Community Based Health Insurance Overview and Theory

Community-Based Health Insurance Overview and Theory Marty Makinen, PhD And Steve Musau, MA PHRplus/Abt Associates Inc. The PHRplus Project is funded by U.S. Agency for International Development and implemented by: Abt Associates Inc. and partners, Development Associates, Inc.; Emory University Rollins School of Public Health; Philoxenia International Travel, Inc. Program for Appropriate Technology in Health; SAG Corp.; Social Sectors Development Strategies, Inc.; Training Resources Group; Tulane University School of Public Health and Tropical Medicine; University Research Co., LLC. URL: http://www.phrplus.org Problem  Necessary to generate resources to provide health services  Charges for services at time of use can be an obstacle to use or impoverishing  Need for some health services unpredictable, not evenly distributed in population  Cash not always available throughout the year Solution (?)  Voluntary pooling of periodic premium payments to pay for health services when needed by members  Community or facility ownership and management of scheme  Amount and timing of premiums and services covered set in a transparent manner Organization of presentation  Definition of health insurance  Building blocks of health insurance  Blocks used by community-based schemes  Advantages and disadvantages of components of schemes  Overall conclusions Definition  Health  insurance Institutional arrangement allowing consumers to make relatively small regular payments into a pool used to pay for health care services  Allows consumers to manage the financial risk of ill health  Is not, strictly speaking, a method to mobilize resources Building blocks of health insurance  Six basic building blocks of health insurance  Many combinations possible  No single “right” answer  Briefly go through each  Specific building blocks of communitybased health insurance and consequences Common types of health insurance  Private voluntary  Social health insurance  National health insurance  Community-based Six building blocks  Choice over participation  Ownership of system  Premiums  Benefits package  Risk management  Provider payment Choice over participation  Voluntary  Mandatory  For all or for some Choice over participation Voluntary  Mandatory  For all or for some Ownership of health insurance system  Major possibilities: Private commercial  Private formal non-commercial  Private informal non-commercial  National government  National quasi-governmental organization (Social Security Institutes, NHS)  Local governments  Ownership of health insurance system  Major possibilities: Private commercial  Private formal non-commercial   Private informal non-commercial National government  National quasi-governmental organization (Social Security Institutes, NHS)  Local governments Premiums  Major possibilities: Fixed amount per person, family, household, or group  Percent of wage  Risk-related  Other ability-to-pay related  Exemptions for disadvantaged  Subsidy for disadvantaged  Premiums  Major possibilities: Fixed amount per person, family, household, or group Percent of wage  Risk-related  Other ability-to-pay related  Exemptions for disadvantaged  Subsidy for disadvantaged  Premiums  Major possibilities: Fixed amount per person, family, household, or group Percent of wage  Risk-related  Other ability-to-pay related Exemptions for disadvantaged Subsidy for disadvantaged  Sometimes these two are included   Benefits package  Major possibilities:       “Insurable” risks—high cost items such as hospitalizations, surgeries, costly drug regimes and tests, rehab “Predictable” risks—ordinary outpatient visits, lowcost drugs and tests, deliveries, preventive services All risks—comprehensive coverage of all services Deductibles and co-payments Stop loss provisions for insurer Exclusions Benefits package  Major possibilities: “Insurable” risks—high cost items such as      hospitalizations, surgeries, costly drug regimes and tests, rehab “Predictable” risks—ordinary outpatient visits, lowcost drugs and tests, deliveries, preventive services All risks—comprehensive coverage of all services Deductibles and co-payments Stop loss provisions for insurer Exclusions Risk management  Major possibilities: Pre-existing conditions excluded from coverage  Addressing adverse selection: group enrollment, waiting period, risk-rating premiums  Promoting/requiring prevention  Reinsurance  Bundling “predictable” with “insurable” risks  Risk management  Major possibilities:  Addressing adverse selection: Pre-existing conditions excluded from coverage group enrollment, waiting period, risk- rating premiums  Promoting/requiring prevention  Reinsurance  Bundling “predictable” with “insurable” risks Provider payment  Major possibilities: Fee-for-service  Capitation  Global budgets  Case-based  Insurer ownership and management of provider  Provider payment  Major possibilities: Fee-for-service Capitation  Global budgets  Case-based  Insurer ownership and management of provider  Community-based health insurance  Choice:  Voluntary  Advantage: by members  Disadvantage:  Adverse selection  Ownership Community-based health insurance  Ownership:   Community NGO Facility  Advantages:   Community NGO: community ownership Facility: close to community, relative management skills Community NGO: lack of management skills Facility: Incomplete ownership by community  Disadvantages:   Community-based health insurance  Premiums:  Amount and frequencies of payment set by community or facility Correspondence with ability to pay Timed with cash availability Difficulty to match premium to expected pay out Bad harvests, need for security, few opportunities to enroll  Advantages:    Disadvantages:   Community-based health insurance  Exemptions or subsidies for the disadvantaged  Lower or no premiums for those identified as disadvantaged Allows all to benefit from insurance protection Possible method to target government or private subsidies Could jeopardize scheme solvency Sometimes difficult to identify disadvantaged  Advantages:    Disadvantages:   Community-based health insurance  Benefits package:    Great variation Often hospitalizations Sometimes primary services, including prevention Benefits tailored to community needs and ability to pay  Advantages:   Disadvantages:    Hospitalizations rare, insurance concept poorly understood Primary services not an “insurable risk” Prevention comes last, if ever Community-based health insurance  Risk management:    Waiting period Household enrollment Stop loss Good methods to avoid adverse selection Can impede initial enrollment—hurdle of confidence Bigger membership pools a good complement   Advantages:  Disadvantages:   Community-based health insurance   Provider payment:  Negotiated fee-for-service Easiest to grasp by members and providers Works well with fixed fee schedules Can lead to providers multiplying services Consumers may overuse (moral hazard) Advantages:    Disadvantages:   Conclusions  Financial risk management an important complement to supply of health services  Community-based health insurance schemes can and do work  Choice of features allows community ownership, but has consequences for scheme success