Many countries have started working toward achieving universal health coverage — where all people can access affordable health care when they need it — but have realized it will be challenging to achieve through the public sector alone. Despite the efforts and funding focused on supporting countries to achieve UHC as quickly as possible, it could realistically still be decades before low- and middle-income countries in particular have the tax base, health infrastructure, and health workforce they need to deliver affordable, timely and quality care for all.
The “working poor” — often earning too much to qualify for government and NGO safety net programs, but earning too little to opt into existing private health insurance offerings — are especially prone to having nowhere to go for affordable care. This often overlooked group poses both a challenge for the global health sector and a market opportunity for private health insurance.
There is an opportunity for global health actors — especially global health funders — to more actively collaborate with private health insurance providers to develop models that reach the working poor at scale, and at high quality in order to shift toward more sustainable sources of financing.
Encouraging support for the private health care system is a contentious notion to some. Critics raise valid concerns that private sector approaches aren’t inherently effective for all, and may even increase inequality of care. This has proven true in some countries, such as South Africa and Namibia, where the private sector is predominantly out of reach for the poor. However, in other countries such as Nigeria, India and Indonesia, a wide range of people use private health care.
What role could global health actors play in making existing coverage more inclusive and appropriate for the needs of the working poor? What might this look like in practice? Below are three illustrative opportunities to help the private sector customize and scale their approach for lower-income consumers.
1. Experiment with partial vouchers and franchising of clinic membership models.
Clinic memberships are the simplest of the three emerging models. Instead of purchasing an insurance policy, consumers become a “member” of a facility (or facility chain) to receive health care from a list of qualifying services, up to an annual limit. For instance, at Avenue Healthcare Kenya, a family of five pays $500 to $1200 per year depending on the plan. We have mainly seen this model in Kenya, serving upper-middle-income families.
Currently, it is unclear if the service could be tailored down to serve the working poor. Further, because it limits care to a specific clinic, emergency care typically must be paid out-of-pocket, keeping surgery and other emergency services out of reach. This model could be made more inclusive by lowering the cost to join. Global health funders could back the development of partial voucher systems, which have worked well to bridge the gap between cost and ability to pay in maternity care, and could be a potential model for preventative and routine care.
2. Prove the business case for corporate partnership models for informal and contracted workers.
Some companies now partner with an insurance provider to meet the risk protection needs of uninsured, informal sellers in their supply chains. Companies that use this model benefit from increased loyalty from their sellers, higher quality products for sale, and lower risk of disruptions due to health issues in their supply chains. For instance, a coffee buyer who provides health insurance will attract sellers with high-quality beans to sell, who are incentivized to keep improving their crops to retain the benefit.
This model relies on co-financing by a commercial business, and therefore may require a clear demonstration effect to persuade more companies to sign on. To increase demand for this approach, global health funders could support research on the social and economic impact to build a business case and clear call to action for corporations.
3. Invest in R&D to develop private microinsurance and health savings products for the poor, especially via mobile channels.
Finally, the private microinsurance market tripled from 2007 to 2013. These are often automatically paired with other microfinance products, such as a life insurance policy affixed to a microcredit loan. Examples in this space include Allianz, which has 25 million microinsurance policies; AllLife in South Africa for people living with HIV; and Leapfrog, a private equity fund for microinsurance. In an effort to add value-added services, a number of mobile network operators offer health saving plans and microinsurance products as incentives for cellphone users — for instance, as an airtime purchase bonus. However, while microinsurance models for other adverse events such as life insurance, have gained traction, private health savings and insurance models have been left largely unexplored by commercial markets.
Every second, three people are pushed into poverty because they need to pay out-of-pocket for health care — 100 million every year. Across low- and middle-income countries, a shortage of quality, affordable health insurance options creates health and financial emergencies for the poor.
Health insurance is more complex, and designing a profitable model that meets the needs of poor consumers has been challenging. Here, global health funders could invest in the upfront costs of research and development for inclusive health savings and insurance models similar to how the inclusive business sector has helped banks develop lending products for small and medium enterprises, and then help codify and share lessons from models that are sustainable and gaining greater traction.
These are by no means the full scope of models that innovators are pursuing today to extend private health insurance to the working poor. Instead, these represent a few where we’ve seen initial promise and believe further support from global health funders could accelerate progress.
However, private health insurance won’t become more inclusive without a nudge. That’s where we think global health funders can help. Like other sectors where early market-building reduced the cost of entry for the private sector, global health funders have an opportunity to shape this sector today, joining a broader movement of stakeholders working to improve the entire ecosystem of insurance provision.
Funders such as Rockefeller Foundation, Omidyar Network and the International Labor Organization have already started to pursue the concept. By ensuring public-private collaboration — and experimenting with social enterprises and companies interested in impact-driven CSR, — private health insurance providers might be incentivized to ensure equity of access. This both provides options for consumers and frees up resources for the public sector to develop strong systems and safety nets for those who need them most.
We recognize, though, that this nudge to make private health insurance models more inclusive and more easily scaled is just the beginning. In specific markets, a more holistic approach will be required to address demand-side, supply-side and enabling environment bottlenecks to creating and scaling insurance products for the working poor.
Importantly, it will take a broader coalition of global health actors and private sector innovators, working together, to help create change and demonstrate successful and scalable models to insure the working poor.
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