Session Four: Risk, Vulnerability and Micro Insurance
Over three percent of the rural households (almost 0.8 million households) fall into poverty annually due to payments for health care – says Professor Syed. M. Ahsan, Department of Economics, Concordia University, Canada and Visiting Fellow, InM.
The keynote speaker of session four of the National Conference was on “Risk, Vulnerability and Microinsurance” was Professor Syed. M. Ahsan. The session was chaired by Professor A. K. M. Nurun Nabi, Vice Chancellor, Begum Rokeya University. As Professor Nabi had some other commitments, he requested Professor S. R. Osmani, Department of Economics, University of Ulster, UK, to Chair the session.
Professor Ahsan gave a presentation titled “Health Care in Rural Bangladesh: The Scope of Micro Health Insurance”. Mr. Md. Fazlul Kader, Deputy Managing Director, Palli Karma-Sahayak Foundation (PKSF), was present as panelist in this session. The focus of the presentation was to outline the finding of the ongoing project of InM entitled “Microinsurance, Poverty and Vulnerability”.
Professor Ahsan, in his keynote presentation, said that the vulnerability to poverty is increased on account costly risk mitigation in the absence of insurance. The findings of the study revealed that health exigencies appear to be the single most common shock that people have to face and the formal health care utilization was quite low as well.
The study found that overall total out-of-pocket (OOP) payment for accessing healthcare was rather high; on an average, a household spend BDT 4,200 as out-of-pocket payments for accessing medical care, a major portion (60 percent or BDT 2,500) of which is spent on drugs.
The incidence of catastrophic health payments was also high. A large proportion of the households need to spend the entire savings, borrow and/or sell assets for mitigating the crisis related to death and health shock, the study added.
Professor Ahsan also said that OOP payments for healthcare annually push 3.4 percentage points or 6 percent households into poverty in rural Bangladesh. From a microinsurance market survey the study found that there was no ‘insurance’ per se since the bulk of the risk is eventually borne by the insured.
In addition, there is a significant demand for well-designed and meaningful micro health insurance. He also said that the study team has also performed a healthcare facility survey and found that the healthcare facility was very weak in rural areas especially for inpatient care.
The Panelist of the session Mr. Fazlul Kader said that microfinance is demand driven program which is the package of income generating activities whereas insurance is a supply driven program and its core objective is the risk mitigation. He believed that disaster-management plan could be an instrument for mitigating risk. PKSF study found that both morbidity rate (54%) and out-of-pocket payment (OOPP) for health care (11% of total HH consumption) is high, so carrying large amount of OOPP is a burden for poor, Mr. Kader said.
Livestock insurance will be viable if the veterinary services can be introduced to cover livestock risk. He said that there is evidence in a study in collaboration with IFPRI that crop-insurance is demandable among rural community. Thus, index-based crop insurance will be a viable idea. Life insurance will also be a viable scheme. It is not possible to cover all risks related to crop, health, property etc. under any comprehensive scheme. Co-sharing could be effective for health insurance.
Mr. Kader informed that PKSF is going to start livestock insurance, after that crop insurance will be started with help of IFPRI, Mr. Kader addressed in the discussion. If morbidity rate is high, it is not possible to cover all health shocks. Thus, he suggested that morbidity data should be ranked by disease prevalence rate so that high-risk group can be addressed accordingly.
Prof. Ahsan made some policy conclusions based on the findings of the study. He suggested adopting the proper measures for effective regulation of essential drug prices and informing the public about the dangers of self-medication or drug overuse. He said that Bangladesh requires introducing some alternative ways to raise funds for provision of health care in the rural areas. Developing appropriate risk-pooling modalities such as low-cost micro health insurance schemes may be an innovation that needs to be seriously considered, which is gaining popularity around the world. He expressed that innovations on the utilization of existing facilities & resources in Bangladesh are necessary for a better health or poverty outcome till a proper solution is found.
Prof. Ahsan said that based on the findings of the study InM is piloting a micro health insurance project in Mymensingh which offered the beneficiaries (MFI participants) a comprehensive health package named ‘NIRAMOY’ with affordable premium covering in-patient, out-patient and maternal care. He also said that this is the first RCT evaluation process in the arena of Health sector in Bangladesh.
As the concluding remark of this session Prof. Osmani said that informal credit could be termed as informal risk sharing tool that is not good enough to cover the catastrophic events. Formal insurance could act as effective tool to cover major risks. Nothing would work without the presence of social insurance, especially for the poor. Thus, government should ensure the existence of social insurance within the society.