Tobacco Campaign etc.
? 82.65
[
0.49
-
Low Risk
0.15
Counseling
g.55.60j 120.90
“
-j Non Compliant
0.70
0.90
§
UHC Care
I Regular Check up _
'
0.38
-T (every5Yrs|
- Medium Risk J 108.00 ? 173.30
[?J.00_7 536.42
0.31
'
- Adult >35Yrs_
? 320.14
0.30
If Hypertensive,
—“I•Treat
Treat for Hypertension
^ 0.00 667.18
0.10
|
Pathway
( ? 199.40 ]t 3.736.48
0,05
I
0.03
/ Diabetes
I
Stroke
i
? 6,077.44 7 6.848 34
-----------laboratory testing-----------
. ? 0.00. ? 0.00
,
High Risk
Treatment at Health
______ Treatment at Health
---------- facility
Facility(DH/CHCI
(DH'CHC)
0.10
Disease Score
<20
L? 0.00
? 439.90
0.80
■I Regular Monitoring
Every 3 Yrs
follow Stroke
Managment Pathway
0.80
—! No Co-Morbidity —■
Treatment at
? 0.00 7 3,767.18
Health Facfity(DK-CHC)
j? 219.007 503.30
g 4,102,76g 4.152.61 '
0.25
0.20
Opportunistic
_ Adult between
? 0.00 ? 307.81
Follow CKD
? 4,500.00 ? 5,270 90
0.90
[-{Check for Co-Morbidity [ Confirmed CVD J g 506.20 ! 4.102.76
1,318.38 7 1,383.38
0.13
High Risk
" No risk scoring
21-35Yrs
0.03
- dronic Wney Disease —|
f65.30 ? 741.31
Pathway
Diabetes
—I Follow Diabetes
? 4,469,-33 ? 5,240.23
I Care Pathway
1
Screening;__ 7
g 49.85 ? 307.81
0.95
1
-j No Monitoring
Low Risk
| ? 55.60 i ? 105.45
ItQJXL 7 284.30
DAL Assumptions:
Costing exercise were based on facility based treatment cost and doesn't include costs incurred on outreach activities, district and state level admin cost, preventive,
promotive, rehabilitative and palliative services.
Administrative overheads were taken at 10% of treatment cost estimation.
Figure 2b: Sub- Pathway for Management of Diabetes
The School based education campaign for children below the age
of 21 accounts for almost a third of the total cost of ? 320.14. This
expenditure would need to be examined very carefully as there are
resource limitations. Laboratory based opportunistic screening for
individuals aged more than 35 and comprehensive diet counselling
adds almost Rs.255 to the overall expenditure. These approaches
may need to be re-examined if there are budgetary constraints.
Health education campaigns and opportunistic screening for
Key Policy Recommendations
1.
Service packages are critical as it serves as a
blueprint to assess the kinds of resources needed to
strengthen the health system for the delivery of the
services.
2.
Based on the care pathway the burden of Cardio
Vascular Diseases can be managed by Indian States
at Rs. 320.14 per capita using the proposed UHC
Care pathway as against Rs. 349.83/- per capita
estimated using the current conventional treatment
based pathway.4
3.
A national level costing exercise with more
representative sample is needed for developing
efficient resource allocation in Health Sector.
younger adults are dependent on State level capacity and initiative.
4 Costing on Conventional pathway is based on following assumptions
RiskofCVD is negligible in < 20 Yrs. (2) Prevalence ofCVD is 9.86% in person >20 Yrs; (3) 20 % of total population does regular preventive check-up of which 90% of high risk
population follow regular treatment protocol. (4) cost of managing emergency is Rs. 6077 which is treatment cost of managing hypertensive stroke.
.C'lON
PUBLIC
HEALTH
FOUNDATION
OF INDIA
NORWEGIAN EMBASSY
This study was conducted with the generous support of the
Royal Norwegian Embassy (RNE)
Public Health Foundation of India (PHFI)
Institute for Studies in Industrial Development (ISID) Campus
4,
Institutional Area, Vasant Kunj, New Delhi-1 10070
Phone No.: 011-49566000, Fax No.: 011-49566063 www.phfi.org
For queries please contact:
Pallav Bhatt, Varada Madge (pallav.bhatt@phfi.org, Varada.madge@phfi.org)
Research Team: Mr. Pallav Bhatt, Ms. Varada Madge, Dr. Nachiket Mor, Dr. Avtar Singh
Mr. Navneet Jain, Dr. Priya Balasubramaniam
Oer>3 W"
Tropical Medicine and International Health
VOLUME 2. NO 7 PP 654,-671 JULY I997
A health insurance scheme for hospital care in Bwamanda
district, Zaire: lessons and questions after 10 years of
functioning
Bart Criel and Guy Kegels
Public Health Department, Institute of Tropical Medicine, Antwerp, Belgium
Summary
A voluntary insurance scheme for hospital care was launched in 1986 in the Bwamanda district in
North West Zaire. The paper briefly reviews the rationale, design and implementation of the
scheme and discusses its results and performance over time. The scheme succeeded in generating
stable revenue for the hospital in a context where government intervention was virtually absent
and external subsidies were most uncertain. Hospital data indicate that hospital services were used
by a significantly higher proportion of insured patients than uninsured people. The features of the
environment in which the insurance scheme thrived are discussed and the conditions that
facilitated its development reviewed. These conditions comprise organizational-managerial,
economic-financial, social and political factors. The Bwamanda case study illustrates the feasibility
of health insurance - at least for hospital-based inpatient care - at rural district level in sub-
Saharan Africa, but also exemplifies the managerial and social complexity of such financing
mechanisms.
keywords voluntary health insurance, moral hazard, hospital care, district health systems,
research, rural Zaire
correspondence Bart Criel, Public Health Department, Institute of Tropical Medicine,
Nationalestraat 155, 2000 Antwerp, Belgium
Introduction
stable revenue to fund the cost of health care provision,
its capacity to reduce financial barriers to health care
Health insurance as a source of finance for health care is
utilization and its redistributive effects (Mills 1983).
a system in which potential consumers of health care
There is great interest in, and sometimes indeed strong
make an advance payment to an insurance scheme,
advocacy of the introduction or expansion of
which in the event of future health service utilization
insurance-based health care financing schemes in
will pay the provider of care some or all of the direct
Africa (Abel-Smith 1986; Arhin 1995a; Vogel i99oa;b;
expenses incurred (World Health Organization 1993a).
World Bank 1987,1993). Several international
The existence of risk is the fundamental rationale for
organizations consider the study of insurance systems
in developing countries as the priority area in the field
insurance. The reasons for encouraging health
insurance are its potential for raising additional and
of health care financing (UNICEF 1992; WHOi993b;
EU 1995). This plea for the development of health
This is the revised version of a paper presented by Bart Criel at
the international colloquium ‘The African Hospital’ held at the
Prince Leopold Institute of Tropical Medicine in Antwerp (6-8
December 1995).
654
© 1997 Blackwell Science Ltd
insurance in developing countries is in line with the
shift towards private sources of finance for health care,
the most notable change during the 1980s being the
introduction and increase in user fees for government
VOLUME Z NO 7 PP 654-672 JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
services (Creese 1990; Van Lerberghe 1994). In this
respect health insurance is a policy option which fits in
with the current international trend towards the
limitation of state activity and privatization (Criel et al.
1996).
presented. Barr Criel worked in the Bwamanda district
from September 1986 to July 1990. initially as a general
medical officer and later as district medical officer. The
Bwamanda insurance scheme is still functioning to date.
In our view, this case study illustrates the feasibility of
The introduction of national compulsory health
health insurance at rural district level in sub-Saharan
insurance schemes is being considered in some sub-
Africa, but also exemplifies its managerial complexity
Saharan African countries such as Ghana, Nigeria and
and difficulties encountered in its evaluation. The paper
Zimbabwe (WHO 1993a). This is unlikely to be an
hopes to contribute to clarifying the many issues and
equitable and efficient financing option in a context
questions district health planners face when considering
where only a minority of the population would be
health insurance in similar environments.
covered, for instance only formal sector employees
(Korte et al. 1992), and where the administrative
capacity required for the adequate management of such
schemes is limited. Vogel in his overview of formal
health insurance systems, both publicly and privately
Some theoretical considerations relative to
health insurance
What is health insurance about?
organized, in 23 sub-Saharan countries concludes that
the development of health insurance has neither
Insurance rests upon the principle of risk-sharing
promoted greater equity in access to health services by
between many people. It reduces individual uncertainty
the poor nor has it permitted greater access (Gruat 1990;
concerning the timing and amount of future possible
Vogel 1990b). The small middle class seems to have
expenses that may be incurred and thus contributes to
benefited most.
an increase in well-being (Dubuisson 1995). Insurance
Locally developed and district-based insurance
relies on the fact that what is unpredictable for an
schemes targeting poor rural self-employed populations
individual is highly predictable for a large number of
remain relatively rare in developing countries. These
individuals. The principle is one of insurance based on
‘community-based’ health insurance schemes are less
risks or probabilities and not one of prefinancing or
common than formal social security systems despite
prepayment for known future events (Mills 1983).
their a priori attractiveness (Baza et al. 1993; Carrin
Premiums ate paid to an institution which compensates
1987; Dumoulin & Kaddar 1993). Only within the last
— partly or totally - any insured victim of the event for
10 or 15 years have experiments in rural health
the financial loss resulting from the event. In the case of
insurance catering for self-employed people been
health insurance this insurance institution may also be
developed in sub-Saharan Africa (Shepard et al. 1990;
the health care provider. Such a situation is referred to
Chabot et al. 1991). There is still little analytical
as direct insurance (Kutzin & Barnum 1992), or a direct
information available about such health insurance
pattern of insurance (Roemer 1969).
schemes (Arhin 1995b), and further operational research
on the design and organization of insurance schemes
covering people in the informal sector is urgently needed
(WHO 1993a; Noterman et al. 1995).
We discuss one of the few well-established
655
Adverse selection and moral hazard: a brief overview
In voluntary health insurance schemes it is important to
minimize the preferential selection of high-risk
experiments in health insurance at district level in sub-
individuals, a phenomenon the insurance industry calls
Saharan Africa: the insurance scheme for hospital care
adverse selection. Adverse selection occurs when those
in the Bwamanda district in Zaire. Its origin, design and
who anticipate needing health care choose to buy
implementation have been documented (Moens 1990;
insurance more often than others: for instance, in the
Moens &C Carrin 1992; Ilunga 1992). Our principal aim
case of health insurance, patients with chronic diseases
is to focus on the evaluation of this scheme, on the
or individuals with a high predictability of health service
conditions for reproducibility, and on avenues for future
utilization (pregnant women for instance). It occurs
research. Institutional features and the practical
when insurance suppliers lack full information about the
organizational details of the scheme will first be briefly
risk of individual insured persons or when, on grounds
© 1997 Blackwell Science Ltd
Tropical Medicine and International Health
B. Cnel and G. Kegels
VOLUME 1 NO 7 PP 654-671 JULY 1997
Health insurance scheme for hospital care in Zaire
of equity, they offer insurance policies based on
security systems in industrialized countries is facing. It
community-rated premiums (Arhin 1995b). Community
has contributed to an increase in unjustified
rating refers to a policy in which the premiums are
consumption of health services at inappropriate levels of
related to the risk of the group in its totality; that is, all
care in the health pyramid, and the achievement of an
subscribers will pay similar premiums (except for
adjustments for family size). The premiums will thus not
integrated health system, i.e. a system where the various
tiers have a specific role and function in a
vary according to age, sex, health risk, occupation, etc.,
complementary way (Unger & Oriel 1995), may be
as is the case with actuarially based premiums.
jeopardized. The consequences are cost inflation, loss of
Community rating discourages those of low risk from
individual and collective autonomy, excessive
purchasing insurance while making it more attractive to
medicalization, etc. (WHO 1977). Hence one of the
high-risk individuals. The occurrence of adverse
major challenges a district health planner in a
selection is a function of the nature of the subscription
developing country will face when implementing health
unit (individual or household) and also of the
insurance is the need to minimize the undesirable and
proportion of people who join the scheme. The former
potentially harmful effects of enhanced financial
determinant can be controlled in the design of the
accessibility to health services.
scheme; the latter cannot, unless a minimum level of
participation is imposed before the insurance scheme
can function.
Moral hazard also has received considerable attention
from the insurance industry. It is defined by Mills (1983)
as ‘the tendency of individuals, once insured, to behave
in such a way as to increase the likelihood or size of rhe
Bwamanda district
Bwamanda district is located in the north-west of Zaire.
risk against which they have insured’. Moral hazard
It covers an area of 3000 km1 and had a population of
thus results in an ‘over-consumption’ of health services
about 158 000 in 1994. About 90% of the population are
for health problems that could find an adequate solution
farmers. Their annual per capita income is about USS
at lower levels of the system. Moral hazard can be
75. The health services in this district are based on a
induced by the patient himself, but also by the health
two-tier system: a network of 13 health centres scattered
care provider’s behaviour (Donaldson & Gerard 1993).
throughout the district and a 138-bed referral hospital.
It is likely to occur in a context where the organization
The diocese is the formal owner of the hospital but in
of the health services system lacks basic rationalization:
functional terms the Bwamanda hospital fully acts as a
for instance, a situation where people insured for
referral hospital for the Bwamanda area in accordance
hospital care have unlimited access to hospital services
with prevailing national health policies.
in the absence of an effective referral system between the
The development of the health services in Bwamanda
different levels of care. The well-documented case of the
was one of the activities of a larger integrated
health insurance experiment in the Masisi district in
development project, the CDI Bwamanda (Centre de
eastern Zaire is illustrative in that respect (Noterman et
Developpement Integral). The CDI Bwamanda is a
al. 1995). Preliminary data on the Nkoranza scheme in
Zairean non-profit organization; it was established at
Ghana also indicate the occurrence of moral hazard
the end of the sixties and gradually developed a wide
(Moens 1995). Methods have been developed in order to
range of activities in other fields than health care, such
counteract moral hazard. One of the most widely used
as agriculture, communications infrastructure, primary
methods, but not necessarily the most effective one, is to
education and rural development. It received
considerable external support in terms both of finance
institute co-payments or co-insurances. The insured
persons then pay part of the fee at the time of health
and of human resources. Government subsidies always
service utilization. Co-payment may be useful, not only
remained very limited.
in limiting excess demand, but also in generating
additional resources.
The occurrence of moral hazard is considered one of
the major problems that health insurance under social
656
Rationale, design and implementation of the
Bwamanda hospital insurance scheme
© 1997 Blackwell Science Ltd
By the mid-eighties the district health system had
reached a relatively high level of functioning. Quality
health care was accessible to the vast majority of the
population through the establishment of an integrated
VOLUME 1 NO 7 PP 654-672 JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
of these health institutions. These salaries always
district health system. Most of the population had
remained very’ poor.
In the case of a hospital admission a flat fee per type
reasonable access to a health centre (95% lived within
7 km of a health centre). The population covered by a
of admission was paid, with 5 possible fees according to
health centre ranged between 3000 and 13 000
inhabitants. The villages in the area of responsibility of
the type of care required. In practice this amounts to a
simplified diagnosis-related groups system: one fee for
each health centre were organized in rural committees
for integrated development (Comites Ruraux de
admission in paediatrics, internal medicine or
Developpement Integral or CRDI), which met monthly
gynaecology, and 4 progressively higher fees for surgical
to discuss health issues as well as other problems related
interventions categorized from minor to major (Table
to development. In 1986, the average utilization rate for
1). In 1985 revenue from patients in the Bwamanda
the curative clinics at health centre level was 0.6 new
hospital constituted 40% of the total hospital revenue
cases/inhabitant/year; coverage for antenatal care was
(Ilunga 1991). The remaining 60% came from subsidies
84%; coverage for measles vaccination was 50%. The
from the mother organization, i.e. the CDI Bwamanda,
annual hospital admission rate was about 30/1000.
from external funds of the Belgian bilateral aid agency
Referral and counter-referral systems functioned
and from various NGOs.
The fee schedule presented in Table x clearly
reasonably well.
indicates that the functioning of the Bwamanda
In the mid-eighties many of the health centres in the
district succeeded in recovering their recurrent costs
hospital was largely subsidized. For instance, rhe total
through community financing mechanisms. These costs
fee charged for a Caesarean section in 1985 (category
related to staff salaries (on average three staff members
surgery IV) was USS 5, which is obviously inadequate to
in each centre: a nurse, a nursing aid and a general
cover actual costs. Surveys of hospital recurrent cost
hand), drugs, medical and other minor supplies. They
analysis carried out in relatively similar settings support
did not include depreciation costs, nor the cost of the
this statement. A recurrent cost analysis of an
monthly supervision visits. The method of payment was
effectively functioning rural district hospital in Uganda
a flat fee per episode of illness and episode of risk. In
showed that the average cost of a single major surgical
1987 for instance, 9 of the 2.1 health centres in the
operation was USS 11 in 1992. If the cost of 10 inpatient
district managed to recover these recurrent costs; the 12
days (an average length of stay in hospital for a patient
other centres reached levels of cost recovery ranging
receiving major surgery) is added to this figure, then the
between 73% and 98% (Bwamanda Health District
total cost was USS 30 (unpublished data). A study of
1987). Such high levels of cost recovery were certainly
unit costs for in-parient services carried out in 3
not exceptional in Zaire and are confirmed by the results
Zimbabwean hospitals identified an average cost for
of a large study by USAID on the financing of 10
major surgery of approximately USS 35 (UNICEF
effectively functioning health districts in Zaire
1996); another study in 6 Malawi hospitals identified a
(Resources for Chile! Health Project 1986). Other data
pertaining to Zaire have indicated an average cost
cost per single inpatient (all services together) ranging
from USS 20 ro S 30 (Mills et al. 1993); and a Medicus
recovery rate for health centres of almost 50% (Pangu
Mundi International (MM1) survey of 59 non
1988). The USAID study also indicated that the salaries
of hospital and health centre staff constituted,
governmental hospitals in sub-Saharan Africa identified
a median cost per inpatient of USS 33 (Van Lerberghe
respectively, 50% and 35% of the recurrent expenditure
et al. 1992).
Children
Adults
657
Paediatrics
intern, med
gynaec.
Surgery I
Surgery II
Surgery III
Surgery IV
30 Z
120 Z
too Z
TOO Z
150 Z
150 Z
200 Z
200 Z
250 Z
250 z
© 1997 Blackwell Science Ltd
Table 1 1985 fee structure before the
introduction of the health insurance
system (in 1985, 50 zaires = 1 US $).
Tropical Medicine and International Health
B. Criel and G. Kegels
VOLUME Z NO 7 PP 654-672 JULY I997
Health insurance scheme for hospital care in Zaire
A health insurance scheme for hospital care
•
one annual subscription period at a time coinciding
with the purchase of the coffee and soy bean crops
Problem definition
(months of March and April);
In the eighties the Bwamanda hospital faced a steadily
increasing cost of medical care due to inflation, and
•
the same time increasing reluctance of external donors
the family as subscription unit, with individual
premiums;
hospital charges had to be raised several times a year. At
•
risk coverage limited to hospital care, with a 20%
•
decentralized collection of premiums at health
to subsidize the hospital’s recurrent costs and virtual
co-payment rate;
non-existence of government funding led the health
district managers to identify other stable sources of
centre level;
funds. In addition there was a problem of financial
accessibility to hospital care, ar least during certain
•
periods of the year, and payment of hospital fees
implementation in the whole district at the same
time, and only for the district population;
became an increasing problem for rhe poor rural
population of Bwamanda district because of fluctuating
availability of cash income due to seasonality of crops.
Some patients referred from rhe health centre only
arrived at rhe hospital after several days due to the time
needed to find the necessary funds. Hence the challenge
for the district management team was to design a
financing strategy with improved access to hospital care
for all people in need while maintaining the hospital’s
financial viability.
Design and organization of a hospital insurance plan
The district management team discussed and compared
various possible financing alternatives. The following
criteria were used: political and social acceptability,
ability to pay, risk-sharing potential, likely effect on the
financial viability of the hospital and likely effect on rhe
hospital’s financial accessibility. An insurance scheme
was considered superior to the current system of fees per
type of hospital service. The team identified the main
variables relevant to a health insurance scheme about
which a decision needed to be taken: What nature of
insurance premium payments? What rime and frequency
of payments? Which unit of membership? Which
services covered by the insurance scheme? Should co
payments or deductibles be considered?, etc. The
discussion was pursued with the nurses heading the
health centres during one of the regular workshops
organized for them in Bwamanda. The various options
concerning the above-mentioned variables were
analysed and compared. Eventually a consensus was
reached on the following features of rhe scheme:
•
658
a cash payment of a premium identical for all,
•
management by the district management ream.
Finally, the basic elements of the concept of insurance
were presented to community representatives of each
health centre. They expressed a preference for a scheme
without co-payments, but the district management team
thought it wise to have a 20% co-payment, which
constituted a financial security margin in a context of
high inflation and could act as a deterrent to
unnecessary hospital utilization. At rhe specific request
of the nurse in charge of the maternity department, an
exception was made and no co-payment was charged for
insured patients using maternity services. The rationale
of this request was the concern to increase the workload
at the maternity unit for the training of the local
midwifery students. Women who had not attended
antenatal care during their pregnancy, however, were
not covered by the insurance and had to pay the full fee.
Questions were also raised concerning the possible
situation of families who joined the scheme but did not
undergo any hospitalization. Would they then get a
refund? This concern is not surprising. Indeed, the
widespread local mutual help mechanisms, such as
traditional solidarity mechanisms within the extended
family and mutual aid associations (tontines in
francophone Africa, or ROSCAs, Rotating Savings and
Credit Associations, in the anglophone literature) are
very often based on a principle of voluntary balanced
reciprocity (Dubuisson 1995) rather than on a principle
of solidarity. Eventually, however, the majority of the
community representatives agreed with the launching of
this innovative financing scheme in 1986.
The first subscription period was the month of March
independent of age, sex, domicile, health status,
1986. During this one-time annual enrolment period of
etc., i.e. a community rating system;
one month, membership premiums were collected by the
© 1997 Blackwell Science Ltd
VOLUME 2 NO 7 PP 654-672 JULY T997
Tropica] Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
staff of each health centre and representatives of the
village committees. The level of the premium was
empirically set at 20 Zaires, which approximately
corresponded to USS 0.3. This amount was deemed
Referral from health centre to hospital was mandatory if
the insurance was to take effect. Table z presents an
overview of the hospital fee structure for the month of
September 1986.
affordable: it was less than half the flat fee charged for
an outpatient consultation at health centre level. Twenty
Results
Zaires was also the equivalent of the price paid to
Bwamanda farmers for 2 kg of soy beans, a common
Financial impact
crop in the area. As proof of payment of the premium, a
The interest shown by the Bwamanda community in this
stamp was affixed to the family record kept for each
voluntary insurance scheme for hospital care was
family at the health centre. A census of the district
overwhelming and beyond most expectations. In 1986,
population had been carried out in 1985 and 1986, and
32600 people - i.e. 28% of the district population -
on that occasion a family file had been opened for each
joined the scheme within 4 weeks. The financial balance
household. In addition a membership register was
opened at each health centre. The nurses in charge of the
health centres eventually handed in the collected monies
to the district health services administrator, who
deposited the funds in a separate health plan account.
The health insurance scheme was not run by a separate
‘third party’ institution; it was managed by the district
health authorities themselves and can thus be described
as a direct pattern of insurance. On the whole, the
administrative costs incurred for the practical
organization and management of the insurance scheme
remained relatively low. These costs covered transport
and stationery expenses, staff bonus payments, and
salaries of the scheme’s administrating and clerical staff.
Data for rhe period 1987-89 indicated total
administrative costs ranging between USS 510 and 1800,
i.e. between 4 and 6% of total expenses (Shepard et al.
1990). Recent data for the 5-year period 1990-95 reveal
that the yearly cost of administering the scheme ranged
after the first year of operation was positive, with a
small surplus of approximately USS 1300. In the
following years the membership rates steadily increased,
indicating a high degree of social acceptability
(Figure 2). In 1987, 60000 people joined the scheme, and
in 1988, 80000. The membership rate tended to stabilize
around 60-65%. Each year the subscription charge was
adjusted in line with inflation. The value of the charge
remained approximately equivalent to the purchasing
price of 2 kg of soy beans - approximately one-third of a
US dollar-though with small variations over the years.
It is striking that this interest remained even during
the dramatic social and political turmoil which Zaire
has been experiencing since the beginning of the
nineties. This is somewhat surprising, since one would
expect expenditure for a hospital insurance scheme to
drop on people’s priority list when the daily search for
food becomes a major challenge. However, membership
between c. USS 1000 and $ 3500, i.e. between 5% and
10% of the total expenses (These costs have been
Table 2 Hospital fees in September 1986 (in Zaires) (in 1986,
calculated through a conversion of Zaires into USS at
the average annual exchange rate was 61 Zaires for 1 USS)
the exchange rates prevailing ar that time. The sky
rocketing inflation rates, especially in the 1990s, make
cost estimates in foreign currency a perilous exercise.
This may contribute to the explanation for the variation
in administration costs identified in the period 1990*995)The routine functioning of the insurance plan can be
summarized in a decision tree in which administrative
and managerial procedures are presented in a sequential
way (Figure 1). It is important to stress that members of
Type of admission
Paediatrics
Internal medicine
Gynaecology
Maternity
Surgery I
Surgery II
Surgery III
Surgery IV
Fee for uninsured
patients
Fee for insured
patients
S1j
500
Soo
^qq
3JO
Joo
?00
9OO
the scheme who used the hospital outpatient department
without being referred by their health centre could not
benefit from the insurance, except in emergencies.
659
© 1997 Blackwell Science Ltd
the use of the maternity services was free of charge for insured
pattents only tf they had attended antenatal care.
Tropical Medicine and International Health
B. Criel and G. Kegels
VOLUME! NO 7 PP 654-672 JULY 1997
Health insurance scheme for hospital care in Zaire
Level In the District
Health Services System
Managerial and
accounting procedures
Patient at the health
centre's out-patient
department: consultation
by nurse
In case of referral to the
hospital, check for
subscription proof on
family file (stamp +
subscription number):
If not member:
‘ordinary1 referral
If member
the subscription
number is notified
on the referral
ticket
In case of doctor's
decision to admit the
patient:
Arrival at hospital’s
out-patient department:
consultation by medical
doctor
If member:
cross-check for
subscription
number in
hospital-based
register'
Hospital's accounting
department
If cross-check
positive: admit
patient at reduced
fee (20% of
regular fee) and
transfer of 80% of
regular fee from
health insurance
fund to the
hospital accounts
If not member
payment of
regular hospital
fee (100%)
If cross-check
negative: further
investigate the
patient's
subscription
status
'Each individual health centre team notifies names and subscription numbers of all people who joined the scheme in a register which
is transferred to the hospitals's accounting department at the end of the enrolment period.
Figure I
Managerial flow-chan for referred and admitted patients (adapted from Moens Sc Carrin 1992).
dropped significantly from 66% in 1991 to about 40% in
membership rates, together with the option to have the
severe ethnic tensions in the Bwamanda area, with a
household as subscription unit, greatly reduced the risk
climate of social unrest, were probably responsible for
of a preferential selection of high-risk cases (i.e. adverse
the fall in subscriptions. In 1994 the enrolment period
selection). These membership rates are in fact a slight
was preceded by the nationwide change in currency
underestimate of the real subscription rates, since a sub
from anciens to nouveaux Zaires, limiting cash
population of a few thousand people in the Bwamanda
availability for many people.
health district - most of them employees of the different
The size of the population joining the scheme made
660
genuine risk-sharing arrangements possible. High
X992, and from 66% in 1933 to 41% in 1994. In 1992
© 1997 Blackwell Science Ltd
CDI project services - are covered by mandatory
VOLUME Z NO 7 PP 654-672- JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
Figure 2
Health insurance scheme for hospital care in Zaire
Membership rates for the period 1986-1995
employer-organized health insurance schemes which
revenue for the period 1985-89 are presented in Table 3.
provide them and their families with free health care.
Revenue raised from payments for hospital care
They did not have an immediate incentive to join the
(‘internal’ or locally generated revenue) doubled from
scheme. If some of them paid the insurance premium out
USS 21180 in 1985, the year before the start of the
of their own pocket, it was with the objective of being
insurance plan, to USS 44 475 in 1989. Internal revenue
insured if they lost their job and thus the benefit of free
is made up of direct payments by non-insured patients,
care.
The evolution and the sources of Bwamanda hospital
prepayment of employer-organized health care schemes,
reimbursements to the hospital by the insurance fund
Evolution of hospital revenue (1986-1989) in USS. (Average annual exchange rates: 1 SUS for 50 Zaires in 1985, 61 Zaires in
1986,128 Zaires in 1987,187 Zaires in 1988, 400 Zaires in 1989)
Table 3
Source of hospital revenue
A. Internal revenue
A.1. Refunding by insurance fund for insured: i.e. 80% of
regular hospital fees
A.z. Co-payment by insured: i.e. 20% of regular hospital fees
A.3. Prepayment by employers for health care of employees
and their families
A.4. Direct revenue from patients*
Total internal revenue (% of total hospital revenue)
B.
Subsidies’* and gifts (% of total hospital revenue)
Total hospital revenue (A + B)
2985
1986
1987
1988
1989
—
—
10,670
2,670
8,620
14,700
M5S
3.675
19,630
4.900
—
zi,i8o
«,4«5
“.<55
10,990
10,870
9.635
7,010
13,810
21,180
(41%)
31.460
(61%)
3^35
(8z%)
35,010
(75%)
44.475
(79%)
30.635
(59%)
20,040
(39%)
7,200
(18%)
11,515
(15%)
11,910
(11%)
51,815
(100%)
51,500
(100%)
39.835
(lOO°/o)
46,535
(100%)
56,385
(100%)
Source of data: Ilunga (1992) Sc Bwamanda Health District (1985-1989).
•Non-insured self-employed patients.
•*The last government subsidies for the Bwamanda hospital were in 1984. Since then the only external hospital funding came
through the CDI project.
661
© 1997 Blackwell Science Ltd
6,135
Tropical Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
and co-payments by insured patients themselves.
51 815 in 1985 to USS 56 385 in 1989. Table 3 shows
Between 1986 and 1989 there was a clear trend for the
clearly that the relative proportion of internal revenue in
revenue from the insurance scheme (reimbursements and
total hospital income increased dramatically from 41%
co-payments) to increase. The insurance ensures the
hospital a source of income which is stable because the
in 1985 to 79% in 1989.
number of non-paying patients is much reduced.
Direct payments by non-insured persons decreased by
almost half from US$ 11 655 in 1986 (when 72% of the
district population was not insured) to USS 6 135 in 1989
662
VOLUME 2 NO 7 PP 654-672 JULY 1997
Hospital utilization data
In 1986 hospital admission rates for the insured and non
insured population were 36.2 and 24.8 per thousand,
(when only 39% of the population was not insured). An
respectively. In 1988 these rates were 35.6 and 24.6 per
a posteriori analysis of the evolution in hospital fees
thousand, respectively (see Table 4). These differences
indicated that the fee levels for non-insured persons -
are statistically highly significant. Hospital data for the
and at the same time the 20% co-payments for the
year 1989, based on a one-in-io sample from the hospital
insured - had in fact dramatically increased over the
register, showed that insured patients had specific
same period. A Caesarean section, for instance, was
hospital service admission rates 1.9-6.7 times higher than
charged at approximately USS 5 in 1985, USS 15 in 1986,
non-insured patients not covered by employer-organized
USS 14 in 1987, USS 19 in 1988 and USS 28 in 1989 (see
schemes (Shepard et al. 1990). More recent data for the
Figure 3). On the other hand, subsidies (external
12-month period April 1993 - March 1994 revealed
revenue) to the hospital decreased in 1989 to about one-
admission rates of 49 per thousand for the insured and
third of the 1985 level (from USS 30 635 to n 910),
24.9 per thousand for the uninsured. The latter figure can
whereas total hospital revenue increased from USS
be further split into 17 per thousand for uninsured self-
© 1997 Blackwell Science Ltd
VOLUME Z NO 7 PP 654-672 JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
Hospital admission rates in insured and non-insured
populations of the Bwamanda district (years 1986 and 1988).
Table 4
district frequently claimed to live within the district
boundaries to be eligible for subscription to the
insurance plan during the enrolment period. They had
Year
Admissions/
insured population
(in per thousand)*
Admissions/
non-insured‘*
population
(in per thousand)*
1,181/32,614
(36.2 7-)
2,863/80,495
(35.6 -n
1.133/85,998
(14-8’/“I
1,100/48,749
(i4.«-n
their names added on the family file of a ‘host’ family
(which was often composed of relatives). This happened
X‘ and
P-value
mainly in the areas of the two Bwamanda town health
centres and in the areas of two health centres situated at
the edges of the district. Hence the figure of 49 per
1986
1988
(x‘ = IT35
p < 0.001)
thousand admission rate for insured persons from the
(X‘ = 11 %
district is probably a slight overestimate.
Table 5 also shows that in the period I993“94 about
p < 0.001)
15% of all admissions (1078 out of 7362) were patients
‘These ratios are considered to be true proportions, which in
reality they are not since the numerator may contain several
admissions for one same individual.
•‘The data concerning the non-insured population also include
admissions of patients covered by employer-organized schemes.
living in neighbouring districts. This is not a new
finding: Bwamanda hospital has always been a facility
with a substantial proportion of users from other
districts. Data for the year 1987 indicate that 17% of
admissions (691 out of 4090) were patients from outside
employed persons and an estimated 184 per thousand for
the district (Bwamanda Health District 1987). In 1995
people covered by an employer-organized scheme (Table
this figure increased to 20.4% (1599 out of 7843)
5). During the last 3 or 4 years people from outside the
(Bwamanda Health District 1995).
Table 5
Hospital admission data for the period 1/4/93-31/3/94
Number of admissions according to patient origin
Hospital service
Paediatrics
Gynaecology
Internal medicine
(male + female)
Surgery men
Surgery women
Maternity
Intensive care
Total admissions
Denominator
Admission rate
Insured from
district
Non-insured
from district
Employer
organized
schemes in
district
Out of district
Total
1,267
178
547
168
39
201
221
21
41
131
68
356
1,788
406
1,146
452
370
1,119
939
4.972-
20
15
82
326
851
17
32*9
99
461
78
87
35
32Z
1,078
567
504
1 >2-65
1,686
7.362-
IOI.353
49 per
thousand
50,131
17 per
thousand
2,500*
184 per
thousand
non-applicable
non-applicable
non-applicable
non-applicable
24.9 per thousand
‘This figure is an estimate.
Notes:
- Patients from the trypanosomiasis ward are not included in this table.
- Most of the patients admitted in the intensive care ward are transferred to other wards afn-r -> f-... j
counted twice and the real number of admissions is therefore lower.
W
663
© 1997 Blackwell Science Ltd
L
,
.
.
theSC admlssl0ns ar' thus
Tropical Medicine and International Health
B. Criel and G. Kegels
VOLUME 2 NO 7 PP 654-672 JULY 1997
Health insurance scheme for hospital care in Zaire
This partem of higher hospital admission rates for the
systems exist. The group proposed a framework for the
insured population may, generally speaking, be due to a
evaluation of financing schemes based on the following
combination of moral hazard and better access for those
criteria (WHO 1993a): the level and reliability of
who need it. Within rhe limits of the available
resources raised; the efficiency and the equity of the
information it is difficult to assess the relative
scheme; its viability in terms of social acceptability; and
importance of each single possible cause. The fact that
finally its health impact. The group recognized that
insured patients can benefit from the insurance scheme
currently information is least available for the last area
only when referred by a health centre and the system of
of evaluation of health gains.
The social acceptability of the Bwamanda scheme
co-payment at hospital level are factors which a priori
tend to counteract any substantial degree of
seems beyond dispute given rhe high subscription rates.
inappropriate hospital utilization.
The other evaluation questions relating to the scheme’s
It is important to acknowledge the fact that the
financial performance, to its effectiveness, efficiency and
equity are discussed in more detail in this section. The
increment in hospital utilization by the insured
population seems to be highly variable. The data in
initial objectives set forth by rhe district managers were
Table 6 indicate that excess use is particularly high for
as follows: on the one hand there was rhe need for a
surgical services, both female and male, but that it is
stable source of local revenue allowing the hospital to
hardly apparent for internal medicine services. The very
function properly virtually without government funding
high admission rates for rhe (small) population covered
and with most uncertain future levels of external
by employer-organized prepaid health care schemes are
subsidies. On the other hand, there was the concern to
not surprising, for these patients - rhe majority of whom
keep hospital fees at an affordable level for rhe
live in and around Bwamanda township — have no
population of rhe district so that financial accessibility
financial cost to bear in case of hospital admission.
was maintained.
Discussion: What lessons can we learn from
the Bwamanda experience?
resources?
Can we regard the Bwamanda insurance scheme as a
success?
Financial performance: attraction of additional
The Bwamanda scheme evidently succeeded in
generating reliable and stable resources for the
functioning of the hospital. Locally raised revenue
A recent WHO study group acknowledged the fact that
virtually doubled between 1985 and 1989, even though
many different criteria for rhe evaluation of financing
total revenue remained more or less the same around
Table 6
Hospital admission rates for the period
Admission rates in
per thousand
Insured
population
Uninsured
population
Paediatrics*
Gynaecology*
Internal medicine*
Surgery men*
Surgery women*
Maternity*
Maternity**
12.5 per thousand
3.3 per thousand
0.8
'-7
5-4
4-4
J«
II
27.6 per hundred
expected deliveries
4
o-4
0.3
1.6
4.1 per hundred
expected deliveries
Population
covered by
employer-organized
pre-paid schemes
Ratio admission
rate insured/
admission rate non
insured
88.4 per thousand
3.8
3-4
i-35
11
8-4
16.8
6.8
12.8
11.6
29 per hundred
expected deliveries
*The denominator is the general population.
••The denominator is the number of expected deliveries (birth rate is 40 per thousand).
664
© 1997 Blackwell Science Ltd
12
4-9
VOLUME Z NO 7 PP 654-672. JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
approximately US$50 000 a year. The precise amount of
subsidies allocated to the hospital was in fact never
decided on a predetermined basis — at the start of every
new budgetary year for instance. The hospital thus had
no real budget. The policy of the CDI project was to
systematically cover the hospital’s deficit as long as the
project had the necessary financial means to do so and
as long as this deficit remained within reasonable limits.
Obviously the room for financial manoeuvre shrank
continuously in the second half of the eighties and the
school were involved in routine hospital work from the
very beginning of their 4-year training curriculum.
Effectiveness and efficiency of the scheme: does it
facilitate access to the hospital for those patients who
need it?
The answer to this question is less clear-cut. It appears
first half of the nineties, due to the steep deterioration in
that insured persons have used the hospital services at a
the socio-economic situation (the decrease in prices paid
significantly higher rate than the uninsured. The
for locally grown coffee, traded on the international
admission rates in the insured population increased
market, meant a serious reduction in income for the
from 35.6 per thousand in 1988 to 49 per thousand in the
project) and to the reluctance of donors to fund
period April 1993 to March 1994 (x1 = 198; P < 0.001)
operating costs. Nevertheless it seems possible that the
whereas these rates hardly changed for uninsured
Bwamanda insurance scheme actually relieved the CDI
persons: 24.6 per thousand in 1988 and 2.4.9 Per
project from subsidizing the hospital to the same extent
thousand in 1993-94 (x* = °*I> P = °-75)«
as in the past. This may have led to displacement effects
ratio of hospital admission rates for insured compared
T988 the
where other activities within the CDI project, more in
with non-insured patients was almost 1.5; in 1993-94
need of financial resources, would have benefited from
this figure increased to a ratio of about 2. This ratio was
higher financial support. But as Zschock (1979) argues,
2.9 in the period 1993-94 when non-insured admissions
displacement is not necessarily a negative feature.
excluding patients covered by employer-organized
The financial data presented in the previous section
insurance schemes are concerned. If we consider higher
support the conclusion that Bwamanda hospital has
admission rates as an indicator of better accessibility to
become less dependent on external funding sources.
the hospital, then the answer seems straightforward,
This trend is clear, even though there probably are
even though the scheme may have selected precisely
problems with the accuracy and completeness of the
those families who were the higher hospital users even
financial data because of the complex accounting
before the insurance scheme was implemented.
procedures and mingling of funds within the
Bwamanda district, and because of the difficulty to
Hospital utilization is not, however, a goal in itself:
convert local into foreign currency values. It is
an increase in hospital utilization is a positive
phenomenon if it reflects the treatment of problems
reasonable to assume that this trend was maintained in
where the hospital’s know-how and technology are
the early nineties, since many fund-providers and aid
needed-. To what extent is this excess in hospital
organizations decided in the period 1990-91, for
utilization explained by an increase in ‘appropriate’
political reasons, to reduce or even to stop altogether
hospital utilization? Some of the arguments supporting
any further aid to Zaire.
Finally, it must be acknowledged that an annual
665
rationalization of resource use in the Bwamanda
hospital. For example, the trainees of the local nursing
the hypothesis that it is not due to a phenomenon of
moral hazard have already been pointed out. Firstly
hospital recurrent expenditure of USS 50 000, i.e. a mean
there is the mandatory referral of the patient by his
expenditure of USS 370 per inpatient bed, is very low
health centre (except for emergency situations), and
compared to similar hospitals in sub-Sahara Africa. In
secondly there is the system of small co-payments. It is
the 130-bed hospital in Hoima district in Uganda, the
possible that health centre nurses may now and then
mean expenditure per inpatient bed was USS 830
have been put under pressure by the patient to be
(unpublished data) and the Medicus Mundi
referred. If this did occur, however, there was a further
International survey of 59 NGO hospitals in sub-Sahara
control: on arrival at the hospital the patient would first
Africa indicated an average figure of approximately
be seen by the medical officer at the referral
USS 1 000 (Van Lerberghe et al. 1992). One explanation
consultation, who would decide whether admission was
for this low figure may be the extreme level of
appropriate or not.
© 1997 Blackwell Science Ltd
Tropical Medicine and International Health
B. Criel and G. Kegels
VOLUME Z NO 7 PP 654-672 [ULY 1997
Health insurance scheme for hospital care in Zaire
However, the fact that the excess in hospital
member, and all enjoy the same benefits in the event of
utilization by the insured population varies considerably
hospital admission, independently of the family’s socio
from one hospital department to the other indicates that
economic status and the other costs to the family of an
moral hazard is not by any means a homogenous
admission. These other costs are often substantial:
phenomenon. It may exist for some health problems and
indirect costs such as transport expenses, expenses for
less so, perhaps not at all, for others. The level of
food, expenses for the lodging of family members in
predictability of some health problems or events
Bwamanda town, etc. are often higher than the direct
requiring intervention at the hospital may be one of the
costs, i.e. the fee to be paid to the health care institution.
explanations. The distinction between predictable and
Two things need to be acknowledged at this stage: firstly
unpredictable health problems as an instrument for
the fact that in a rural environment like Bwamanda, the
assessing moral hazard has been applied in the
farther people live from the hospital, the higher are these
evaluation of the Masisi hospital insurance scheme in
indirect costs and the higher the opportunity cost of an
eastern Zaire (Noterman et al. 1995). The predictability
hypothesis may constitute a plausible explanation for
admission, and secondly the fact that the farther people
live from the hospital the lower their hospital utilization
the considerable increase in utilization of the hospital’s
(King 1966; KI00S1990). Hence members of the
maternity services, and perhaps even for the striking
insurance scheme who live far from rhe hospital, but pay
increase in utilization of surgical services. The latter
the same premium as members living close to it, actually
could be explained by a high proportion in this
subsidize the scheme. The premiums in the Bwamanda
incremental utilization of non-urgent surgery for
scheme are de facto regressive.
abdominal and inguinal hernias which are very
There is a need to study the design of systems which
prevalent health problems in the Bwamanda area. Our
aim to increase the solidarity basis of similar schemes.
data neither confirm nor disprove this hypothesis.
Such systems must not only be technically feasible, but
Further investigation is needed to elucidate this
financially affordable and socially acceptable (Gilson et
phenomenon of differences in hospital utilization.
al. 1995) as well. A system of sliding scales according to
The administrative costs of the scheme in the nineties
were between 5% and 10%, suggesting a relatively
distance from health centre to hospital was tried out in
Bwamanda in 1988 with the objective of tackling this
satisfactory level of administrative efficiency. These
problem. It was designed to channel benefits to a well-
costs are indeed far below the operating costs of social
defined target population, in this case people living far
insurance funds in other African countries (ILO 1988;
from the hospital. This is what Glewwe & van der Gaag
Gruat 1990; Shaw & Griffin 1995).
*s noc surprising to
(1988) call characteristic targeting, in this case according
find the highest proportion of administrative costs
to the geographical area where people live. In
(about 10%) in the years 1992 and 1994, when
Bwamanda the district team divided the health centre
subscription rates were lowest.
The data do not provide information on the effect of
network into 3 subgroups: a first group of health centres
the health insurance scheme on patients’ delay in seeking
second group (w = 8) 25-45 km away and a third group
(n = 7) located less than 25 km from the hospital, a
treatment. Comparison of admission rates between
(n = 7) more than 45 km from the hospital. The greater
insured and uninsured patients shows that insured
the distance from health centre to hospital, the lower the
individuals use the hospital more often, but does not
co-payment to be paid by the members when admitted
indicate whether patients actually come more timely.
to hospital (see Table 7). This system of characteristic
This is clearly one of the priorities for further study,
targeting did not have a positive impact on the hospital
since the problem of patient delay was one of the
admission rates of the more remote insured populations.
reasons which led to the development of hospital
A comparison of 1987 (without targeting) and 1988
insurance in the first place.
(with targeting) revealed that the rates remained similar
for groups 1 and 2, and that the rate for group 3 actually
fell in 1988 (see Figure 4).
Equity of the scheme?
In Bwamanda all families subscribing to the insurance
scheme pay the same premium per individual household
666
© 1997 Blackwell Science Ltd
In the following year it was decided to discontinue
this experiment with sliding scales because of the
absence of effect in terms of equity and to a lesser extent
VOLUME 2 NO 7 PP 654-672 JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
Table 7
Health insurance scheme for hospital care in Zaire
..
/ir» tgRR rhe average annual exchange rate was 187
Hospital fees in 1988 (Zaires). Sliding scales according to distance. (In 190 ,
_
Zaires for 1 USS)
Type of admission
Fee for uninsured
patients
Co-payment for
insured patients
from group 1*
Paediatrics
Internal medicine
Gynaecology
Maternity
Surgery I
Surgery II
Surgery III
Surgery IV
600
1800
1800
1800
1000
2500
3000
3500
350
350
—
200
500
600
700
120
__
Co-payment for
insured patients
from group 2**
Co-payment for
insured patients
from group 3***
60
180
180
—
100
250
300
30
100
100
350
50
120
150
180
Patients living in the catchment area of health centres situated* ar less then 25 km from the hospital,** between 25 and 45 km from
the hospital,*** at more than 45 km from the hospital.
because of the more complex management and control
1990). Differential premiums and fees for the poor,
procedures required (for instance, the origin of the
perhaps even exemption of payment, could be
admitted patients had to be systematically checked).
considered. Such a policy is called direct targeting, i.e. a
However, some members of the district management
system where the provision of benefits is limited to
team argued that the considerable social acceptability
individuals or households identified as belonging to the
the proposal had achieved among all 3 population
target group (Glewwe & van der Gaag 1988). Direct
groups constituted a strong enough case for continuing
targeting, in contrast to characteristic targeting, requires
the experiment. Moreover, the data did not permit
means-testing, i.e. a process where specific individuals
breaking down the number of admissions according to
are classified as eligible or ineligible for benefits (Willis
the nature and severity of the health problems for which
& Leighton 1995). Means-testing procedures could be
people were admitted.
The membership rate never exceeded two thirds of
tested in Bwamanda within the framework of the
hospital insurance scheme.
the total district population. A survey carried out in
1987 indicated that the very poor were represented to a
higher degree in the non-member population (Moens
Description of the environment in which the Bwamanda
scheme thrived
The authors’ hypothesis is that the relatively successful
development of the Bwamanda scheme, as well as its
viability, was possible because it took place in a
specific environment. However, the various constitutive
features of the Bwamanda environment in which the
scheme was conceived and in which it thrived cannot,
strictly speaking, be considered conditions. The
identification of conditions for a successful
development would imply a more formal research
perspective in which different conditions, or a set of
conditions, were tested with the object of assessing
whether and to what extent they were necessary for a
Effect of sliding scale of co-payments for patients
living at different distances from the hospital (see Table 7 ).
Admission rates for ■ 1987 and ■ 1988.
Figure 4
667
© 1997 Blackwell Science Ltd
satisfactory development. This was not the case in
Bwamanda. Hence caution is needed in the
interpretation of the relative importance of each factor
Tropical Medicine and International Health
B. Criel and G. Kegels
VOLUME 2 NO 7 PP 654-672 JULY I997
Health insurance scheme for hospital care in Zaire
in the development of the Bwamanda scheme. The
Preparation of the scheme took more than a year, and
features of the Bwamanda environment are tentatively
both health centre staff and community representatives
classified in four categories:
were closely involved in the initial process of planning
and in the implementation of the scheme. There was a
Organizational/managerial factors
huge effort of communication and mobilization every
The insurance scheme was launched in a context in
year in the weeks preceding the enrolment period. Staff
which the district health service system had reached a
from other sectors (for instance rural development and
relatively high level of operational efficiency. In the mid
agriculture) also contributed to the effort.
eighties Bwamanda district was considered one of the
best-functioning health districts in the country. It was
Economic!financial factors
headed by a strong district management team of medical
The district management team received substantial
doctors, senior nursing staff and health service
support from the CDI’s general infrastructure and
administrators. From the early seventies on it had
administration facilities. For example, value
enjoyed continuous external support, especially from
maintaining mechanisms for the collected funds were
Belgian bilateral aid. On average, two expatriate Belgian
developed in a context of high inflation. Initially the
doctors and two Dutch nurses (sisters of the Medical
premiums collected were deposited in a special fund at
Mission) were working in rhe Bwamanda hospital from
the CDI, which then paid interest rates of 3% per
1970 to 1990. In 1986 the district health system
functioned as an integrated two-tier system, i.e. a system
the purchase of drugs by the CDI-supported inter
in which health centres and hospital fulfil their specific
diocesan pharmacy. In the 1990s, when inflation became
roles in a complementary way (Unger & Criel 1995). Use
very high, the revenue from the insurance plan was
month. Later the collected premiums were invested in
of resources was highly rationalized. The referral and
immediately introduced into the local and regional
counter-referral system functioned well and contributed
economic circuit via the CDI’s economic activities.
to the effective and efficient functioning of the health
The CDI agreed at the start of the scheme to act as
services. Particularly important was the fact that
financial guarantor. This back-up was of crucial
mechanisms of control to secure rational utilization of
importance in case the scheme turned out not to be
the health services were in place: the network of health
financially viable. Financial viability was unpredictable
centres covered the whole of the district area; direct
at the time when the scheme was launched in 1986. The
hospital utilization - bypassing the first line - was
CDI committed itself to cover a financial deficit which
virtually non-existent; a hospital admission was decided
could jeopardize the credibility of the insurance scheme.
on by the hospital doctor after the patient’s referral by
In the period 1990-95, for instance, a deficit occurred
the health centre nurse, etc. In such circumstances it was
twice: on the first occasion the deficit was met by a gift
feasible to keep moral hazard within reasonable
from a donor, and on rhe second the CDI lent the
proportions.
The hospital offered relatively high standards of care
necessary funds.
and there were no social or cultural barriers to its
where the availability of ready money is irregular. It was
utilization. Moreover, as the only hospital in the district,
for that reason that the enrolment period was fixed at
it occupied a virtual monopoly position for most people
the time of year when the CDI buys the coffee and soy
in the district although people living in the southwest of
bean crop in the Bwamanda area.
The Bwamanda area is typical of a rural context
the district had easy access to the hospital in the
668
neighbouring Tandala district. Hence people’s
Social factors
willingness to subscribe to a hospital insurance scheme
The CDI project initiated its economic and social
was high.
The scheme’s design represented a direct pattern of
activities in the economically much disadvantaged
insurance: the insurers were also the health care
mission in Bwamanda was the structure around which
providers. In an environment in which rational resource
the project’s activities were organized and expanded.
Bwamanda area around 1969-70. Initially the Catholic
use was a strong tradition such a direct insurance system
Gradually a certain number of social services were
fostered efficiency.
developed in a spirit of ‘integrated’ development: the
© 1997 Blackwell Science Ltd
VOLUME X NO 7 PP 654-^71 JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
----- ----------------------------- -----------------------------------------
Health insurance scheme for hospital care in Zaire
health infrastructure was upgraded and extended, and
the health care delivery system in the district was
organized; the local primary and secondary education
systems received support; activities in the field of rural
development were launched; local communications and
transport infrastructures were rehabilitated, etc.
Gradually a relationship of trust grew up between the
CDI and the population in general and between the
health services and the population in particular. This
confidence certainly influenced the community
representatives in their decision in 1985—86 to join in a
hospital insurance scheme even though not all the issues
eighties many other districts in Zaire developed, often
with substantial donor support, highly effect.ve district
health services. What was specific to Bwamanda was the
existence of the CDI project and its financial, logistical,
technical and institutional support. The CDI
increasingly took over some of the basic responsibilities
that would normally fall on the state. Indeed, the
project’s activities partly filled the vacuum created by
the virtually complete withdrawal of the Zairian state
from the public service arena. The reproducibility of the
Bwamanda scheme in other parts of the country - and
perhaps in other parts of the region — seems therefore
involved were clearly understood at the time. There was
largely dependent on the presence of support by a public
also faith in the district management team’s ability and
interest-orientated body or institution. As the state of
trustworthiness to manage efficiently the financial
Zaire has effectively collapsed and is not capable of
aspects of the insurance scheme.
performing this supportive role it is probable that such
an enabling environment can be created only through
Political factors
effective and sustained NGO-supported development
Under the Zairian decentralization policy health
projects.
districts were to be largely self-financed. Consequently
the Bwamanda district management team had sufficient
autonomy to allow them to experiment with innovative
Avenues for further research
Several areas for investigation and study were identified
financing schemes. The overall environment in which
in the previous sections: the need for tools and methods
the initiative took place was characterized by the
for the identification of moral hazard; the need for
virtually total absence of the state, both in terms of
research on the impact of health insurance on patient
resource allocation and in terms of planning, regulation,
delay; the need to design and test mechanisms increasing
control, etc. This de facto vacuum left district teams
the solidarity basis and equity of the scheme. Research
with almost total autonomy to manage (or not to
on these managerial issues would contribute to a better
manage) the health systems for which they were and are
understanding of the Bwamanda scheme and to more
responsible. The lack of government support for the
appropriate design and organization procedures.
district health services was a general trend in Zaire for
Health insurance is, however, socially not a neutral
many years: the last subsidy from the government to the
phenomenon. In his analysis of the social functions of
Bwamanda health services was in 1984. In fact in the
health insurance in both modern and traditional
case of Bwamanda the absence of government funding
societies Rushing (1986a, b) argues that the introduction
of the hospital’s recurrent costs was at the core of the
of insurance leads to qualitative transformations in
problems which led rhe district team to consider an
terms of social relations, that health insurance may also
insurance scheme in the first place.
bring important non-medical benefits, and that it may
exert substantial influence on social integration and
cohesion in the community. An evaluation which limits
Policy conclusions
itself to the more quantitative aspects of the scheme
would necessarily remain incomplete. Hence it would
Replicability of the Bwamanda scheme?
As argued in the previous section, the Bwamanda
669
also be interesting to study in more detail the social
experiment was launched at a time when the overall
perception and the social impact of the Bwamanda
scheme after 10 years of operation. For instance, is there
performance of the district health services system had
in the community a feeling of ‘collective ownership’ of
reached a high standard and local managerial capacity
the scheme? Or is it (still?) considered a ‘foreign’
was strong. These features were not, however, specific
initiative taken by the health service? How do people
to the Bwamanda setting alone. During the seventies and
perceive the social concern of risk-sharing which guided
© 1997 Blackwell Science Ltd
VOLUME Z NO 7 PP 654-67Z JULY 1997
Tropical Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
the district team in its decision to consider health
competent and stable - is important and valuable
insurance rather than other hospital financing methods?
because it permits adaptations of general guidelines to
What are the reasons motivating people to join (or not
local constraints, and rhe smallness of the district
to join) the scheme? Has the insurance scheme had any
facilitates people’s understanding and endorsement of
influence on existing social organization patterns, more
the potential benefits of health insurance schemes. This
particularly on the very many small-scale family and
social proximity may facilitate accountability from
group mutual aid mechanisms?, etc. Obviously more
district team to community; trigger the establishment of
qualitative research methods would need to be used.
local mechanisms of social control over the insurance
scheme; and perhaps promote the gradual development
Conclusion
Notwithstanding the specific features of the
to enable substantial pooling of funds and to make risk
environment in which the Bwamanda experiment took
sharing arrangements possible.
place, this case study illustrates the feasibility of health
The district level - rather than the provincial or
insurance - at least for hospital-based inpatient care - at
central level - appears to be most promising in the
rural district level in sub-Saharan Africa. It provides
health system for the implementation of health
evidence supporting Arhin’s position not to dismiss
insurance schemes. There are still few documented case
rural health insurance in Africa as impractical or
studies of health insurance schemes managed at the
unfeasible (Arhin 1995a). But at the same time it clearly
local level in sub-Saharan Africa, and thus hard
illustrates the managerial and social complexity of such
evidence supporting this hypothesis is lacking. There is,
financing mechanisms. The need to proceed with
however, evidence that health insurance schemes which
caution is thus apparent. In Bwamanda there was
are managed at the national level in sub-Saharan Africa
enough time and room for manoeuvre to do so. In many
remain inadequate (Vogel 1990b). Studies of rhe
other places the (financial) situation may be much more
Burundi health card insurance scheme indicate that this
acute and may require quicker - but less well prepared -
national insurance scheme would benefit from more
decisions.
managerial autonomy at the peripheral levels of the
Experience in Bwamanda also highlights the fact that
locally developed health insurance schemes, in addition
to their financial and social objectives, may constitute an
opportunity to improve the overall coherence of district
670
of a feeling of collective ownership of the scheme. At the
same time the population of the district is large enough
health system (McPake et al. 1993; Baza et al. 1993;
Ahrin 1994).
The role of district teams as key actors in the
management of insurance systems does not mean that
health service systems. The Bwamanda scheme
there would be no further role for the central level.
contributed to strengthening the local referral system; it
Decentralization should not be reduced merely to
made the different roles of health centre and hospital
privatization and limitations on the role of the state
explicit; it triggered discussions within the management
(Collins & Green 1994). In the present discussion on
team on important issues like the adequacy of health
health insurance systems the role of the central level
services utilization, equity, social perception of
would not lie primarily in actually organizing these
community financing schemes, etc.
The district is the most appropriate level in the health
systems but rather in designing a framework for their
organization, in providing district teams with the
system for top-down and bottom-up planning to meet. It
necessary assistance in design, training and information
is sufficiently small to allow management teams to be
services (WHO 1996) and - last but not least - in
familiar with the specific features of the setting and to
compensating for the differences between districts in
acquire a thorough knowledge of the community, while
their ability to raise local revenue. Some degree of
being sufficiently large to allow for economies of scale.
centralization thus remains necessary if these differences
There is a case for considering this balance as a major
are to be compensated for through national financing
asset in the specific processes of the planning, design,
reallocation mechanisms (Collins & Green 1994). In
implementation and evaluation of health insurance
Zaire these corrective mechanisms have, unfortunately,
schemes. The district team’s knowledge of the
not worked for many years. The consequence is that a
community - as long as the team is sufficiently
relatively successful hospital insurance system within an
© 1997 Blackwell Science Ltd
VOLUME 2 NO 7 PP 654-672 JULY I997
Tropical Medicine and International Health
B. Criel and G. Kegels
Health insurance scheme for hospital care in Zaire
effectively functioning and externally supported district
system co-exists with very poor health service systems in
the neighbouring districts. The substantial proportion of
Bwamanda hospital users coming from neighbouring
districts (20% in 1995) illustrates Bwamanda’s
attractiveness in terms of quality of care offered; it also
indicates the poor performance of the hospitals in the
surrounding districts. Support to these districts — in
terms of staff, finances and logistics — is crucial if a
balanced development of all the health services in this
part of Zaire is to be achieved.
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Dumoulin J & Kaddar M (1993) Le paiement des soins par les
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economique et autres questions subsequentes. Sciences
Sociales et Sante xi.
European Union (1995) Research programme Scientific and
Technological Cooperation with Developing Countries.
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DC.
Co m H 2- 0- .
Quality
In 5 years,
at a nominal
amount of
will be «t
protected by a
healthcare
1 just
D n C /1 1
Success story of the
Yeshasvini Health Scheme
every lamily
in India
health
scheme.
Dr. Devi Shetty
Chairman, Narayana Hrudayalaya, Bangalore
We at Narayana Hrudayalaya Foundation, Bangalore and the Asia Heart Foundation,
Kolkata have a dream. A dream of making sophisticated healthcare available to the
masses, especially in a developing country like our own.
We run two hospitals in India, Narayana Hrudayalaya, a 780-bed hospital project in
Bangalore and the Rabindranath Tagore International Institute of Cardiac Sciences,
Kolkata dedicated to cardiac care.
Over 20,000 heart surgeries later, we realized that we were still part of a micro picture. The
areas we could cover, or rather had to cover, were far bigger than we could ever hope to
reach. Which is when we realized we needed an outreach program, and fast.
The first step was to launch the Telemedicine Program, a first-of-its-kind initiative in
association with the Indian Space Research Organisation (ISRO). In the first leg of its
inception, the program rolled out in the north-eastern hilly regions of Tripura, Siliguri,
Bankura in West-Bengal, Tinsukia in Assam, and Chamrajnagara, the tribal belt of
Karnataka. So far, 10,000 heart patients have been advised treatment, free of cost under
the program.
With the problem of accessibility gone, we faced a new problem. In spite of having the best
of doctors and facilities in place, the rural masses lacked the capacity to pay for speciality
care. Which is when, we initiated the Yeshasvini Health Scheme, a healthcare scheme for
the rural masses to access quality healthcare at a nominal amount of Rs.5 (11 cents) per
month. The program went on to become a successful venture of the
Co-operative Department, Government of Karnataka.
And this brochure takes you through that success story.
Dr. Devi Shetty
Sri. S. M. Krishna
Hon b!e Chief Minister. Government of Karnataka
“Every farmer must be covered by a health scheme."
Even as India propels into an era of prosperity
and technological advancements like never
before, we still lack an efficient healthcare
delivery system for the masses. A scenario that is
prevalent especially among the marginalized and
the rural population of India.
The beginning of a
X7
movement
1
called-
Y eshasvim
Healthcare experts, both in India and the world over,
.
unanimously agree that the main causes of pain and
suffering in villages are lack of quality hospitals,
qualified doctors, and medical equipment. We too, for a
long time believed in these facts until studies proved
us wrong.
Sri. H. Vishwanath
Hon'ble Minister of Co-operation, Government of Karnataka
"This is a co-operative movement that has all rhe makings of a revolution in quality healthcare.”
Sri. Kagodu Thimmappa
Hon’blc Minister of Health and Family Welfare. Government of Karnataka
"Wc h ive a dream oi mass healthcare."
, iWhat.didi
tne study ,
tell US?
In a startling discovery, through an informal survey, we learnt that occupancy of
hospital beds in Karnataka on an average stood at a mere 35%. The utilization of
operation theaters was even lower.
It was common for aged men to suffer from kidney failure for want of a simple
prostrate operation, or from premature blindness which is easily rectifiable by a
cataract extraction procedure. Thousands of middle aged women suffered from
excessive bleeding because of a diseased uterus which could be removed by an
inexpensive operation. Thousands of children died every year due to appendicitis,
another easily curable condition.
Through the study we concluded that it was not the lack of infrastructure, but the
lack of paying capacity of the working class and the poor, which was the root cause
of the mammoth healthcare problem India faced.
In fact, our findings correlated with the observations made by Dr. Amartya Sen,
Nobel laureate, who opined that the cause of the Bengal famine was not the
shortage of food, but the lack of pay ing capacity among the rural masses.
Hence, began one of the most ambitious, self-funding initiatives to bring quality
healthcare within the reach of the masses - the Yeshasvini Health Scheme.
Sri. A. Ramaswamy, IAS
India
Principal Secretary. Department of Co-operation,
Government of Karnataka
“Bureaucracy backed by political will, will move mountains!
health
A major chunk of the budget allocated for healthcare in
a typical Indian family goes to the earning/male
member of the family. Children follow while women,
the silent sufferers, occupy the bottom of the list.
Shockingly, the most common operation carried
out under the Yeshasvini Health Scheme was on
women. Hysterectomy or the removal of
diseased uterus in women accounted for 24%
of all operations carried out.
..
Dr. Prathap C. Reddy
Chairman, .Apollo Group of Hospitals
“Bringing healthcare of International standards within the reach of every individual."
Yeshasvini
Health Scheme
a storyo£ success
a. The classic rural scenario
Today, when an Indian farmer who owns two acres of land and a
I ■ house needs to admit a family member to a hospital for an
operation, he will need atleast Rs.5000 in cash which, more
often than not, he does not have. The next logical step is for
him to approach the village money lender who lends him
the money at an exorbitant rate of interest. Once in the
debt trap, the farmer undergoes severe physical
and emotional harassment from the money
lender. The situation could further get
compounded by crop failures, famine
and drought. The result is high
* instances of suicide amongst the
farming population.
b. Yeshasvini Health Scheme the plan
Taking these parameters into
consideration, the self-funding
Yeshasvini Health Scheme for the rural
masses of Karnataka was launched. The
Yeshasvini Health Scheme provided over
17 lakh farmers and their families quality
healthcare, and that included costs of critical
operations of the stomach, gall bladder, bones, eyes,
uterus, brain and heart at a nominal Rs.5 (11 cents)
per month.
Sri. H. Siddaiah, IAS ■>*
Registrar of Co-operative Societies, p
Government of Karnataka I---------------------------- 1
“We have one of the strongest co-operative networks in the world."
’■
Dr. Alok Roy
M.;n-.'.ging Director. Family Health Plan Ltd.
“Self-funding health schemes are the buzzword when it comes
to revolutionizing delivery of quality healthcare to the masses.”
c. Yeshasvini Health Scheme - the first steps
The Yeshasvini Health Scheme was open to people who were together for a purpose. Be it as a
co-operative society, a grameen bank or quite simply for a reason other than health. This criterion
was of paramount importance for the success of the scheme, because opening the scheme to
everybody would have resulted in only people with diseases becoming members. This in turn would
make a self-fundingscheme enviable.
d. Yeshasvini Health Scheme - at work
The Yeshasvini Health Scheme entirely depended on numbers to keep it afloat. Working around
the axiom that it costs Rs. 10,000 for a life saving operation, the Yeshasvini Health Scheme was
open to a large number of people because, among 17 lakh members only a few thousand members
are usually the ones with diseases. The other members are generally healthy members who pay for
the treatment of the rest of the diseased members. (Moreover, the Yeshasvini Health Scheme
enrolled members already diagnosed with diseases.)
Today 85 hospitals are recognized for treatment at 27 districts in Karnataka ensuring farmers do not
travel outside their districts for operations, except for heart and brain surgery, which are carried out
at 8 hospitals, spread across the major cities of the state.
What does
Sri. A. Shankar
‘Ewp
I ru'tee. Xaray.ina Hrudaval.iya Foundation
problem h r. an cc.-n-.-mx reason ulnch can be solved.”
Yeshasvini Health Scheme
offer its .
->
members I
The Yeshasvini Health Scheme covered
approximately 1,700 different types of
operations which included operations of the
stomach, gall bladder, uterus, eyes, heart and brain,
entirely free of cost. The only exception being - the
price of implants like heart valves, which are required
in very few patients. The members get free
outpatient consultation in all Yeshasvini
recognized hospitals. In addition, they also get
inpatient treatment and outpatient
investigations at discounted rates in
these hospitals.
•1 *
f 'f
Dr. K. Sudarshan
Vigil.uKc Director, Karnataka Lokayukta
■vs io hcihhcareis the tuud.<rnental nghr of even citircn.'
Absolute
requirements
for the success of aT r r
.
selr-tunaing
health scheme
t^e
Yeshasvini Health Scheme
o A minimum of 10 lakh members.
o The members should have come together for some other reason than healthcare, like a
co-operative society, a teachers association, a grameen bank or the like.
o
A monthly premium of Rs. 10- 15 should be collected for the whole year and
deposited before the launch of the scheme. If the membership fees were to
be collected on a monthly basis, the logistics would amount to more than
the actual cost of the premium.
o The premium must be deposited in the account of the charitable
trust that will be the regulatory body for implementing the
scheme, and a third party administrator should be given the
responsibility of managing the scheme, on a day-to-day basis.
o Recognized hospitals should offer comprehensive
packages for the operation, which will be paid by the
Yeshasvini Health Scheme. Patients should be exempted
from additional charges if he/she develops
complications that requires additional stay and
treatment. The hospital should not directly charge the
patient, irrespective of the duration of stay in
the hospital.
• Yeshasvini is successful primarily because of
benevolence of the recognized hospitals.
Dr. Alexander Kuruvilla
Medical Superintendent, Naravana Hrudayalaya
& Chief Co-ordinate, Yeshasvini Health Scheme
“Political will, supported by private entrepreneurship can solve most social problems."
Name: Chikkaya
Age: 50 years
Place: Mandya District, Karnataka
Underwent successful surgery' for a chronic debilitating backbone
condition, in a nearby Yeshasvini Network Hospital. He says, “A small
contribution of sixty-rupees has saved my precious life.”
Name: Vijayamma
Age: 35 years
" Place: Mandya District, Karnataka
Underwent spine operation under the scheme at Mysore. She says,
"We work as daily laborers near Bernal and this scheme has helped us
in time, like a friend.”
Name: Prasanna
Age: 20 years.
Place: Tumkur District, Karnataka
He underwent open-heart surgery and valve replacement at Bangalore.
He says, “Had this scheme been there before, my father would also have
survived like me.”
Name: Prema
Age: 40 years
Place: Mandya District, Karnataka
She got quick and responsive treatment at the right time for a broken
leg. She says,“Yeshasvini program proved to be a gift. I feel God
himself came down and treated me."
Name: Chikkamma
Age: 35 years
Place: Mandya District, Karnataka
A widow from Vivasoor near Mandya, she had bothering uterine
problems, which was set right by hysterectomy under the Yeshasvini
Health Scheme. Her daughter in an emotional tone said, “Yeshasvini
has helped bring back my mother from the dead! ”
The power oflf.ftindi
schemes
In a short span of time, the Yeshasvini Health Scheme has breathed a new
lease of life in bringing quality healthcare within the reach of rural
Karnataka. With its dynamic structure that generates funds to run itself,
the Yeshasvini Health Scheme forms a working model for more such
initiatives across the country.
The day
this man
In the first 7 months of its launch, 5,000 farmers underwent various types
of operations and 23,500 farmers had out-patient medical consultation,
entirely free for just Rs.5/- per month. That is the amazing power of a self
funding health scheme in action.
The Yeshasvini Health Scheme was conceptualized and launched by
Narayana Hrudayalaya in association with various co-operative societies
and the Government of Karnataka as a social welfare activity. The entire
expense of conceptualizing and implementation was borne by Narayana
Hrudayalaya as a charitable activity.
has access
The Family Health Plan Ltd., is an IRDA recognized Third Party
Administrator that does day-to-day management of the scheme under
the supervision of the Yeshasvini Trust.
to healthcare,
If any state government or organization wishes to launch a self-funding
health scheme like the Yeshasvini Health Scheme, Narayana
Hrudayalaya will carry out the entire process of launching the scheme,
free of cost using its expertise and infrastructure.
we become
For any further information or queries please feel free to contact
Dr. Asha Naik, Co-ordinator, Yeshasvini Health Scheme,
at Narayana Hrudayalaya on 80 - 783 5000 or mail us at
hrudayalaya@sify.com
developed Nation
=
iYr
Narayana Hrudayalaya
258/A. Bommasandra Industrial Area. Anekal Taluk, Bangalore - 560 099. Tel: 080-783 5000 - 18. Fax: 080-783 2648. email: hrudayalaya@sify.com Web: www.hrudayalaya.com
t C Community Risk Transfer
Through Microinsurance:
An Opportunity for South Asia?
An Effort to Turn Local Tsunami Recovery into Regional Disaster Risk Reduction for the Poor
<
southasiadisasters.net
Mm oc onnc
Key Idea
isuat-ij-j’
Recipes for Risk Reduction- the
Emergence of Microinsurance
Editorial Advisors:
Dr. Ian Davis
Cranfield University. UK
Kala Pt iris De Costa
Siyath Foundation, Sri Lanka
¥ following the UN year of Microcredit in 2005, there is growing interest
JL in microfinance solutions to help alleviate poverty in developing countries.
Khurshid Ahm
lnrcnr.iior.il Tsunami Programme
Ac.tion.Aid IntrntmonaJ, Dhaka
Madhavi Mahlgoda Ariyahaadu
Intermediate Technology Development
Group <li PG) - South Asia. Sri Lanka
Mihir R. Bhatt
All India Disaster Mitigation Institute, India
Dr. Rita Schneider - Sbwa
Basel University . Switzerland
Dr. Satchit Balsari, MD. MPH
The University Hospital of Columbia and
Cornell, New York
In this issue
1.
Recipes for Risk Rcductiontbe Emergence of
Microinsurance
2
2.
Conceptualising Risk
Transfer
3
3.
Role Models in
Microinsurance: Who
Contributes in the
Provision?
4
4.
Insurance Models for
Developing Countries from
Developed Countries: A
Case for Microinsurance
6
5.
Learning from the Positive
Experiences in the Field of
Microfinance
7
6.
A Life and Non-Iifc
Insurance Product for
the Poor: the Afal Virno
Scheme
8
7.
Product Innovations:
The Index Insurance
10
8.
Due Diligence Checklist
for Identifying an
Insurance Partner
11
9.
Commodity Risk
Management for
Developing Countries
12
10. SWOT Analysis of Index
Insurance Products
16
2
In Asia, in particular, the demand for microfinance has encouraged an everincreasing number of institutions to provide services, such as microcredit,
savings and social funds for low-income households. Microfinance services are
also now beginning to include the provision of microinsurance as financial
protection for low-income households or businesses against specific loss^^^
including death and funeral expenses, health expenses, loss of small-scale asst^^B
damage to properly or loss of livestock and crops. The emergence or
microinsurance is an important development within the field of microfinance
and challenges the previously wide-held belief of the "non-insurability" of the
poor.
Microinsurance is also emerging as a potential instrument for transferring
natural disaster risks by providing cover, or indemnification, against losses
from a disaster event. Like other forms of microinsurancc, the intent it to
provide easily accessible insurance cover for small-scale assets at affordable
premiums by keeping transaction and other costs low. By protecting the poor
from disaster losses and providing incentives for risk reduction, microinsurance
is increasingly recognised as an important part of disaster risk management.
However, questions remain over the affordability for the poor and the viability
of such products from a commercial point of view. To address these key concerns
there is need for more learning informed by practice and, thus, this latest
soiuhasiadisasters.net is an important contribution to the debate on
micro insurance.
This issue of soiahasiadisasters.net examines the subject of microinsurance
and discusses the opportunities and challenges that have been learned through
recent experiences in implementing microinsurance schemes in Asia. The
opening articles introduce the concept of risk transfer that underpins
microinsurance and discuss its relevance to disaster mitigation. Case study
examples illustrate different approaches to microinsurance, including a range
of insurance services and products tailor-made for low-income communities,
and highlight salient lessons learned for the evolving microinsurai^^
agenda.
We sincerely hope dial this issue of southasiadisasters.net will contribute
towards further learning and practice in microinsurancc and help promote the
use of risk transfer as an important tool in the field of disaster risk reduction.
Certainly, as disaster losses continue to grow and the poor arc hit the hardest
there is an urgent need for more innovative solutions-microinsurancc could be
one. ■
David Peppiatt
Head. Pro Vention Consortium Secretariat
May 2006
This issue has been prepared by A1DMI as a contribution to the Annual Meeting
of the International Task Force on Commodity Risk Management in Pretoria,
South Africa.
southasmdisaversnet
May 26. 2005
Conceptualising Risk Transfer
he provision of financial services
Like savings or credit for the poor
is well recognised as an effective
instrument to address poverty,
especially the economic well being of
the poor.
However, despite savings and credit
Services, the population of India and
neighbour countries face many risks
or shocks in the form of natural
disasters that make the poor
vulnerable. Implicitly, attempts by
poorer households to cope with severe
hazards, often leads them into debt and
ultimate impoverishment—a challenge
that the World Bank refers to as the
’poverty trap".
In order to address this issue, this
newsletter will focus on the concept
of risk transfer for achieving risk
reduction. One microfinance tool
which allows risk transfer is the
relatively new instrument of
microinsurancc. Essentially, many
individuals or groups arc capable of
sharing the cost of a risky event when
applying micro insurance.
The rationale behind the concept of
risk transfer lays in the fact that by
All photographs in this issue: AIDMI
T
Disasters destroy assets that have been accumulated by individuals and families.
Without these assets, they are increasingly vulnerable to future disasters.
forging relationships with other
community members, low income
households can achieve a greater
reduction in vulnerability than through
individual strategies. Thus, the risk is
transferred from the individual level
to the community or inter-community
level with groups in different
geographic locations which are not
equally disaster-prone.
"Of thefour billion people on
earth today who live on less
than two dollars a day, fewer
than ten million have access to
insurance.n
- Munich Re Foundation
As we will learn, microinsurance
products have the potential to offer
more complete protection against
many risks and therefore against
significant loss. This service is
provided at an affordable cost, the so
called premium. ■
How can we Define Microinsurance?
he Consultative Group to Assist
the Poor (CGAP) provides a
helpful definition of this instrument
of microfinance;
T
"Microinsurance is the proteaion of
low-income people against specific
perils in exchange for regular
monetary payments (premiums)
proportionate to the likelihood and
cost ofthe risk involved. As with all
insurance, risk pooling allows many
individuals or groups to share the cost
ofa risky event. To serve poor people,
nucroinsurance must respond to their
priority needs for risk protection
(depending on the market, they may
A fay 26. 2005
seek health, car. or life insurance).
be easy to understand, and affordable '
(CGAP 2003).
This definition refers to another
important feature: the insurance lias
to be understandable. This is an issue
we will devote more attention to in
terms of the discussion of the Afat Vimo
(AIDMl’s disaster insurance) scheme
since it implies that alongside the
supply of products every interested
institution, the training of potential
"clients’ becomes relevant.
After having provided a definition of
micromsurancc, it appears interesting
southasiadisasters.net
to learn more about the criteria of
insurability from the perspective of a
potential provider. According to
Brown and Churchill, the features to
be taken into account are the following
(Brown and Churchill 2003):
•
A large number of similar units
exposed to the risk.
•
Limited policyholder control
over the insured event.
•
Insurable interest.
•
Losses are determinable and
measurable.
•
Losses should not be catastrophic.
•
Chance of loss is calculable.
•
Premiums are economically
affordable. ■
Role Models in Microinsurance: Who
Contributes in the Provision?
ollowing Cohen and McCord
(2003), we can distinguish four
institutional models for providing
microinsurance which help us to
understand how corporate insurers.
government bodies as well as other
institutions, such as microfinance
institutions (MFIs) can play a role.
F
Organisations considering taking up
microinsurance initiatives should take
the positive and negative aspect of
each into account in order to achieve
the best fit with their circumstances.
a.
Partner - agent model:
Commercial or public insurers
together with MFIs or non
governmental organisations
(NGOs) collaboratively develop
the product. The insurer absorbs
the risk, and the MF1/NGO
markets the product through its
established distribution network.
This lowers the cost of distribution
and thus promotes affordability.
This model of collaboration has
become the dominant approach to
microinsurance in India and has
encouraged many microfinance
institutions to switch from a full
service model to the partner-agent
model. Examples of this scheme are
AEDMI's/f/ar Vuno as well as SEWA,
a microinsurance pioneer, who offers
its life, health and asset coverage in
partnership with various insurers.
b.
Community-based model:
A group of people or local
communities. MFIs. NGOs and/
or cooperatives develop and
distribute their own product.
manage the risk pool and absorb
the risk.
The Swayamkrushi Youth Charitable
Organisation (YCO) in Andhra Pradesh
"We cannot stop natural
calamities, but we can and must
betterequip individuals and
communities to withstandthem. ”
- UN Secretary Kofi Annan
is an example of a community-based
model. It is primarily a savings and
credit association with added insurance
features. The cooperative's 8,100
members pay a yearly premium of Rs.
100 ($2.22) into a pool managed by lite
cooperative and receive cover for death
and property loss. The Life insurance
benefit is Rs. 15.000 ($333) for a
natural death, and Rs. 30,000 in the
event of an accidental death.
c.
d.
the field of disaster insurance for the
poor.
If microfinance tools are considered
appropriate in order to help the poorthen why are microinsurance
products relatively new and why ®
many corporate insurers lacW
interest in this market?
An answer to this question will include
several factors. Economic reasons
relate to the insurability of the poor
in developing countries. Other reasons
have to do with the specific terms of
disaster insurances.
Concerning the first point, namely
the economic reasons, one can state
that the insurance sector has not
In the in-house or full-service shown much interest in the provision
model, a MFI or NGO runs its of insurance schemes for the poor
own insurance scheme for its since they are usually not expected
clients and any profit or loss is to be able to pay high risk
absorbed by the MFI. The system premiums. This is understandable
is not very common anymore but given the irregular and small income
it still exists in some organisations these people earn—especially those
such as SPANDANA, located in in the informal sector. Furthermore.
Guntur, Andhra Pradesh. This the transaction cost of these
scheme started in urban areas and
insurance products very high relative
then moved to rural ones and has to the premiums because proper
expanded enormously in recent infrastructure is lacking and
years.
potential insurers would face a high
illiteracy rate. This implies that
Provider model: Banks and oilier policyholders need training befo^
signing an insurance contract. The®
providers of microfinance can
directly offer or require insurance problems are often addressed to as
contracts. These are usually the concern of "capability* and the
coupled with credit, for example.
"willingness to pay" of the poor.
to insure against default risk.
This model is used
widely in the
general insurance
market but high
transaction costs
and low ability to
pay premiums
inhibit
its
extensive use in
scnnhasiod/sastersjiel
May 26. 2005
A very central issue that deserves
more explanation is the asymmetric
distribution of information between
insurer and insured which might lead
to adverse selection as well as moral
hazard. Adverse selection implies that
since the insurer is not able to screen
the beneficiaries of his product in
terms of their related risks, he might
set the premium which should reflect
the risk of the insured too high
jkhich leads the "good risks’ to drop
Put of the market- finally leading to
market failure. Moral Hazard on the
other hand, refers to the fact that an
insured person might change his
behaviour after having signed the
contract (i.c. by investing less effort
in the harvest). Moral hazard is
therefore commonly known as the
problem of incentives.
There arc some other important
features to be kept in mind, namely
the specific difficulties related to
disasters.
Contrary to risks such as the death of
a breadwinner or livestock, health
expenses, funeral expenses and
property damage from theft/fire which
are mostly independent (i.e. they do
not affect whole communities or risk
pools at a time), disasters, on the other
hand, are covariant risks which imply
that they not only take the lives of
people and livestock but cause also
damages to property and crops. Brown
and Churchill (2000) refer to the
llowing characteristics which make
saster insurance different from
Olliers:
•
Disaster risks are difficult to
estimate.
• They can affect large portions of
the population or the risk pool at
the same time.
•
Informal safety nets (family and
friends) tend to break down.
• They cause multiple losses
simultaneously to health, life and
property.
R
The characteristics of poor people,
especially in disaster-prone areas.
May 26. 2005
Glossary of Important Terms Related to
Insurance
Adverse Selection:
Also called anti selection, the tendency of persons who
present a worse than average risk to apply for, or
continue, insurance. If not controlled by underwriting,
results in higher-than-expected loss levels.
Covariant Risk;
A peril that affects a large number of the policyholders
at the same, c.g., an earthquake; or several risks that
consistently occur together (at the same time or under
the same circumstances).
Moral Hazard:
A risk that occurs when insurance protection creates
incentives for individuals to cause the insured event;
or behaviour that increases the likelihood that the event
will occur. Examples include bad habit such as smoking
in the case of health insurance or life insurance.
Source: ILO
make it difficult to imagine that
private insurers could ever show
interest in these individuals. Recent
experience, however, indicates that it
is possible to provide microinsurance
schemes and at the same time working
cost-efficiently. Details on successful
products and lessons learnt are found
below.
Do people affected not face other,
more important problems related to
their very basic needs such as shelter
or food and how docs the provision
of microinsurance products fit in the
standards of the International
Community in terms of disaster
mitigation?
Indeed, the above question is a very
legitimate one and one may ask
whether insurance products are of
central importance or they rather
represent secondary needs.
In providing an answer to this
question, one has to consider that
disaster mitigation is a long-term
process and implicit in sustainable
human development. The issue of risk
reduction in the form of risk transfer
becomes central as it helps to
accelerate the recovery and secure the
gains of disaster-affected people. In
order to implement insurances as a
useful tool in the field of disaster
souihasiadisaslers. net
mitigation, any institution working in
this specialised field of development
work has to be aware of the fact that
complementary actions such as disaster
awareness, capacity building, and
effective product design are of central
importance.
Quoting UN Secretary General Kofi
Annan in this context sheds light on
the fact that the international
community shares this perception:
"We cannot stop natural calamities,
but we can and must better equip
individuals and communities to
withstand them’. We find further
evidence in favour of the importance
of Disaster Risk Reduction as one of
the so called "UN Priorities for
Action" (point 5) as a part of the
’Hyogo Framework for Action 20052015" by the UN ISDR (International
Strategy for Disaster Reduction). This
framework is dedicated to Disaster
Risk Reduction and states that disaster
preparedness for effective response
should be strengthened at all levels.
Microinsurance contributes to
breaking the cycle of poverty and
mitigating disasters. This is possible
because it helps transfer life as well
as non-life risks and fits the states
priorities of the international
community. ■
5
Insurance Models for Developing Countries from
Developed Countries: A Case for Microinsurance
n rich countries, financial services
on the whole work well. These
services have evolved to fit the needs
and circumstances of these
environments. The vast majority of
people have access to interest bearing
savings accounts, mortgages at
reasonable rates: they have a choice of
consumer credits as well as insurances
for almost every kind of risk at
premiums that re flea the risk of losses.
I
A recent study of the World Bank
(Hess ct al., 2005) has addressed the
question on whether agricultural
insurances designed for developed
countries can be applied in the same
fashion in the context of developing
countries. The results of this study are
relevant since they hint at some
environmental characteristics that
must be taken into consideration
whenever an institution is interested
in providing insurance schemes.
The mentioned study presents the
available insurance products covering
agricultural risks in Canada, Spain and
the United States of America. The
products are covered either by the
government (regional or national) alone
or jointly alongside a corporate
insurer and cover around 100 specics
of crops. These insurances work quite
well at first sight and farmers in the
mentioned developed countries are
keen on signing the insurance
contracts. When undertaking further
analysis, however, the authors notice
that the respective governments have
to provide high monetary contributions
to the various insurance schemes. The
authors find that, considering these
issues, agriculture insurance models
for developed countries are not
applicable for developing countries.
Each of the presented countries, the
government plays either a minor or
major role in providing the insurance
products. This implies an income
6
Economic Losses due to tfisutm In 2005 and insured krsts
transfer in terms of national budget.
the very bxric fact of the amount of
available resources becomes very
relevant.
Implicitly, developed countries can
afford to allocate much higher amounts
of money in this form of agricultural
subsidies with respect to developing
ones1. A further consequence of the
discrepancy in fiscal resources as well
as die status of countries’ development
has been depicted in the opportunity
costs of money spent in this particular
field. Considering the scarce resources
of developing countries, the opportunity
costs of money allocated to agricultural
subsidies are much higher since money
could be spent in another manner that
might result in higher growth rates and
in better long-term welfare.
Another relevant point is the
importance of the tertiary sector in
the economies of developed and
developing countries respectively is
very different. In India, for instance.
two thirds of the workforce has an
occupation in agriculture compared to
approximately 3% in the United States.
Consequently, would the expenses of
wide coverage be exuberant in a
developing country with respect to a
richer country that has successfully
transformed its economy into a more
service oriented one?
Apart from aspects related to the
economic power of developed and
developing countries, the study finds
out that in developing countries die
farms arc much smaller compared to
"industrialised" farms in rich
countries which implies relatively high
administrative costs.
Another important aspect is that
developing countries have much less
access to global reinsurance markets.
Reinsurance contracts usually face
transaction costs as well as due
diligence since they must understand
every aspect of the insurance product
they arc reinsuring. This implies
underwriting, contract desigt^
ratemaking, and moral hazard aifl
adverse selection control mechanisms?
Taking these points into consideration,
one has to conclude that as far as
agricultural insurances are concerned.
the schemes working "quite" well in
developed countries cannot be applied
in the same fashion for developing
countries. As a consequence, we have
to rely on products that take the special
features of clients in developing
countries into account. ■
I For instance. agricultural insurance* in the US: for every $ of insurance provided,
the US taxpayer ha* to subsidise with US 55 (Yaron el al., 1997)
southasiodisaucrs.net
May 26. 2005
□
Learning from the Positive Experiences in the
Field of Microfinance
International Workshop on Disaster Risk Mitigation: Potential ofMicrofinance
for Tsunami Recovery, New Delhi, October 14th and 15th, 2005
005 saw the launch of the United
Nation's Year ofthe Microcredit
as well as the creation of an
International Day for Disaster
Reduction that is celebrated annually
on October, 12th. Tliis day is designed
to raise awareness of the need to put
disaster risk reduction on policy
agendas and encourage the
development of innovative methods for
reducing disaster vulnerability.
2
International Workihop on
•
Taking this into account, the AU India
Disaster Mitigation Institute (ALDMI)
seised the opportunity of these two
coinciding events to instigate an
international discussion on the
potential use of microfinance for
tsunami recovery.
The workshop was hosted by AIDMI
with the United Nations International
Strategy for Disaster Reduction
(UNISDR) and the Indian National
Institute of Disaster Management
(NIDM) and was held at the India
Habitat Centre in New Delhi.
It was well attended by an array of
expens in microfinance provision and
disaster risk reduction from across
^^the world, as well as representatives
,^w>f the Government of India including
'^^the Honourable Home Minister,
Shivraj Patil, D.K. Shankaran and
M.P. Sajnani from the Ministry of
Home Affairs. Representatives from
tsunami-affected stales in South India
were also in attendance.
The central outcomes of the
workshops were the following:
• Due to the fact that experiences
with microfinance tools have
been very positive in terais of
poverty and vulnerability
reduction, there has been a clear
Recommendation
for
May 26. 2005
Disaster Risk Mitigation ■
Potential of Micro Finance tor Tsunami Recovery
Octco* u 15. 2001 intfa HoOtct
National initituto of Disaster Management
Ministry of I'hyo Affair
sw Doll
The workshop was lead by practitioners and policymakers, including (left to right):
D.K. Shankaran, Ministry of Home Affairs; P.G. Dhar Chakrabani, Executive
Director. NDMA; Shivraj Patil, Honorable Union Home Minister; N. C. Vij, Vice
Choir, b’DMA; Praveen Pardeshi. Senior Advisor. UN'ISDR; and Mihir R. Bhatt.
Honorary Director, All India Disaster Mitigation Institute.
•
developing a strategy for
applying microfinancc for
disaster recovery.
The participants have agreed that
before microfinance can be
successfully and broadly applied,
fundamental paradigm shifts in
outlook and approach are
required. Policy and institutional
level commitment is necessary in
order to build disaster mitigation
in the development process.
As Mr Sajnani, Advisor at the
Ministry of Home Affairs put it:
“Where previously government
authorities concentrated on disaster
relief, a shift in orientation is taking
place, from a relief-centric approach to
a holistic multi-disciplinary approach.
This new approach encompasses
prevention. mitigation, preparedness,
response, reliefand rehabilitation. “
Development of a microfinance
recovery model:
• The international experiences
shared in the workshop have
soulhasiadisasters.net
shed light on the fact that there
is not a single model for
microfinance and its application.
Credit-based models are
considered most effective, and
should be combined with
as savings and insurance.
In expanding the use of
microfinance for disaster
recovery in all areas, it was
concluded that more work is
required to reach the poorest
of the poor.
At the same time as recognising
the disaster-stricken as clients.
it was agreed that indigenous
coping strategies should be built
into programme design through
community
consultation
following a community-based.
participatory approach. This will
help increase the community's
capacity to address risk in the
future. ■
To learn more about the workshop,
7
A Life and Non-life Insurance Product for the
Poor the Afat Vimo Scheme
o August 2004, the All India Disaster
Mitigation Institute (AIDMI)
launched the Regional Risk Transfer
Initiative (RRTI) in association with
the Provention Consortium. Other key
partners are the Chamber of
Commerce and Industry of Small
Businesses, the International
Federation for Red Cross and Red
Crescent Societies, the World Bank.
the Asian Development Bank and the
Department for International
Development.
I
The main objective of the RRTI is in
the convergence of micromitigation.
microcredit and microinsurance as a
precondition for effective local, lowcost risk transfer. It therefore strives
to promote more effective risk
management for the poor. The RRTI
has been central in terms of
establishing the Afat Vimo scheme as
disaster insurance for the poor.
Background of Afat Vimo
Following the 1998 Kandla cyclone.
AIDMI established the Livelihood
Relief Fund (LRF) with the main
objective of building livelihood
security and reducing economic risks
through sustainable long-term
recovery. Following the January 2001
earthquake in Gujarat. LRF expanded
and played a major role during
recovery from the February 2002 riots
8
in Gujarat. In the wake of
the 2004 tsunami. AIDMI
responded again providing
much needed livelihood
relief.
To coincide with the launch
of the RRTI in September
2003, AIDMI held a focus
group
session
on
micro insurance for the poor
which brought to life the
idea of a "Demand for
Insurance Survey". The survey was
conducted in September 2003 within
14 earthquake-affected slum
communities in Bhuj, Gujarat. This
provided information on what
percentage of the population already
had insurance (only 2 %) and bow many
respondents were interested in taking
out a policy in the future (73%). The
survey also revealed that capacity
building was required since awareness
and understanding of insurance and risk
transfer was low.
Afat Vimo
Since the survey revealed need by
beneficiaries for mechanisms to
safeguard their newly replaced or
created assets in the aftermath of
disaster, the Afal Vimo scheme was
bom.
After negotiations with companies
interested in supplying lowpremium insurance policies
to poor clients, good
partnerships were forged
with the Life Insurance
Corporation of India (LIC)
and the Oriental Insurance
Company Ltd. (OIC). LIC
committed to providing a
life insurance policy under
Afat Vimo and OIC agreed
to establish non-life
insurance policy coverage
southasiadisasienjwi
for Afat Vimo beneficiaries. The
scheme was launched in August 2004.
with the coverage of 829 LRF
beneficiaries in Bhuj. It lias extended
its coverage to 5597 in February 2006.
LRF beneficiaries arc now covered in
several districts in Gujarat, as well
as in Tamil Nadu and Pondicherry in
South India.
Description of the Afat Vimo Product
Afat Vimo provides life and non-life
disaster insurance to low-income
clients who are beneficiaries of
AIDMI1 s livelihood relief through the
LRF. It covers policyholders for losses
incurred in the case of 19 eventualities,
among them earthquake, cyclone,
lightening, and landslide.
Like all AIDMI initiatives, Afal Vim^
focuses on the poor among disast^
victims. Thus, the typical profile or
Afat Vimo policyholders is as follows:
•
Disaster affected.
• LRF beneficiary.
•
Low-income household—average
annual income Rs. 12000Rs. 18000.
•
Engaged in microenterprises in
the unorganised sector.
• Average assets worth Rs. 9000.
•
Average savings Rs. 200-Rs. 400.
The insurance scheme of Afat Vimo is
unique since it combines life and nonMay 26. 2005
□
life coverage in one policy. The
coverage is provided by different
insurance companies but is brought
together by AIDMI under Afat Vimo.
The total payable premium in Gujarat
for instance, is Rs. 146 (tax incl.) per
household per annum. The life
insurance component in this example
includes an assured sum of Rs. 20.000
at a premium of Rs. 86, whereas the
non-life insurance costs Rs. 60 per
annum and covers house and contents
(Rs. 40,000), stock-in-trade (Rs. 10,000)
and personal accident (Rs. 25,000).
Complementary Services Provided
by AIDMI
As stated above, the role of AIDMI in
the Afat Vimo scheme is of both
facilitator and intermediary. Unlike
other organisations, however, their
activity is not limited to the initial
stages of insurance coverage, but
AlDMI's community-based approach
ensures that they are actively involved
with the beneficiaries at every stage.
They are committed to supporting
communities in the long-run when
relief institutions leave to provide
assistance elsewhere. AIDMI has no
exit strategy because they continue
providing relief, rehabilitation and
development assistance to vulnerable
communities. This implies also the
capacity building provided by
AlDMI's Learning Resources team in
cooperation with the LRF team in the
form of training sessions with the
community.
These
involve
comprehensive explanations of how
insurance works, why it is beneficial.
0
/
[
A typical Livelihood Relief Fund beneficiary is able to return to work based on
compensation from Afat Vimo scheme.
how to be a good policyholder, the
differences between microcredit and
microinsurance, and the importance of
the Indian Insurance Regulatory
Development Authority. Training
courses are essential for the effective
operation of/f/hr Vimo; through these,
beneficiaries come to understand what
to do in the event of a disaster in terms
of how to make claims as per the legal
and procedural requirements of the
insurers and AIDMI.
Apart from providing educational
services, AIDMI also collects the
premiums and helps the disasteraffected to start the claim process.
Lessons to be Learnt
As described above, the number of
households covered by Afat Vimo has
increased from an original
membership of 829 in August 2004 to
5597 in February 2006. This has been
a very successful development.
Market research
>
|O Inctrtutkxial assessment l
f© Product development]
____________ r_________J
I
Pricing
CQMonitor the claims experience]
Implement
Source: ILO
A possible cycle for developing a microinsurance schemes.
May 26. 2005
souihasiadisasters.net
Furthermore, the renewal rates for
Afat Vimo have been encouraging with
an average of 88% which is very
positive for a scheme in its relative
infancy. However, there are also a
number of reasons why beneficiaries
do not renew their policies.
The LRF (cam has observed that the
following reasons are the most
common explanations for non-renewal
of policies:
•
migration,
•
inability to pay,
•
no desire to renew because people
do not see the benefit in insurance.
Regarding the scheme as a whole, one
can state that it has proven to be
possible to achieve relatively low
insurance premiums as well as
expanding the programme by spreading
risks to other communities since not
everyone will be affected by disaster.
Apart from the success of the scheme.
however, there are some challenges
to cope with such as the limitations in
the expansion of coverage since an
augmentation of membership would
invariably mean a substantial increase
in operating costs—particularly if
geographical coverage was to
increase. ■
To learn more about the Afat Vimo
insurance
scheme,
view
www.southasiadisasters.net and
Mww.provcntionconsortium.ore
9
■
Product Innovations: The Index Insurance
Opportunities refer to the positive
perspective while Weaknesses and
Threats refer to the negative. ■
ecently, the World Bank has
provided the impetus and
technical assistance for the
implementation of innovative index
based crop insurance schemes in
developing countries based on the
experience of developed countries. The
index-based crop insurance contracts
are sold in standard units by rural
development banks, farm cooperatives
or microfinance organisations, and the
■premium" varies from crop to crop
Payments to policyholders arc based
on a weather index that is highly
correlated to farm yield or revenue
outcomes.
refer to the internal perspective
whereas Opportunity and Threat set
up the external one. Strengths and
Since payouts are not coupled with
individual loss experience, fanners
have an incentive to engage in loss
reduction measures, for example,
switching to a more robust crop
variant. A physical trigger also means
that claims are not always, fully
correlated with actual losses, but this
"basis risk" may be offset by the
reduction of moral hazard and
elimination of long and expensive
claims settlement. Since the claim is
a fixed amount of money per unit of
protection, transactions are greatly
simplified. The major advantages of
index-based insurance are the
reduction of moral hazard and
transaction costs. Index-based
mechanisms arc also more transparent
since they are based on a physical
trigger, and the payout is fixed in
advance. The major downside of
index insurance is the basis risk: if
the trigger is insufficiently correlated
with the losses experienced then no
payout may occur despite substantial
losses.
International Strategy for Disaster Reduaip/LJI^DR}: "Invest to prevent
disaster'; Geneva, 2005
/
In order to provide an analysis of these
new products, we will apply a SWOT
analysis to the Index Insurance that will
tell us more about the ’Strengths,
Weaknesses, Opportunities and
Threats’ of the products. In this
context. Strengths and Weaknesses
www.uasa.Qc ,at
R
10
References and where to learn more about Risk transfer and
microinsurance:
Churchill. Craig F.; Liber, Dominic; Me Cord, Michael J.: Roth, James:
‘Making Insurance Work for Microfinance Institutions- A technical Guide to
Developing and Delivering Microinsurance*, edited by ILO, Geneva, 2003
Cohen. Monique: Sebstad. Jennifer: ’Policy Arena- Reducing vulnerabilityThc Demand for Microinsurance*; Journal of International Development, J.
Im. Dev. 17.397-f74 <2005) available at: www.intcrscicncc.wilcy.com
Hess. Ulrich; Skees. Jerry; Stoppa. Andrea; Bamett, Barry; Nash, John:
"Managing Agricultural Production Risk- Innovation in Developing Countries*;
The World Bank Report No. 32727-GLB, Washington D.C., June 2005,
available at: www, nfcommrisk. org
Mechler. Reinhard; LinnerootH-Bpyer. Joanne; Peppiatt, David:
’Mkroinsarance for Natural Disaster Risks in developing countries- Benefits,
Limitations and Viability; A ProVention/llASA study, January 2006
Miamidian. Eileen; Anfuld. Margaret; Burritt, Kiendel; Jacquand, Marc:
Surviving Disasters and Supporting Recovery: A Guidebook for Microfinance
Institutions; The World'Aank Hazard Management Unit, Working Paper
Scries No. 10, WashingidHJXC., February 2005
Morduch, Jonathan. 'MiSpinsurancc: the next revolution?; in Banrcjee,
Abhijit, Benabou, Roland. Sjpokherjee, Dilip; New York, 2004
Outcome of the W'orld Conference on Disaster Reduction, Hyogo, Kobe
Japan, 18-22 Jan 2005: avails* at: www.unisdr.org/wcdr
Roth. James; Athreye. Vijay: yTATA-AlG Life Insurance Company India
Ltd.’, CGAP Working Group ouMicroinsurance- Good and bad practice".
Case
Study
No. 14.
September
2005,
available
at:
v.ww.microi~inaiK<.-c^gray.ojArcTina/rcsourccccntcr5/nucromsuraDcc
Roth. James; Churchill, (jug; Ramm, Gabriele andNamerta: "Microinsurance
and Microfinance Institutions-Evidence from India", in: CGAP Working Group
on Mkroinsurance- Good and bad practices, Case Study No. 15; September
2005; available at: www.microfmajKCEaicway.orc/section/resQurcecciitcrs/
mkroinsurance
For more information:
www.ilo.ore/steD
scctjon/rcsourcecenters/inicroinsurance
uww.prorentioncoiisortium.QrE
>»ww,southi»si«t disasters.nd
www,unisdr,org/hfa
www.woridbank.on? ■
southasiadisasiers.net
May 26. 2005
B
Due Diligence Checklist for Identifying an
Insurance Partner
Questions
What an MF! Should Look For
What is the reputation of the
insurance provider?
It should be a strong institution that pays claims on time. Check with policyholders
to see if they have had a positive experience.
How is (he insurer currently
financed?
The insurer should be financed from its earnings, and it should have a stable.
conservative asset portfolio.
What is the claims experience
of the insurer and its history of
claims payouts?
They should pay most claims within a month and be willing to guarantee a fast
turnaround (within two weeks guaranteed with an effort to pay within one week) on
claims from MFI clients. The MFI should track this once a relationship is finalised.
How interested is the insurer
in serving the low-income
market?
They should not only express interest but also have examples of current work with
this market or at least examples of efforts to work with this market.
Will the insurer adjust its
products to suit the preferences
of the poor?
They will likely need to reduce the coverage, reduce the price proportionately.
and even adjust some procedures to facilitate the transactions between the MFI
and the insurer.
Is the insurer willing to make
a medium- or long-term
commitment to the MFI?
This type of relationship will take time to mature. If the insurer is not willing to
make a commitment for at least three years, it is not worth the MFI entering the
arrangement. Note: the insurer is not tied to the original terms of the insurance
for that period, just to continue to work with the MFI and its clients.
Is the insurer willing to pay a
commission to the MFI for
performing tlx? agent role?
On shornerm group life business, insurers typically pay an agent five to twenty
percent of the premium. The MFI should get a substantial portion of that amount.
Are there issues related to
regulatory compliance by the
insurer?
An MFI should review the insurer's annual report and discuss its regulatory
compliance with the insurance commission. Some insurance companies employ an
ombudsman to interact with the public. If one is available, the MFI should discuss
with her issues related to regulatory compliance and common customer complaints.
Will the insurer give lite MFI
responsibility for verifying
claims?
It is not recommended for the insurer to verify claims. The two partners should
have a written understanding regarding what proof the insurer requires. The agreed
documentation should be accessible to the poor, yet conclusive.
Can the insurer minimise
the number of exclusions
without jeopardising the
sustainability of the plan?
Generally, MFIs have difficulty informing clients about complex products. Insurance
will be the same. Not only will MFIs have to explain the concept of insurance
(risk pooling), but they will also have to help clients understand the product. The
simpler the product, the easier it will be to sell and administer the product. ■
May 26.2005
sotithasiadisasters.net
J]
Commodity Risk Management for
Developing Countries
Jntroduclion
Farmers face a spectrum of risks, and
each of these risks-along with how
farmers manage them-impact farm
income, productivity and access to
credit.
Among the risks farmers in des eloping
countries have to deal with is the
weather risk as well as the risk related
to the price of commodities. A recent
study of AIDMI conducted with
farmers in the Indian state of Gujarat
has shown that 40% of the interviewees
do not know about the existence of crop
insurances.
Funbermorc, AIDMI gained evidence
among those who know about the
existence of these schemes, only 34%
have signed in a contract. The
conclusion for AIDMI in terms of the
mentioned survey implies to increase
the awareness of agriculture insurance
is an effective method to reduce
several risks and reduce their
vulnerability and give them a more
stable livelihood.
Whereas our article on index insurance
schemes has provided an analysis of
an appropriate method to mitigate
weather risks, this contribution sheds
light on the tools that can help fanners
manage risks in the context of
commodity prices better.
Impact of Price Volatility on
Farmers
Price volatility significantly impacts
the incomes of farmers as well as the
macroeconomic health of their
countries. According to the World
Bank, from 1983-1998. the price of
many commodities fluctuated from
below 50 percent to above 150 percent
of their average prices. Attempts by
many countries to guarantee farmers
12
Farmers discuss possible hazards in a workshop in Delhi.
minimum prices by separating
domestic commodity prices from
international prices have proven
financially unsustainable. Instead,
these countries have started to pursue
the path of liberalisation which exposes
fanners to price fluctuations over the
course of a season creating uncertainty
about the price they will receive for
their product to be sold.
countries are, in general, unable to
access these markets. In the absence
of markets for price hedging
instruments, fanners try to cope with
price risks by:
a.
self-insuring by asset accumulation
b.
income diversification
c.
informal insurance arrangements.
At the farm level, this uncertainty in
commodity prices makes it difficult
for producers to allocate resources
efficiently, limits their access to
credit for productivity enhancing inputs
and leads them to adopt low-yield, lowrisk production technologies, thereby
lowering average incomes. At the
macro level commodity price
volatility affects government’s fiscal
revenues, trade balance, exchange
rate, and creditworthiness.
Diversification to other activities is
difficult due to the lack of necessary
skills of most farmers, information and
capital to do something else. Many
farmers adopt low-risk and low-yield
crop to ensure a minimum income.
However, these inefficient production
patterns inhibit the creation of income
growth and the accumulation of
capital. Finally, informal insurance
arrangements at the local community
level often break down in the face of
large systemic risks such as the
collapse in commodity prices.
While market based tools (futures and
options) that insulate producers from
the negative effects of short-term price
volatility are widely used in highincome countries, the vast majority of
agricultural producers in developing
The use of market oriented price risk
management strategies to mitigate this
price risk would provide farmers with
new alternatives and allow them
greater certainty in planning their onfarm activities.
somhasiadisasiers.net
May 26. 2005
The price falls and tbc farmer is not hedged
Hinting
’
I tarvea
Sale
The price falls and the farmer is hedged
Hinting
Harvest
Sale
Source: CRMG. World Bank. 'Commodity Price Risk Management for Producers. A Training Guide '
Why arc farmers unable to access
these financial instruments?
Some barriers have prevented
smallholders from assessing these
tools:
•
the minimum contract size traded
on organised exchanges far
exceeds their annual production
quantity
• lack of knowledge of such market
based price insurance instruments
•
lack of understanding of how to
use the tools available
• sellers of such instrumentsgencrally international banks and
brokerage houses-arc often
unwilling to engage with a new
and unfamiliar customer base of
small-scale
producers,
characterised by high transaction
costs, diminished access to
credit, and performance risk.
The World Bank as a facilitator
As learned above, market based tools
are difficult or almost impossible for
poor people to assess. The World
Bank- with support from several donor
governments, and in collaboration with
international organisations and private
sector representatives- has been
working as a has been working as a
facilitator, providing technical
assistance and capacity building to
allow producers in developing
countries and local intermediary
institutions with links to producers to
access these instruments. To date
seven transactions have been completed
between developing country clients (in
Uganda, Tanzania, and Nicaragua)
and international providers (mainly
major international banks in Europe
and the US).
These transactions provided price
protection for tonnages ranging from
as low as 50 tons to as much as 700
tons. Transactions provided price
protection for sales that were made
as short period as one month in advance
up to seven months in advance. The
range of premiums paid for price
protection varied from around 3 % of
the value of the commodity to as much
as 8% with most transactions involving
premium payment of around 4-6%.
An AJDMl team member finds that falling commodity prices represent big risk to
farmers.
May 26. 2005
southasiadisasters.net
How do Price Risk Management
Instruments Work?
A parallel can be drawn between
hedging instruments for price risk and
typical insurance products. Producers'
organisations, local banks, or
exporters can purchase derivatives that
13
Can South Asia Learn from other Developing Countries?
The Example of Tanzania
Background
In 2001 and 2002 coffee price fell to
forty-year lows. Tanzania liberalised
the coffee sector in 1993 and as a
result both private traders and
cooperatives buy it at competitive
prices at the community level. Coffee
makes 20% of Tanzania's export
earnings and the drop in price has
affected 400,000 people. Indeed.
liberalisation and implicitly the
volatility in prices have made it
difficult for fanners to optimise
production technology. timing of sales.
and use of assets that could eventually
result in higher household incomes.
Overall, the welfare of coffee fanners
in Tanzania has diminished.
The Product
Being aware of the impossibility of
stopping the long-term trend of
declining prices cannot be stopped
without significant structural changes
in the world coffee market, one of
the largest coffee cooperatives in the
country has begun working with the
World Bank in order to confront the
negative effects of short-term price
volatility. In doing so. they utilise
price risk management instruments
to hedge their price risk. This
cooperative union has a large number
of smallholder producer members
whose average production is between
20-100 kg per farmer.
Like many other cooperatives in
Tanzania, the cooperative union
utilises a pricing system that consists
of multiple payments to farmers
throughout the year. Cooperative
members receive a uniform minimum
price for their coffee when they
deliver it to the union, and then later
in the season, depending on sales and
market performance overall, fanners
may receive subsequent payments for
their product. The uniform minimum
price, which is called the 1st
payment, is established months in
advance of the actual selling season
14
and agreed at the annual general
meeting of the producers. The
guaranteed 1st payment is viewed as
a service to the farmers and provides
them with some form of price stability.
but it can have disastrous financial
impacts on the cooperative overall. If
cooperatives guarantee a low 1st
payment at the beginning of the season,
they run the risk that market prices
will rise and farmers will sell to
traders instead of to the cooperative
(local traders compete with the
cooperatives by paying full market
price for coffee, in cash, at the time
of delivery of the product). If
cooperatives guarantee a high 1st
payment at the beginning of the season.
they run the risk that market prices
will fall, and they will make losses on
the negative margin between purchase
price to fanners and actual sales prices
on the market. Since the 1 st payment
price is established well ahead of the
selling season a: a time when sales
prices are not yet known, the
cooperative union is essentially taking
a long position on coffee, which is in
effect from the time they set the 1st
payment until the time they conclude
all sales of coffee at the end of the
season, a period which can stretch up
to ten months.
Complications of the Programme
However, in order to assure long-term
sustainability of the cooperative, it has
been necessary to develop a number
of strategies as for instance finding a
way to protect overall profitability
from the often disastrous affects of
setting 1st payment price high at the
beginning of the season and having to
sell low when prices fell later in the
season.
For the cooperative, although
conclusive impacts of the risk
management strategy are not yet
entirely known since the season is just
now ending, there were a number of
positive affects:
suuihasiadisasiers.nel
1.
2.
3.
4.
The union improved its
relationship with its local bank,
which included a loan for
premiums to cover the cost of
hedging instruments in the total
loan package given at the
beginning of the year.
The union improved its overall
financial state, including its
debt position, and management
of the union had a clear view of
overall financial status
throughout the season, without
having to worry about the impact
ofprices falling below a certain
level on the global market. They
were able to communicate results
with confidence to the local bank
and government ministers who
were monitoring progress.
Improved financial transparency
helped the union make better and
more strategic selling decisions.
The union was able to pay fanners
a 2nd and 3rd payment since there
were periods of relatively higher
market prices during some
months of the selling season. In
the past, any positive returns
from high priced sales would
have been held by the union until
the end of the season to protect
against future losses. With
hedging, the price floor created
by the option allowed the union
to disperse revenue at the lime
it was earned.
Concluding Remarks
Each of the impacts listed above
bodes well for the union's ability to
continue to strengthen its relationship
with its lenders and improve its access
to credit In a very short period of
time, the union has moved from being
a very high-risk enterprise to a much
more stable operation. Price risk
management has contributed to that
growing stability and the union's
managers have indicated that they arc
very pleased to have knowledge and
access to such tools.
May 26. 2005
are traded on international exchange
(or based off these exchanges); in most
cases a simple put option, on behalf of
their producers. When combined with
physical sales these financial
instruments, it will guarantee a
minimum price level based on an
international price (not a local price)
for a given commodity for a number
of months. In order to purchase this
financial product producers must pay
a market related fee or a premium. In
the case of put options, when price rises
during the option contract period, the
producer receives no payout from the
contract but can still sell his physical
product for the market price in order
to benefit from the rising prices.
However, when price falls during this
period, the producer receives a payout
equal to the difference between the
price the producer chose to insure with
the price risk management contract and
the international market price on the
last date of the option coverage.
Because of the size of these contracts
it is necessary to aggregate producer
demand for these products. A diversity
of different types of organisations
could serve this role as an
Mutual learning between farmers and insurance companies about the risks and
commodity pnees at a workshop conducted by AIDMI.
intermediary. A domestic bank or other
financial institution could integrate
these products into its services.
The World Bank, 2002. "Delivering
Price Insurance. Lessons Learned
From Four Cases Studies’,
Sources:
The World Bank, 2002, "Tanzania:
Coffee Price Risk Management".
Commodity Risk Management Group,
Washington. D.C. February.
Commodity Price Risk Management
Group, Washington, D.C., February.
Commodity Risk Management Group,
Washington, D.C. August.
Varangis, P., D. Larson and N. Yabtdd,
1998, "Commodity Risk Management
and Development", The World Bank
Policy Research Working Paper No.
1963, August. ■
The World Bank, 2001, "Delivering
Price Insurance, Lessons Learned
From Four Cases Studies",
The ProVention Consortium
he ProVention Consortium is a
global
coalition
of
governments,
international
organisations,
academic
institutions, the private sector, and
civil society organisations. The
Consortium is based on the premise
that we all must take responsibility
for making the new millennium a
safer one and that it is the inter
sectoral links-among the scientific
community, policymakers, and the
private and public sectors-that will
facilitate the promotion of risk
assessment, risk reduction, and risk
education activities in developing
countries. The Consortium's
objectives are straightforward and
attainable:
• To promote a culture of safety
through education and training
T
May 26. 2005
•
•
•
•
among leaders and citizens of
developing countries.
To support public policy that can
reduce the risk of natural and
technological disasters in
developing countries.
To support pilot projects and to
disseminate information about
"best practices" proven to
mitigate the scope and frequency
of disasters.
To develop governments’ ability
to minimise disasters and to
respond effectively when they
occur.
To forge links between public and
private sectors, between the
scientific community and
policymakers, between donors and
victims, so that all stakeholders
work together to strengthen the
southasiadisasters. net
economy, reduce pain and
suffering, and promote the
common good.
The ProVention Consortium functions
as a network to share knowledge and
to connect and leverage resources to
reduce disaster risk. It focuses on
synergy and coordination so that
efforts, and benefits, are shared.
Partners include the Governments of
Japan and Norway. Organisation of
American States, International
Federation of the Red Cross, UN
Development-, Environmental-. Food
Programmes, World Meteorological
Organisation. African Development
Bank, Asian Development Bank,
Wharton School of the University of
Pennsylvania or private groups such
as Munich Reinsurance. ■
15
SWOT‘Analysis of Index Insurance Products
variables. ’ Measurement
ShrnwhS -Education: Required by users to
redundancy and automated
• Lower moral hazard siax.dttf;'
assess whether index insurance
instrument calibration further
mkrnmtydoesnotdepaxl,«orbe^.“.- wiH4provide effective risk
increase of the credibility of an
individual proJowV realised S.' manassnrent.
index.
yield..
. *...
the market is still in
• Less adverse selection since the >its, infancy' in developing countries
Availability and negotiability;
indemnity is based on widely' ■' ind has^onte start-up costs.
Standardised and transparent,
available information, so there • '‘^•'Microclimates; Make rainfall or
could be traded in secondary
'are' few
informational
areit-yicid index based contracts
markets.
asymmetries to be^xplqjwd,
. '^-’dlfficuji for more frequent and
Reinsurance function; Index
• , Lower administrative costs as - ', '^localised events.
insurance can be used to more
\\ underwriting and inspections of V/pForecasts;
Asymmetric
easily transfer the risk of
widespread
correlated
individual farms is nqtiequired,
' information about the likelihood
agricultural production losses.
• Standardised and transparent
ofan event in the near future will
—
/create
the
potential
for
Versatility;
Can
be easily
structure- due to. .uniform
intertemporal adverse selection.
bundled with other financial
structure qtcoritracis?
» Not appropriate in highly spatially
services, facilitating basis risk
heterogeneous production areas or
management.
with commodities grown in
>• Without sufficientcorrelation
microclimates. In this case, index Threats
between the index and actual
insurances will only work if it is • Weather cycles; Actuarial
losses, index insurance is not
highly localised, and/or if it can
soundness of the premium could
an effective risk management
be written so that it protects only
be undermined by weather cycles
tool. This is mitigated by self
against the most extreme loss
that change the probability of the
insurance of smaller basis risk
events.
insured events, for example. El
by fanner, supplemental products
Nifio events.
underwritten by private insurers;
• When designing a contract,
blending index insurance and
New innovations in technology.
significant care must be taken to
rural finance; and offering
assure that the insured has no
coverage only for extreme events.
including the low-cost weather
better information about the
Precise actuarial modelling is
stations that can be placed in
likelihood and magnitude of loss
required; Insurers must
many locations where weather
variables can be measured, and
than does the insurer. ■
understand the statistical
properties ofthe underlying index.
also the types of measurable
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E-mail: dmi@iccnct.co.in
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.St
de'1
Ann-15cation to r^W for the training of Basic Health
Workers and for Health Insurance Scheme of Dhamara Phimananally
Background information
LOCATION:
It is a Village belong to Devarakonda Taluk of
Nalgonda District in Andhra Pradesh.
It also belongs to
Nalgonda Diocese.
Dhamara Bhimanapally has 3 villages with the
POPULATION:
population of 3,500.
The names j?of the villages are Dhamara
Bhimanapally, Karmaguda, and lambadi Tanda.
SOCIO RCtyniC CONDITION:
Christians and Tribals.
The peculation consists of H’ndus,,
The Hindu population has Reddys,
Harijans (Maias & Madigas), Carpenter's, Fishermen, and Smiths,
Komaties.
THE HATH OCCUPATION OF THE PEOPLED
In Karmaguda is agriculture
and other two villages are agricultural and other types
of Labourers.
About 6 to 7 months a year the people are occupied,
the rest of the year the work depends upon the cultivation
and rains.
Average income of the labourer family is 90 - 100
if both husband and wife get a job, and the average size of
the family is about 6 members.
The main crop is Jawar and Cash Crop is Tobacco, Chillies
and Caster seed.
The crop is depend unon the rain.
There is
not possibility of digging wells due to rocky land also (PH)
contents and fluride is very
cultivation.
high.
Hence it is not good for
The people are very poor.
The average land
holding is about 5-10 acres but due to draught the cultivation
is not possible, hence most of the noenle are in debt even if
they have land.
HEATTH C1 TUITION*
the high contained of fturide in the water
is a big public health problem.
Most of the children suffer
from Calcium deficiency and deformity of bones.
Women after
2-3 pregnancy suffer from Ostiomalsia, which is a big public
health problem, even men also suffer from the same.
Other
diseases are nutritional deficiency diseases such as
2
1-1 '7
fY - S’
s 2 :
Anaemia,
Protein Malnutrition,
Vitamin *A* Difficiency,
Vitamin *B' Difficiency,
Dirrhoea,
Fever,
Typhoid,
Gastic Ulcers,
T.B, almost one in every family,
Seabies, eye infection and other common and seasonal
diseases.
There is no medical facilities in these villages excent a
small dispensary run by the ^isters. The nearest health centre
16 K.M. in Marriguda.
The nearest Hosnital is in Nalgonda
which is 50 K.M. also Devarakonda which is 50 K.M.
These
villages are A - 5 K.M. away from the main road.
There is
no bus sendee from the villages to the main road.
The patient
has to be carried or taken in bullock cart to rea<fh the main
road.
There is no regular bus services, excent three or four
times a day.
PROJECT PROPOSAL:
Though the sisters are having the dispensary, so far
curatives services have been given to the people.
The Parish has started a youth moment and this association
has been registered as ’Lal Bahadur labour Cooperative Society'.
The main aim of this association is to up lift their economic
condition by imnroving their agricultural and health condition.
I.S.T. mobile training team has offered to help in different
asnect of training.
Tn the month of January, we are planning
to have a training programme for basic health workers and
agriculture extention work by T.S.I. team.
The reason for
training, the Basick Health Workers is to have a better health
care since there is only one sister in the dispensary.
In order
....3.
: 3 ■
to reduce the cost of medical care and to have better health.
We are nlarming to have a health insurance programme.
The
youth of the association are very much interested and have
taken ’ead to start this scheme.
The insurance fees is Rs.2/~
per month per family (the aims and policy is enclosed).
At
oresent about 300 families have been enrolled and more will.
will be encouraged.
In order to start the health insurance scheme as an initial
exoer.se is needed for one years as a subsidy.
Hence we request a grant of Rs.15,000/- Rs.10,000/- for
the medicines and Rs.5,000/- for training and salary of basic
health workers.
The peoples' contribution will be almost
rs.6,000/- to Rs.7,000/-.
This first year will on experimental basis.
In the second
year we are planning to reduce the cost and if any help is
needed we will request later.
We are also planning to get
some help from the Ciovemment by second year.
LAL PAHAHlF HEALTH INSURANCE SCHEME
AIMS AND OBJECTIVES
1.
To make health care possible by the people.
2.
To provide low cost medical care.
3.
To foster unity and self help.
A.
To make each one responsible for their own health, thus
build, up a healthy corarunity.
POLICY
1.
A policy should be drawn up by the Committee and it should
be made clear to every member before starting the Scheme.
2.
This policy can be revised as and when needed with the
consent of the geenral body.
Membershin Fee (hl,?)
3.
The present membership fee is Rs.2/- ner family per month.
This can be revised as and when needed with the concent
of the General Body.
4.
The M.F. should be naid between 5th to 10th of every month.
It can also be naid once a year Rs.24/- or Rs.6/- every
three months.
Put the date should be same.
The fees can be paid by c ash or kind (market rate) or
by both.
5.
Pass-Book should be maintained for each family.
6.
The pass book should contain the following details.
(a)
The name of the family members (Husband, Wife and
Children who are not married) should be entered.
If it is a joint family with unmarried brothers, sisters
and parents of the head of the family, it should be
registered as separate family.
(b)
The fees should be entered clearly and correctly in
the pass book.
(c)
In the same way the date of the visit, name of the medicine
given by tho health workers or in the dispensary and the
total cost should be entered.
: 2 :
7.
Maximum benefit fora family per year will be unto a
value of Rs.100/- of medicals. Once they exceed this
amount they should pay the full cost.
R.
Selection of members:
Before registering the family, all the members of the
family should have a nhysical examination and the children
below 5 years should have small pox, BCG, DPT, Polio
Cholera and Typhoid Vaccination.
All the members should
have small, pox, Cholera, Tyohoid Vaccination every year.
If they fail to have the vaccination and get any o^ these
disease all the expenses should be met by the family.
9.
Any one who ret sick should come for the treatment immediately
to avoid unnecessary expense.
10.
During the nhysical examination if any one found with
serious disease, such as, heart disease, paralysis,
deformity, fracture, diabities, serious TP cases, can become
a member, but that narticular patient should be treated
by a specialist and the exoenses should be met by the
family, (as a health Insurance member recommendation
letter can be obtained from the President of the Lal
Bahadur Co-operative Society or Sister-in-charge, St.
Philomena's Hospital.
11.
The following diseases can be treated under the Scheme:
1)
Coinman Biarrhoia
: Cold, Cough, Fever
2)
3)
Ordinary aches and pains.
) Anaemia and malnutrition
4.
5) Common Stomach problem
6) Early stages of TB and chronic cases if it is not
too severe (provided they continue the treatment f«r
t*w years regularly)'.
If they don't take the treatment regularly then they will
be
out from the Insurance benefit (i.e) should pay far
the treatment.
....3.
4-
+
Page 2: The recent
tree-felling in
Belgaum proves that
it is going the Coorg
way and that we are
not learning from
our mistakes.
insure it
Centre, Sri Vinayaka Hospital
Surgical cover
diac bypass are covered. The and implants including valves, Out-patient services
Narayana Hrudayalaya in col Narayana Hrudayalaya.
(Chandapura), N R Hospital
grafts mesh, stents, nails,
On why ICICI chose to associ
1,600
listed
surgeries
schpme
c
°T
ers
both
pre
,
“
d
laboration with ICICI Lombard
This
includes
free
out-pa
Over
Highway)
General Insurance Company ate itself with this project, such as he». appendiciti^,post °ppratlve SPrfcal ll;eat screws; joint replacement sur tient consultation, free regis (Bangalore-Hosur
hyO-ctomyandcaW1,10';15' H™ever’lt does not m' geries; transplants; burn cases; tration only at network hospi and FOSA Hospital (BanPrivate Limited, shows immense Smiths Aggarwal, Head - Rimal
nerghatta Circle).
malignancies - chemotherapy;
J
~ elude prosthesis
promise of changing tilings for and Agriculture Business Gro
tals, investigations and diag
“There is a catch-22 situa
cosmetic surgery; medico-legal nostic tests, low cost, high qual
up, ICICI Lombard General In
the better.
cases; angioplasty; auto-im ity generic medicines provided tion at work. You need patients
“Health insurance is normal surance Company says, “We
in order to maintain hi-tech
mune diseases; vaccination;
ly aimed at affluent urban peop have always been committed to
at special prices.
medical equipment. But the
dental surgeries; skin grafting
le. Ignoring rural people who fo wards providing insurance to
equipment happens to be so ex
for wound; spectacles, hear Eligibility
rm such a big part of the Indian rural. Health risks are the high
pensive, that the patients can’t
ing aids; dialysis; ambulance
population, will cause huge pro est risks they face, and we want
The applicant should be a res afford it. Hence a low-cost
services; food and other non
blems in the long run,” says Ki- to give them all the risk protec
ident of Anekal taluk, between 0 health insurance scheme such
medical expenses, vitamins
ran Mazumdar-Shaw. CEO. Bioc tion they deserve, through this
and 70 years of age on the date of as oui-’s meet their need,” says
and tonic, and any other expen
on Foundation. “The objective of project.”
enrollment. Proof of residence Devi Shetty
diture
unrelated
to
the
illThe Arogya Raksha Yojana
Arogya Raksha Yojana is to pro
for family (ration card / voters
Kiran further states, “the pr
ness/hospitalisation.
vide quality health care at a rea derives inspiration from man
ID / driving license/ passport / ice of medicines is consider
sonable cost to those very mass agement guru C K Prahlad’s bus
PAN card /bank account) should ably decreased as we ourselves
Medical cover
es and route out indebtedness to iness model that propagates bot
be produced.
handle the marketing and dis
Hospitalisation (without sur
tom up planning, where the hu
hile on the glam side, money-lenders,” she adds.
tribution of drugs. The network
gery)
is
covered
along
with
three
The fee
The first Arogya Raksha Yo ge market of the poor that exists
botox is making its ad
hospitals and BioCare pharma
days of hospitalisation which
vent in the Indian mar jana centre with a clinic, office in India needs to be tended to.
The ‘Individual Scheme’ co cies lead to economies of scale.”
includes charges towards room,
ket and hookah bars are becomi and BioCare Pharmacy was in What the scheme entails
mes up to Rs 180 per member
The organisers of this
F professional fees and routine per year. As part of the ‘family
ng the latest craze with the cr augurated by Prof Muhammad
scheme truly believe that pre
. investigations. Certain condiFree out-patient considtatiowds here, a bite of the reality Yunus, Managing Director, Gra
scheme.’ it works up to Rs 180 vention is better than cure, and
E tions apply, such as treatment
pie might expose one to less ta meen Bank. Bangladesh at Hus- on can be availed as part of Aro
per member per year for two
f can be availed only in the gen members, Rs 150 per member have hence arranged for volun
lked about bitter truths. With ev kur Village, Anekal taluk, Kar gya Raksha Yojana. Generic
teers to educate the people in the
ie
eral
wards
at
network
hospi
medicines at special rates
ery passing day, more and more nataka, on December 19.2004.
per year for three members,
tals. Individual members can and Rs 120 per member per year villages through presentations
“Currently, a pilot study is from network hospital phar
Indians in rural areas are falling
and visual aids, about prevent
avail one admission per year for four or more members.
being conducted in Anekal macies and BioCare phar
prey to diseases.
ing the various diseases they are
(maximum- three hospital days).
Some major, some insignifi taluk where all its four hoblis macies; diagnostic tests at
susceptible to. Reducing infant
Members who have enrolled un Network hospitals
cant. The lack of capital leaves (cluster of villages) - Sarjapur, discounted rates; hospitalisa
and maternal mortality is an
der the ‘family pack’ are eligible
them with no other choice but to Attebele, Kasaba and Jigini, tion (without surgery) and
Some of the network hospi other one of their prime aims.
for a maximtun of 50 pc of the to tals include Narayana Hruday
ignore the ailment, until it wors consisting of 250 villages and free surgical interventions
“The biggest challenge is to
tal number of enrolled mem alaya (Bommasandra Industri
ens and pushes them into the 6,00,000 people will get to be a with 100 per cent cashless
bers. The cover excludes medi al Area), CSI Hospital (Hazarat break psychological barriers
part of the scheme.
jaws of death.
facil ity for surgical treat
cines and medical Kambal Posh Road), Chinmaya and prove that there are no
Based on its success there, ment and medical admis
Talk has been building up in
vested interests on our part. We
, consumables, oxevery nook and corner to ad the implementation will spread sions up to the covered
\
ygen and ventila- Mission Hospital (CMH Road), want one and all to realise that
dress this issue and work to to states other than Karnata amount, are also
Devi Eye Hospital, ACTS He this will become a huge change
,
\
tor charges.
wards ridding the rural society ka,” says Dr Devi Shetty included.
„
alth maker in our country." Kiran
of it. However, when it comes to
smiles. Judging by the passion
action, the stage has so far been
and determination behind it.
bereft of activity
this vision called Arogya Rak
So far... because Arogya Raksha Yojana deserves all the suc
sha Yojana, the recently-intro
cess due to it, and more.
duced health insurance scheme
Contact 080-28082153 for
for the rural masses, an initiative
more details.
of Biocon Foundation and
Biocon Foundation
and Narayana
Hrudayalaya have
initiated a health
insurance scheme
targeted at rural po
pulations, starting
with Karnataka.
Priyanka Haldipur
gives an insight
into the project.
W
my guests from over the worth
and India for its holistic-heatth
approach. Another good exam
ple of a successful synergy be
Aruna Chandaraju
tells us that the
concept of health
tourism has arrived
in Karnataka and
may well take wings,
though it is a fairly
new sector in
tourism worldwide.
gin active data-tracking and treatments
soon explains Vishal happen
here
Bali, VP, Wockhardt Hos faster ; Banga
ealth tourism is now the
focus in many countries pital and CII Chairman for lore's much-cele
including
Singapore, Health Tourism in Karnataka brated climate and
Thailand, Malaysia, Cuba, Cos (he is also member of the na fairly temperate weat
ta Rica, Jordan and South tional committee): "In Karnata her in the rest of the State too
Africa. Asian countries togeth ka we are beginning to build up make it comfortable to tourists.
To cite a few examples:
er attracted six lakh medical a database." There are strong
tourists in 2003 and this will reasons why the Karnataka Wockhardt Hospital receives pa
grow by 30 per cent in 2004. The Tourism authorities and the lo tients from UK and USA for
Confederation of Indian Indus cal chapter of the CII - who are heart surgeries and angioplas
try (CID sees a huge potential in working in concert on this issue ties, Narayana Hrudyalaya’s pa
this area - in three-four year’s - see a big growth in health ediatric heart surgeries on ba
bies from neighbouring cou
they expect that India will draw tourists inflow into the State.
Bangalore is home to high ntries have been well-publi
about one lakh tourists who
will bring in about two billion tech modern tertiary care hos cised. Manipal Hospital draws
USD of revenue. And Karnata pitals with high-grade facilities in NRIs for its services in ad
ka dreams of getting 10 per cent in cardiology, orthopedics, vanced medical areas, etc.
neurosurgery and oncology be These and other major hospitals
slice of this huge pie.
These health tourists in sides excellent centres for in Bangalore are noted for their
clude those coming in for either ayurveda, naturopathy, home state-of-the-art facilities and
hardcore modern medical care opathy, holistic health, homeop high-quality after-care.
In fact, the swanky Sathya Sai
(bypasses, kidney replace athy, among others ; the City
ments) or alternative-medicine and outskirts have among the Hospital at Whitefield may treat
needs like Ayurveda, holistic highest number of full-fledged mostly Indian residents, and to
spas/wellness centres for reju tally free at that, but is visited by
health, naturopathy, etc.
Currently in Karnataka. venation-seekers for any major top-ranking medical teams, in
there are an estimated 7,000 to Indian metro ; There are good cluding Nobel lam’eates, from
8,000 of health tourists per year. facilities in both modern medi- other countries to study its un
Note the word ‘estimated.’ cine and rejuvenation are ique working pattern.
The costs, of course, are an
There are no survey-based re spread across the State; Many
sults as yet, simply because it is Western patients, even with other big draw. "Treatment here
NHS coverage may find the is broadly speaking, about one■ a new segment.
However, the Confederation waiting period too long in their tenth the cost it would be in the
of Indian Industry plans to be country and find that bookings West or the Gulf or Singapore.
H
More specifically it ranges from
one-sixth to one-fifteenth of the
cost," explains Mahendra Jain.
Tourism Commissioner, Gov
ernment of Karnataka.
Does this estimate include
the travel and accommodation
costs? Apparently it does and the
fact that international air travel
has become cheaper in recent
tween health and tourism is il
lustrated by the Culture Veda
packages of IVAC put together
since most of the guests like to
combine Ayurveda with some
sightseeing," explains Vinita
Rashinkar. Manager (Wellness).
"Most guests are keen on ecotourism and love to visit the
times has added to the tres especially in and around wildlife sanctuaries of Kabini
economic advantage for Bangalore are drawing in ho and Nagarhole and Coorg (espe
health tourists. And ho rdes of tourists, both interna cially Dubare Elephant camp).
tels often tie up with these tional and domestic compared They also love Bylakuppe. The
airlines to offer attractive to other metros in the country usual favourite is, of course,
packages too, Jain explains. All offer excellent facilities, au Hampi and Badami which no
Luckily Karnataka has many thentic treatments and well- guest misses. Mysore of course
tourist destinations including trained staff.
is also full of tourist attractions
the world-famous Hampi for
As far as other advantages and they make the best of this
example, which tourists who are concerned; Soukya has su as well, she adds.”
come in for medicine needs also perbly landscaped gardens and
The tourism authorities too
visit As Bali says, "it is a ques a wide range of treatments in do their bit by giving broction of a proper synergy between cluding unique ones like hot- hures/tounsm material to hosthe health and tourism sector- stone therapy, the interiors of pitals/wellness centres to pass
one propels the other."
Golden Palms spa are both luxu on to guests on request.
The action is not confined to rious and impeccably main
Of course, there is no thrust
Bangalore. To mention a few oth tained and there's a cosmetic ing a tourism brochure on the
er places which are attracting surgery unit too, Ayurvedagr- patient or his anxious relatives
health tourists: the AJ Shetty am boasts a backing of decades when they enter the country or
Memorial Hospital in Mangalore of research of the parent com hospital. But the tourist bro
draws a lot of the NRIs with ori- pany KAPL, Angasana Oasis chures and other materials are
gins in the Gulf : the swanky In Spa and Resort has a tie-up with provided when requested.
dus Valley Ayurvedic Centre the prestigious Banyan Tree,
Realising how indelicate
(IVAC) in Mysore and the less up Jindal's Health Centre is known this would be the tourism au
market but popular - especially for genuine naturopathy and thorities work a little more dis
with budget and domestic good environment and so on.
creetly. Jain explains that they
tourists - ayurveda and natur
In a very customer-friendly supply brochures and related
opathy hospitals in Dharmastha- approach, all these also offer tourism material to the hospi
la, Mandya or the Kairali centres custom-designed programmes tals and rejuvenation centres
in Gokarna and Karwar also get to suit individual requirements. who in turn offer it to rejuvenatheir share of visitors.
Dr Isaac Mathai, renowned ho- tion/modern-medicine seekers
IVAC receives around 350 listic healer, says "India, espe who make enquiries.
travellers coining from overseas cially Bangalore has the poten
Once their plans are clear
for health reasons and from In tial to project itself as world the travel agents, tour opera
dia, around 85-90 guests annually class healthcare destination."
tors, and government tourism
The alternate-medicine cenHis Soukya attracts discern- authorities do the needfid.
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