cbhi compilation formatted

Community Based Health Insurance and Micro Health Insurance

GIZ Kenya Health Sector Programme

June 2013

Kenya Profile

Implemented by:

Compilation of examples of CBHI and MHI: Kenya

© 2013 Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH GIZ Health Sector Programme 6th Floor, ACK Garden, 1st Avenue Ngong Road P.O Box 41607 00100 Nairobi Kenya Tel: + 254 20 2725684 Fax: + 254 20 2719217 Web: www.giz.de /www.gtzkenyahealth.com

List of Acronyms and Abbreviations CBHF - Community Based Health Financing CBHI - Community Based Health Insurance CHF - Community Health Finance MHI - Micro Health Insurance MOH - Ministry of Health NHIF - National Hospital Insurance Fund OOP - Out of Pocket SACCO - Savings and Credit Co-operative Society WHO - World Health Organization


Acknowledgement GIZ Health Sector Programme in Kenya would like to acknowledge all the organisations, who are implementing either the community based health insurance schemes or micro-insurance scheme or both in Kenya, for the time and information that was provided to us for use in this document. We appreciate these organisations effort in serving their targeted group and making a contribution towards the community. The programme also appreciates Ms. Alisha Rahmatulla (Intern) for compiling the examples of various forms of health insurance in Kenya; Ms. Hellen Were (Consultant) for putting it under a context and Ms. Atia Hossain (Head of Healthcare Financing Component) for overall guidance in the compilation effort. Last but not least, the Programme acknowledges Ms. Olivia Okech (Communications Officer) for putting the document together, and Dr. Heide Richter-Airijoki (Programme Leader) for approval of the effort.


Table of Content Page Introduction ................................................................................................. 5

Background …………………………………………………………… 5 Definitions ……………………………………………………………. 5 Features ………………………………………………………………. 5

Examples ………………………………………………………………… 8 Global: East African experience …………………………………….. 8 Kenya: CBHIs and MHIs …………………………………………… 9

Kenya: Health Insurance Platform ………………………………………... 10 Conclusion ……………………………………………………………….. 11 Annex ………………………………………………………..................... 12 References ………………………………………………………............... 13


1. INTRODUCTION In the wake of Kenyan Government commitment to providing free healthcare aiming the maternal services, primary healthcare and the indigent population, sustainable ways of funding for health care other than traditional taxation and donor funding need to be looked into. This paper explores the Community based health funding as a way of pooling resources and providing health coverage to the low income groups in the informal sector by reviewing literature on various countries’ experiences. The main aim of the paper is thus to document, under one roof, the various Community Based Health Insurance and Micro Health Insurance schemes being practiced and implemented in Kenya. 1.1 Background Health financing has attracted a lot of attention in the recent past as countries aim to provide accessible, affordable and quality health care to all their citizens. Health financing refers to the collection of funds from various sources (e.g. government, households, businesses and donors), pooling them to share financial risks across larger population groups, and using them to pay for services from public and private health-care providers (WHO, 2000). The objectives of health financing are to make funding available, ensure choice and purchase of cost-effective interventions, give appropriate financial incentives to providers, and ensure that all individuals have access to effective health services (Carrin and James, 2005). Kenyan health sector continues to be predominantly financed by private sector sources including by households’ out-of-pocket spending (RoK, 2011). Only 18% of the population is covered by both NHIF and private insurance companies. The remaining majority of population mostly poor, access health care through out-of –pocket or fees for services that can be a major source of impoverishment (RoK, 2011). Community Based Health Insurance and Micro Health Insurance organizations have risen to target this population excluded from the formal health coverage.

1.2 Definitions The term community-based health financing (CBHF) has evolved into an umbrella term that covers a wide spectrum of health financing instruments (Hsiao 2001; Dror 1999).

The common characteristics of various forms of CBHF are that they are run on a non-profit basis and they apply the basic principle of risk sharing (Jakab and Krishnan, 2001). Some schemes are integrated with the provider while others operate outside of the service providers. These are termed provider-based and community-based schemes, respectively. Micro health insurance (MHI) is a form of micro-insurance in which resources are pooled to mitigate health risks and cover health care services in full or in part. It is also referred by different names such as community-based health insurance, mutual health insurance, community-based health financing, and community health insurance (Preker et al, 2002). Services are delivered through a variety of different channels, including small community-based schemes, credit unions or other types of microfinance institutions, but also by enormous multinational insurance companies (Churchil, 2006). 1.3 Features There are a number of reasons behind the growth of interest in CBHF schemes in low-income countries, including the widespread imposition or increase in user fees for government health care services that occurred during the 1980s and 1990s in many low-income countries, particularly in sub-Saharan Africa, Kenya, Uganda and Tanzania included the increasing recognition of the

CBHF is often loosely referred as: v Micro insurance v Community health funds v Community health Insurance v Mutual health organizations v Rural health insurance v Revolving drug funds v Community involvement in user fee

management


significant scale of use of private sector providers, even in relatively poor communities, the collapse of government health care services in certain countries e.g DRC Congo due prolonged conflict the difficulties faced in expanding formal health insurance coverage to people who are outside of formal sector employment (Preker, 2004).

Musau (1999) argues that the decentralization process unleashed in these countries to empower lower layers of government and the local community further fueled their emergence. The inefficiency in the public health care system caused patients to avoid accessing lower level facilities first due to the low fees charged at all facilities (primary, secondary, tertiary). In addition, the district or regional hospital may have been the only health facility that was geographically accessible to the local community and lastly, insufficient funding for the more cost-effective primary health care facilities lowered the quality of service they could provide, (inadequate supply of drugs and other commodities, inadequate staff) which also discouraged their use (Musau, 1999). The success of community-based microcredit schemes may have also contributed to the emergence of community-based health initiatives designed to improve the access through risk and resource sharing (Dror and Jacquier, 1999). In Kenya, the reduction in Government subsidies and increasing operation costs of mission hospitals (FBOs) led to the rise of the first CBHF scheme. It was started by Chogoria mission hospital in partnership with Apollo insurance in 1991 (Musau, 1999). All CBHF schemes in Kenya are community based; however, most of them were initiated within integrated development activities (Musau, 1999). Assessing the overall impact of community-based health insurance schemes is very difficult because in most cases, community-financing arrangements are not registered, and therefore centrally

maintained data do not exist (Jakab and Krishnan 2004). Other reasons are lack of proper legislative framework, policies and guidelines as to how

CBHI and MHI schemes should be

operated. This is further complicated by variations in structures and services offered by the schemes. Literature review suggests that Community Based Health Insurance has several strengths; Mobilizes resources thus improving access to health care by low income people, improves financial protection by reducing out of pocket payment and combats social exclusion by extending coverage to a large number of rural and low income populations who would have otherwise been excluded from collective arrangements to pay for health care. A study conducted by Jutting (2003) in rural Senegal (Thies region) showed that community health financing through prepayment and risk-sharing reduced financial barriers to health care as was demonstrated by higher utilization and lower out of pocket. It further showed that risk pooling no matter how small- scaled, could improve financial protection for the poor. Arhin (1995) in assessing

the viability of rural health insurance as an alternative to user fees also found that the scheme in Ghana removed a barrier to admission and led to earlier reporting of patients and increased utilization among the insured. CBHI is also useful as a component of a health financing system involving other instruments. Community-based health insurance schemes may complete or fill the gaps of other health financing schemes (social health insurance or government financing), or they may be a first step toward a larger-scale system (Gottret and Schieber, 2006). Community-based health insurance may be very useful to supplement other forms of medical

Strengths of CBHF: v “community” people is the target v Improves access v Reduce out-of-pocket payment v Mobilization of insufficient fund

Difficult Assessment of CBHF: v Non registration of schemes v Limited data v Variability of schemes

Growth of CBHF: Why? v Increase in user fees v Dysfunctional government health care v In-effective health insurance v Absence of mechanism to provide health

service to in-formal sector v Decentralization


coverage. Community-based schemes cannot provide medical coverage to the whole population, but can help meet the needs of specific categories of people, such as the rural middle class and informal workers (Bennett, Kelley, and Silvers

2004). For this reason, in many countries governments try to launch community-based health insurance schemes (as in Rwanda) or use existing ones to extend health coverage to certain populations. In Tanzania, for instance, the Community Health Fund targets informal workers, while workers in the formal sector are covered through a new social health insurance scheme (Bennett, Kelley, and Silvers 2004). Musau (1999) in his study of Community Based Health Insurance Schemes in East Africa; 3 in Tanzania, 2 in Uganda and 1 in Kenya, attributes long-term sustainability of the schemes to their design and management.

He further says that the problems experienced by the

schemes was not a failure of the concept of health insurance and its applicability to low-income communities, but were due to difficulties encountered in their design and implementation. CBHI has weaknesses: Limited protection for members, sustainability, limited ability benefit for the poorer part of the population and limited effect on delivery of care (Gottret and Schieber, 2006). Eckman (2004) in his systematic review of 36 papers and 178 schemes of CBHI found little convincing evidence that voluntary CBHI could be a viable option for sustainable financing of primary health care in low-income countries. They were found to mobilize insufficient amounts of resources. However, the study found evidence that CBHI provided financial protection by reducing OOP spending and by increasing access to health care, as seen by increased rates of utilization of care. The very low and diminishing population coverage rates, however, put the implications of this finding in doubt (Eckman, 2004). An extensive WHO study was made in 82 non-profit health insurance schemes for people outside formal sector employment in developing countries (Bennett et al. 1998). It was observed that very few of these schemes covered large populations or even covered high proportions of the eligible population unless government or others facilitated their membership through subsidies (Bennett et al. 1998).

CBHF: seen from a different glass v Complement social health insurance or

government financing v Supplement medical coverage

Sustainability of CBHF can be attributed to the design and management, not on the failure of the concept of health insurance.

Weaknesses of CBHI: v Limited member protection v Sustainability v Limited benefit v Less control on service provision


2. Examples 2.1 Global: East African Experience of CBHI

Tanzania Through its health sector reform initiative, the Tanzanian government introduced the Community Health Fund (CHF) in 1995 as a new element in the country’s health financing strategy. The CHF is a district-level voluntary prepayment scheme, introduced in parallel with user fees at public health facilities, that targets the 85% of the population living in rural areas and/or employed in the informal sector. It was introduced in Tanzania as part of the Ministry of Health’s (MOH) endeavor to make health care affordable and available to the rural population and the informal sector. The scheme started in 1996 with Igunga acting as a pilot district, and was later expanded to other districts (MOH, 1999). Several studies have shown an improvement in the provision of and access to health care services after the introduction of CHF. For example, Shaw (2002) shows that the CHF fund helped to purchase microscopes, reduce drug stock-out, and improved the availability of or introduced other important equipment and supplies in various hospitals. Other studies have also shown an increase in health service utilization for CHF members (Msuya, Jutting et al. 2004; Musau 2004). However, CHF is faced with low enrolment and coverage (MOH- Tanzania, 2003). The barriers to enrolment identified by evaluations are: a widespread inability to pay membership contributions, the poor quality of available services, a failure among communities to see the rationale for protecting against the risk of illness, and a lack of trust in CHF managers (Mwendo 2001; MOH- Tanzania, 2003).

Rwanda Rwandan experience is arguably one of the most dramatic recent experiences of CBHI-based National Health Insurance in sub-Saharan Africa today, at least in terms of population coverage. After successfully initiating pilot schemes in 1999, the Government decided to go to scale in a rapid fashion. As of October 2007, it is reported that the schemes had enrolled about 75% of the total population. By 2009, the schemes coverage had exceeded 86%, reduced out-of-pocket spending for health from 28% to 12% of total health expenditure, and increased service use to 1·8 contacts per year. Over the last decade in Rwanda, deaths from HIV, TB, and malaria dropped by 80 percent, maternal mortality dropped by 60 percent, life expectancy doubled -- all at an average health care cost of $55 per person per year, which could be attributed to the success of the CBHI scheme (MOH- Rwanda, 2010) To support the growth of the schemes, the Government of Rwanda has created a special solidarity or risk-pooling fund, into which transfers from the Ministry of Finance via the Ministry of Health are made to cover the costs of indigents and people living with HIV/AIDS. The Global Fund to fight AIDS, Tuberculosis and Malaria is providing financial support for five years to cover the Government subsidy.

Tanzanian CBF: key features and results v Government initiative v Voluntary pre-payment scheme v Parallel to user fees v Target: rural areas, informal sector v Started as pilot, later rolled out v Marked improvement in service provision,

utilization v Low enrollment, coverage v Inability to pay membership contributions v Poor service quality v Lack of understanding the rationale for

protecting against risks of illness v Lack of trust

Rwandan CBHI: key features and results v Government initiative v Started as pilot, later rapid rolled out v Marked improvement in utilization, enrollment v Reduction in out-of-pocket spending v Average health care cost: 55USD per annum v Government subsidy for HIV/AIDS, Malaria

continued


2.2 Kenya: CBHIs and MHIs The information was collected through telephone interviews with providers and also from their websites (when available). (Please refer to Annex for details)

Name of scheme Target population Starting Date Premiums per annum Cover Limits Partners MICRO HEALTH INSURANCE SCHEMES Faulu Afya Kenyans in the informal

sector unable to afford NHIF and private insurance Premiums

Operated 3 micro-insurance programs since 2005

• Financed through a loan kshs 7000

• Kshs 200 co-payment

• Unlimited outpatient • Kshs 200,000 inpatient limit • Kshs 10,000 marriage benefit • Kshs 20,000 chronic illness cover per

illness per year • Kshs principle life benefit • Kshs. 20,000 last funeral expense

British American insurance –administers and processes claims

Northstar alliance Truck drivers Sex workers Roadside corridor community members

2005 TNT Express World Food program Pharm access Foundation International Transport workers federation UNAIDS

Bima ya Jamii SACCO members MFI clients Jua Kali(open air) artisans People in rural areas and informal sector

2008 Kshs. 3650 per year

• Kshs 15,000 co-payment for surgery • Inpatient care- no monetary limit.

Maximum cumulative 180 hospitalization days

• Kshs 30,000 last funeral expense • Kshs 100,000 accidental cover • Kshs. 100,000 disability Insurance

cover • Kshs 2000 per week for the duration

member hospitalised

Co-operative Insurance NHIF MFIs SACCOs Swedish cooperation Centre

Kenya Women Finance Trust (KWFT)

Cooperative Insurance NHIF

Kenya Ecumenical Church Loan Fund (ECLOF)

COMMUNITY BASED HEALTH INSURANCE SCHEMES Support for Tropical Initiatives in Poverty Alleviation (STIPA)

Low /middle income earners(informal sector) Living with HIV/AIDS

2006 Product A- Kshs 2000 per year Product B- Kshs 2400 per year Product C- Kshs 2700 per year

Kshs 5000 outpatient cover limit per year STIPA and health providers

ACK development services((ADS) Nyanza

Members of rural community; nyanza

1997 Product A- Kshs 600 Product B- Kshs 960 Product C- Kshs 1200

Outpatient cover only at dispensaries and health centres. Product A- Kshs 8000 limit Product B- Kshs 8000 limit Product C- Kshs 10,000 limit

Afya Yetu Initiative (AYI)

Residents of Nyeri and Kirinyaga counties

2009 Kshs 2300 Total NHIF= kshs 1920 CBHF=kshs 380

Inpatient cover at NHIF accredited hospitals. 20,000 per visit per beneficiary

NHIF NETWORK

Western Region Christian community service (WRCCS)

Rural communities in western Region

1997 Product A-600 Product B- 600 Product C- 800

Outpatient cover only

Jamii Bora SACCO The poorest of the poor who cannot access primary quality health care in our poor set-ups/slums.

2001 In-patient cover – Kshs.5,200 In & Out patient cover – Kshs.12,500

ACK Christian Community services Eldoret region (ELRECO)

Subsistence farmers in Eldoret Region

2005 Kshs, 1200 Outpatient cover only MOH VI agro forestry Good Neighbours Min. of Livestock and Fisheries AMPATH Constituency AIDs Control Council


3. Kenya: Health Insurance Platform In the Vision 2030 under the social pillar, Kenya’s vision for health is to provide “equitable and affordable healthcare at the highest affordable standard” to its citizens. The key areas of focus are: (a) access including actual availability of services and financial access - targeting affordability, (b) equity, (c) quality, (d) capacity, and (e) institutional capacity (RoK, 2010). The current President of Kenya in his speech during the official opening of 11th parliament stated that his government would progressively roll out its commitment to provide free primary healthcare to every Kenyan by 2020, starting with children, persons with disability, pregnant women and breastfeeding mothers. Free medical care implies

more financial resources to invest in human resource for health, medical and non- medical supplies, health infrastructure and equipment. Given the limitation in financing through taxes, the Government needs to explore and invest in alternative methods of mobilizing resources. Free medical care has also put demand on the urgency for universal health coverage in Kenya. Health Care finance strategy (RoK, 2009) recognizes that no single healthcare financing system can work and that several mix of solutions need to be applied in order increase health financing and also ensure access to quality health care by all Kenyans.

It recommends the following;

• Improving efficiency, transparency and accountability in the current health systems at NHIF and MOH.

• Strengthening revenue collection by; 1) establishing a new revenue collection agency to collect and manage the overall pool of Health care financing. 2) review the case for ear marked taxes and 3) explore health bonds and other financing instruments

• More effective risk-pooling; 1) through transformation of NHIF to National Health services trust that would oversee overall health care financing system.2) establishment of community health funds to be insured under National Health services trust above.

• Harnessing the informal sector financing potential; supporting reforms in NHIF to penetrate informal sector and increasing coverage from 24% to 70%.

• Broadening the benefits package; NHIF to broaden package to cover both inpatient and outpatient • Strengthening provider incentives; • Protecting the poor and vulnerable groups by; 1) better Identification of poor that are to be

registered for social health insurance, 2) strengthening of service provision to the poor, 3) elimination of user fees for the poor and, 4) covering the cost of providing health to the poor through social health insurance approach.

• Improving aid effectiveness; by ensuring Donors make more use of country mechanisms • Ensuring sustainability through continuous review and long-term planning horizons

From the above, the strategy has placed much of the health financing responsibility on MOH and NHIF. NHIF is to provide cover for those in the formal sector (together with private insurance), informal sector (expected to increase coverage from 24% to 70%) and also to the poor through Social Health Insurance. Given the governance and structural reforms that are warranted for NHIF to perform as per the members’ expectations, it may be extremely ambitious to expect that NHIF would be able to implement all

the above roles in the immediate future. In addition, the challenges of arriving at a national consensus for a scheme’s structure; income inequalities; weak oversight capacity, and poor infrastructure may limit the facilitation of collections, re-imbursements and monitoring. Given these difficulties, CBHI and MHI schemes could be probably options for extending insurance coverage in Kenya and particularly among the rural and informal sectors of the society.


4. Conclusion Kenyan health policy makers need to recognize the potential of CBHIs and MHIs in contributing towards the health coverage of the informal sector, and thereby may consider to provide for their establishment, space, and legal framework for growth and efficiency gain. The Government can consider supporting them through subsidies following the examples of Tanzania, Rwanda and Ghana where CBHIs

formed the base for the National Health Insurance. This made National health Insurance to expand coverage much easily as it has used the already existing structures in CBHIs. CBHIs and MHIs therefore, may have the potential to be complementary towards the Government’s aim of achieving universal coverage in Kenya.


Annex ..\Dropbox\GIZ-HSP Videos\CBHI and Microinsurance\CBHI Programs in Kenya-desk review-July31,2012.xls ..\Dropbox\GIZ-HSP Videos\CBHI and Microinsurance\MHI Programs in Kenya -desk review-July31,2012.xlsx


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3. Bennett, S., A. G. Kelley, and B. Silvers. 2004. 21 Questions on CBHF: An Overview of Community-Based Health Financing. Bethesda, Md.: Abt Associates, Inc., Partnerships for Health Reform Project.

4. Carrin G, James C, Social health insurance: Key factors affecting the transition towards universal coverage, International Social Security Review, 58(1): 45–64, 2005.

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12. Jutting, P. (2003). Do Community Based health Insurance Schemes improve poor people’s Access to HealthCare? Evidence from rural Senegal. World Development Vol.32, No.2, pp.273-288.

13. MOH (1999). Community Health Fund (CHF) Operations Guidelines, URT. 14. MOH (1999). Community Health Fund (CHF): Design, URT. 15. MOH (2010). Rwanda Community Based Health Insurance Policy. RoR 16. Msuya, J. M., J. P. Jutting, et al. (2004). Impacts of Community Health Insuance Schemes on

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18. Musau, S., (1999). Community-based health insurance: experience and lessons learned from East Africa. Technical Report No. 34. Partnerships for Health Reform Project. Bethesda, MD: Abt Associates Inc.

19. Musau S. 2004. The Community Health Fund: Assessing implementation of new management procedures in Hanang District, Tanzania. Technical Report No.34. Bethesda, MD: Partnerships for Health Reform (PHR), Abt Associates Inc.

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21. Preker, et al (2002). "Effectiveness of community health financing in meeting the cost of illness". Bulletin of the World Health Organisation (Geneva: WHO) 80 (2): 143–150.

22. Republic of Kenya, 2009. Health Financing Strategy. Ministry of Medical Services, and Ministry of Public health and Sanitation.

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Ministry of Public health & Sanitation. 25. Shaw P. 2002. Tanzania’s Community Health Fund: prepayment as an alternative to user fees.

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factors affecting enrolment and coverage. Dar es Salaam: Ministry of Health. 27. WHO, The world health report 2000: Health systems: improving performance, Geneva, World

Health Organization, 2000

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