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What is Health Microinsurance?

Health micro-insurance – referred by different names such as community-based health insurance, micro-health insurance, mutual health insurance, community-based health financing, community health insurance etc -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. Health micro-insurance schemes are more complex in nature compared to life insurance schemes, as they provide services towards specific risks or illnesses and involve the role a health care provider, whether independent of or in partnership with the scheme.  The scheme can be provided by government, a private insurance company, an NGO or a CBO.

Health microinsurance is important for the poor because health risks are often identified by the poor as the greatest and costliest risks among all other natural, social, economic etc risks faced by them. Health problems not only impact expenditure of the household, but also reduce the productivity and lessen the opportunity for growth.  Long-term illnesses have serious implications on the poor, leading to other unhealthy social conditions such as alcoholism, domestic violence or psychological complications. The poor are considered to be more vulnerable to illnesses and epidemics than the rich as the former usually live in unhygienic conditions, they have low-levels of health awareness and fail to take up preventive measures. According to Devadasan and others in the ACCORD Community Health Insurance: Increasing Access to Hospital Care,  the poor become further impoverished in the process of seeking health services.  Nearly 40% of hospitalised patients sell assets or borrow money to afford treatment and an average of 24% fall further down the poverty trap in this process. One of the reasons for lack of a proper health-seeking behaviour within the poor community is the expensive medical treatment especially at private health clinics in addition to the bad facilities available at public health centres. There is a close relationship between the health conditions of the people and the economic growth of the country in which they live.  It becomes necessary for the government to ensure affordable services for the poor to improve and maintain their health well-being. Some of these factors prove that health microinsurance is critical to reduce poverty and improve household conditions in poor and developing countries.

Read about… What benefits can be covered under a health microinsurance project for the poor?

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