A Umarani Director Tata-Dhan Academy Action Research on Micro Health Insurance for Poor Experience of DHAN Foundation, India A Umarani Director Tata-Dhan Academy

Health and Poverty Human capital is essential to keep the people engaged in productive works. Health is one of the aspects to build the human capital Morbidity is high among the low income households leading to poverty The low income households are highly vulnerable to health risks Two major approaches to manage risks by the communities are risk reducing (prevention and avoidance) and risk coping (reduce the effect after the event)

DHAN’s model Building Social capital (SHG-Federations) as the basis for poverty reduction Development and risk & vulnerability management are the twin approaches adopted by the SHGs and their federations SHGs and their federations provide access to services such as microfinance, micro insurance, healthcare and education and livelihoods development services

Risk and vulnerability management in DHAN promoted People Institutions Risk reduction strategies Reproductive child and healthcare Anaemia control programmes Community health promotion through safe drinking water, sanitation and hygiene Malaria control programmes Nutrition programmes Ensuring entitlements through Primary health centers SUHAM (Sustainable Healthcare Advancement) hospitals – primary and secondary care Federation clinics for primary care

Risk coping strategies Risk retention – savings and credit services through self help groups Risk transfer – most appropriate solution for uncertain health risks through micro insurance

People institution model of DHAN Federation 150-200 SHGs Cluster 1 15-20 SHGs Cluster 2 SHG 1 SHG 2 SHG 3 SHG 21 SHG 22 SHG 23 DHAN Foundation

Subsidiaries of Federation Hospital Vocational Institute Federation Producer Company Mutuals DHAN Foundation

Subsidiaries of Federation The SHG federation acts as an development agency In addition to promotion of Microfinance for poverty reduction, the federation also takes up other development programmes like health, education, business promotion etc, based on the need of the Kalanjiam members Exclusive subsidiaries are promoted as separate institutions for each of the development programmes DHAN Foundation

Hospital One of the subsidiaries of Kalanjiam Federation Exclusive governance structure with inter linkage with Federation’s. Provides primary care Identifies referral hospitals for secondary and tertiary care DHAN Foundation

Federation Mutuals It is one of the subsidiaries of federation for providing mutual based solutions to the risks of members; Owned and controlled by the members Adopts three approaches to promote Micro insurance among the members Through partnership with other insurance companies Offers mutual based own solutions Combination of both DHAN Foundation

People Mutuals Federation 1 Federation 2 People Mutuals Federation 3 DHAN Foundation

People Mutuals Institution promoted by SHG federations Separate entity (Trust) to implement the insurance programme for the members of DHAN promoted People Institutions Promoted through collaboration between Oxfam Novib, Rabobank Foundation and Eureko Re, The Netherlands DHAN Foundation

Micro Health Insurance - Models Partner-agent model Combination of partner-agent and mutual model

Partner Agent Model: Universal Health Insurance Scheme Central Government sponsored Scheme Implemented by all the four public sector general insurance companies DHAN collaborates with National Insurance Company Universal- includes all economic category-2/3 of premium is subsidized by the government for poor; covers preexisting illness also

iii. Procedure to claim the benefits  Particulars Section I Section 2 Section 3 i. Benefits Hospitalisation benefits upto a maximum of USD 600 (Rs.30000) in a year with a ceiling of (Rs.15000) USD 300 per illness Life insurance coverage for accidental death of head of the family : USD 500 (Rs.25000) Wage loss compensation for the head of the family of USD 1 (Rs.50) per day for 15 days from the 4th day of hospitalisation ii. Exclusions 1.Any disease during the first 30 days from the commencement date of policy 2. Maternity expenses in the first year 3. Cost of spectacles, contact lenses and hearing aids not payable. Any Dental Treatment or Surgery, internal self injury and use of intoxicating drugs / alcohol, sterility, Venereal Disease not covered. Vitamin and tonics unless forming part of treatment of injury / illness are not covered. Treatments arising from or traceable to pregnancy, child birth, miscarriage, abortion or complication of any of these including caesarean section are not covered. Intentional self injury, suicide or attempt to suicide. Under the influence of intoxication, liquor or drugs If the insured committing any breach of law with criminal intent   iii. Procedure to claim the benefits 1. Notice about the admission in the hospital should be immediately informed to Good Health Plan Limited (GHPL), the Third Party Administrator for National Insurance Company. 2.The claim form along with the bills should be sent to GHPL within 7 days of discharge from the hospital 3. GHPL would process and pay the eligible claims within 15 days to SUHAM/ Federation clinics.

Combination of Mutual and Partner Agent model Mutual solutions are offered in addition to the partner agent model Mutual solutions are offered only where there are community owned hospitals are established Federations act as nodal agency and People Mutuals is the risk carrier

Mutual health Insurance Program features i. Benefits : 1. Primary health care cover upto USD 60 (Rs.3000) with 25% copayment by the insured 2. Hospitalisation expenses upto a maximum of USD 100 (Rs.5000) ii. Exclusions : Chronic / pre - existing illnesses primary health care cost iii. Procedure to claim the benefits: Primary health care claims upto USD 60 (Rs.3000) per family in a year: The insured avail the benefits on the spot and they pay only 25% of the treatment cost to the federation clinics/SUHAM hospitals. The clinics / SUHAM Hospitals would claim the benefits as detailed below: a) The authorised bills from SUHAM/Federation clinics should be submitted to People Mutuals on a weekly basis b) People Mutuals would process and pay the eligible claims within 15 days to SUHAM/ Federation clinics. Secondary care claims upto USD 100 (Rs.5000) per family in a year: a) The claim form along with the bills should be sent to People Mutuals within 7 days of discharge from the hospital

Premium structure for UHIS+Mutuals Family type Total Premium paid by the insured Premium for NIC-UHIS Admin cost of federation Mutual insurance risk premium to People Mutuals Single 375 100 25 250 Family of five 500 150 325 Family of seven 600 200

Back up insurance premium Health Insurance Mutual insurance premium Member Kalanjiam Federation Mutuals (Nodal agency) Premium& Member info Claim pay out Insurance Companies Back up insurance premium Claim pay out People Mutuals (Mutual Insurer) Member ID Card SUHAM/Federation Hospital Third Party Administrator

Insurance Literacy Members As consumers As owners 2. Governing Board of Federation Mutuals 3. Management staff of Federation Mutuals 4. Field level staff DHAN Foundation

Consumer Education: Before selecting a solution/product Consultative workshops for selecting a product/ designing a mutual solution Risks and vulnerabilities faced by the members Current coping mechanisms- their pros and cons Need for a special strategy for managing uncertainties- importance of insurance Difference between banking and insurance Group and personal insurance schemes- Pros and cons from the perspective of consumer Various group insurance schemes and their benefits and limitations Selection of a particular programme from existing schemes or devising mutual solutions or a combination of both DHAN Foundation

Consumer Education : After selecting a solution/product This is done for promotion of a particular product Features/components of the solution and reasons Insurable and non insurable risks Entry procedures Claim settlement FAQs DHAN Foundation

Literacy: Members as owners Enrollment procedures Selection and anti selection Claim servicing procedure Orientation on financial management of Mutual programme Need for Reinsurance/ Back up insurance DHAN Foundation

Literacy: Governing Board of Federation Mutuals Enrollment procedure Selection and anti selection Underwriting procedure Claim settlement procedure Financial management for mutual health programme Roles and responsibilities of Mutuals committee DHAN Foundation

Literacy: Management Staff of Federation Mutuals In addition to all the above, Models of micro insurance delivery- Corporate agency and Mutual solutions Accounting and auditing Management Information system Financial planning Insurance literacy to members and field staff DHAN Foundation

Literacy: Field staffs Basics of insurance and mutual solutions Details of the specific solution/programme of the federation (features with reasons, exclusions) Insurance literacy to members Collecting the data Enrollment and renewal procedures Usage of MIS Claim settling procedure DHAN Foundation

Institutions for providing literacy Federation Mutuals Dhan People Academy HRD of DHAN Advanced Center for Skill and Knowledge for Mutual Insurance (ASKMI)of Tata-Dhan Academy People Mutuals DHAN Foundation

Reach (As on March 2012) Members enrolled Premium (in USD.) Claims (in USD.) 1,78,081 542,971 455,924

Collaboration with Achmea Re Foundation Promotional support for 45 federation mutuals for three years Philanthropic reinsurance support at the end of third year Technical mission team from EAF provides technical assistance

Prepositions for successful health insurance for poor Health insurance is viable only when it is built upon micro finance initiatives Social capital Scale advantage which avoids adverse selection Community based health care services to avoid moral hazard Micro health insurance should focus on inclusion of primary health care and other health care related expenses, all diseases and all family members Packaging of benefits by improving the product should ensure good and repeat enrolment Pricing in Health insurance should ensure a right balance between viability and affordability The reduction in health risks leads to improvement in human capital

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