Elsevier

Social Science & Medicine

Volume 62, Issue 3, February 2006, Pages 707-720
Social Science & Medicine

Making health insurance work for the poor: Learning from the Self-Employed Women's Association's (SEWA) community-based health insurance scheme in India

https://doi.org/10.1016/j.socscimed.2005.06.037Get rights and content

Abstract

How best to provide effective protection for the poorest against the financial risks of ill health remains an unanswered policy question. Community-based health insurance (CBHI) schemes, by pooling risks and resources, can in principal offer protection against the risk of medical expenses, and make accessible health care services that would otherwise be unaffordable.

The purpose of this paper is to measure the distributional impact of a large CBHI scheme in Gujarat, India, which reimburses hospitalization costs, and to identify barriers to optimal distributional impact. The study found that the Vimo Self-employed Women's Association (SEWA) scheme is inclusive of the poorest, with 32% of rural members, and 40% of urban members, drawn from households below the 30th percentile of socio-economic status. Submission of claims for inpatient care is equitable in Ahmedabad City, but inequitable in rural areas. The financially better off in rural areas are significantly more likely to submit claims than are the poorest, and men are significantly more likely to submit claims than women. Members living in areas that have better access to health care submit more claims than those living in remote areas. A variety of factors prevent the poorest in rural and remote areas from accessing inpatient care or from submitting a claim.

The study concludes that even a well-intentioned scheme may have an undesirable distributional impact, particularly if: (1) the scheme does not address the major barriers to accessing (inpatient) health care; and (2) the process of seeking reimbursement under the scheme is burdensome for the poor. Design and implementation of an equitable scheme must involve: a careful assessment of barriers to health care seeking; interventions to address the main barriers; and reimbursement requiring minimum paperwork and at the time/place of service utilization.

Introduction

Financial risk protection arrangements are inadequate for very large numbers of the poor in low and middle income countries (WHO, 2000). All too often, poor people who seek health care face out-of-pocket payments that can push them into poverty. For example, one cross-country analysis found that in several developing countries, annually, more than 3% of all households faced catastrophic health expenditures (i.e. exceeding 40% of income remaining after subsistence needs have been met) (Xu et al., 2003).

During recent years, community-based health insurance (CBHI) has emerged as a possible solution. CBHI schemes involve prepayment and the pooling of resources to cover the costs of health-related events. Membership is generally voluntary and targeted at lower-income populations. The nature of the “communities” around which schemes have evolved is quite diverse: e.g. people living in the same town or district, members of a work cooperative, micro-finance groups. Often the schemes are initiated by a hospital, and targeted at nearby residents.

There is a shortage of empirical evidence to assess whether or not CBHI schemes have improved financial protection among the poor. The World Health Report 2000 noted that prepayment schemes represent the most effective way to protect people from the costs of health care, and called for investigation into mechanisms to bring the poor into such schemes (World Health Organization, 2000). This enthusiasm was fuelled in part by studies showing disproportionate increases in utilization among the poorest with the implementation of insurance (Yip & Berman, 2001) or mandatory prepayment schemes (Diop et al., 1995). But studies of voluntary CBHI schemes have yielded less promising results. CBHIs have tended to exclude the poorest, in part because they generally charge a flat premium that is regressive and unaffordable (Bennett et al., 1998; Preker et al., 2001). Opportunities for cross-subsidization—the transfer of resources from wealthier to poorer members—has been limited as many schemes are small, with fewer than one or two thousand members (International Labour Office (Universitas Programme), 2002).

Given the limited evidence base, and the great variation amongst schemes in terms of size and design, their impact needs further investigation. The purpose of this paper is twofold: to measure the distributional impact of a large CBHI scheme in Gujarat, India, and to identify barriers to optimal distributional impact. We first measure the extent to which three socio-demographic determinants (socio-economic status (SES), gender and place of residence) are related to joining the scheme and submitting a claim. We then explore factors that may limit access, particularly among those of low SES, to the scheme and its benefits.

According to WHO, greater than 80% of total expenditure on health in India is private (figure for 1999–2001 (World Health Organization, 2004)) and most of this flows directly from households, in the form of out-of-pocket payments, to the private-for-profit health care sector. Because the poor lack the resources to pay for health care, they are far more likely to avoid going for care, or to become indebted or impoverished trying to pay for it (Peters et al., 2002). The richest quintile of the population is six times more likely than the poorest quintile to have been hospitalized, whether in the public or private sector (Mahal et al., 2000). Peters et al. (2002) estimated that at least 24% of all Indians hospitalized fall below the poverty line because they are hospitalized, and that out-of-pocket spending on hospital care might have raised by two percentage points the proportion of the population in poverty (Peters et al., 2001).

CBHI schemes in India are extremely diverse in terms of design, size and context, including the size and nature of their target populations (Ranson, 2003; Ranson et al., 2003). Of the 10 schemes visited by Ranson et al. (2003), five were hospital-based (i.e. an NGO owned and managed both the insurance scheme and the associated health care services), one operated as an independent third-party payer, and four involved an NGO acting as an intermediary between the target population and a formal insurance company (the latter category includes Vimo SEWA, described below). There is little empirical information on the equity/distributional impact of Indian CBHI schemes. Most cite the provision of insurance services to poor or disadvantaged groups (e.g. tribal populations) as an explicit goal. But in terms of their distributional impact, the schemes generally reach a fairly small percentage of their target populations (10–50%) and face difficulties in enrolling diverse member populations (Ranson et al., 2003). This may indicate that the poorest among the target population are not enrolling, and certainly limits the potential for cross-subsidization. Dave (1993) cites a number of mechanisms that have enabled poorer individuals and households to participate in “prepayment/insurance” schemes in India (including sliding-scale premiums, premiums that can be paid in kind and exemptions) although she provides no evidence of their effectiveness in terms of increased enrollment among the poor. But the majority of schemes use a flat-rate (community-rated) premium, and at many of the schemes visited by Ranson et al. (2003), “high premium” was cited as a reason for non-participation.

The Self-Employed Women's Association (SEWA) is a trade union of informal women workers, started by Ela Bhatt in Ahmedabad in 1972. Headquartered in Ahmedabad (Gujarat, India), and inclusive of members from 11 of the state's 25 districts, “It is an organization of poor, self-employed women workers… who earn a living through their own labour or small businesses… (and who) do not obtain regular salaried employment with welfare benefits like workers in the organized sector” (Self-Employed Women's Association, 1999). The organization has two main goals: to organize women workers to achieve full employment, i.e. work security, income security, food security and social security; and to make women individually and collectively self-reliant, economically independent and capable of making their own decisions. The union's membership in Gujarat was 469,306 in 2003.

In 1992 SEWA started an integrated insurance program, Vimo SEWA, for its members. Vimo SEWA provides life, hospitalization and asset insurance as an integrated package. Membership is voluntary. Women are the principal members, and can also buy insurance for husbands and children. Most members pay an annual premium, and this amount is passed on to a formal-sector insurance company, which shoulders most of the financial risk. Members also have an option of making a one-time fixed deposit in SEWA Bank—the interest from this deposit is used to pay the annual premium.

Membership in Vimo SEWA is not restricted to members of SEWA. At the time of Vimo SEWA's annual membership campaign, women and their families are approached to join the scheme. Those who report they already belong to SEWA union are charged only the insurance premium, while those who report they do not belong to SEWA are charged the Vimo SEWA premium plus a nominal fee (Rs. 5) to become a SEWA member.

Vimo SEWA's health insurance component covers hospitalization expenses only, to a current maximum of Rs. 2000 (USD 46) per member per year. The choice of health care provider is left to the member, and can be private-for-profit, private-non-profit or public facilities. At the time of treatment, members pay out-of-pocket. They are later reimbursed by Vimo SEWA upon submission of medical certificates and bills documenting the hospital stay and expenses. Benefits have evolved considerably since 1992, with the types of diseases and treatments covered expanding markedly. There has been considerable discussion about providing claimants in the most rural sub-districts with a fixed transportation reimbursement. This has not been implemented, in part because it would have to be kept as a separate SEWA-administered fund, and would mean treating members of Vimo SEWA differently, depending on their place of residence.

Vimo SEWA is run by a team of full-time staff and local women leaders called aagewans. The aagewan is a grassroots level worker who is the critical link between members and scheme administrators.

In calendar year 2003, Vimo SEWA had over 1,00,000 members, over 85,000 adult women and 18,000 adult men, most of them in Gujarat state. Approximately two-thirds of scheme members were in rural areas (67,500) and one-third in Ahmedabad City (33,000).

Despite the capped benefits, research has shown that the scheme confers considerable financial protection. An analysis of all claims submitted between 1994 and 2000 (Ranson, 2002) revealed that the median rate of reimbursement for all reimbursed claims was 92.6% (mean 76.5%). Reimbursement more than halved the percentage of catastrophic hospitalizations (i.e. those where total expenditures exceeded 10% of annual household income).

Section snippets

Conceptual framework

We assess the distributional impact of the Vimo SEWA scheme based on the extent to which select vulnerable groups—those of low socio-economic status, female gender, and remote rural place of residence—are able to join the scheme and submit health insurance claims.

In order to benefit from Vimo SEWA's CBHI scheme, consumers must first join the scheme and secondly, having undergone a hospitalization, they must submit an insurance claim. There may exist constraints to joining, seeking

Equity by socio-economic status

Appendix A (Table A1) compares the general population, Vimo SEWA members and claimants by the variables that make up the SES index.

Vimo SEWA is inclusive of the poor in rural areas. The mean SES score of rural Vimo SEWA members (−0.19; SD=0.76) is significantly lower than the score of the general rural population (0.00; SD=0.94) (see Table A1); the difference between the two values is −0.19 (95 CI=−0.27 to −0.11). The frequency distribution of members, by deciles of the SES index, resembles a

Summary of findings

The Vimo SEWA scheme is inclusive of the poorest, with roughly 32% of rural members, and 40% of urban members, drawn from households below the 30th percentile of socio-economic status. Submission of claims is inequitable, particularly in rural areas. The less poor in rural areas are significantly more likely to submit claims than are the poorest. Members in talukas closer to Ahmedabad are more likely to submit claims than those living in distant talukas. And, among rural Vimo SEWA members, the

Acknowledgements

This research was carried out as a part of collaboration between the Health Economics and Financing Program, London School of Health & Tropical Medicine (LSHTM) and Vimo SEWA. Financial support was provided by the Wellcome Trust (UK). The authors wish to thank members and staff of the SEWA and Vimo SEWA for their encouragement and support. The study would not have been possible without research assistance from Charumati Acharya, Kapila Chauhan, Archana Dave, Dharmishtha Kosthi, Rupal Mistry,

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