The Role Of Community Health Insurance In Perfecting Financial Inclusion

Abstract

Financial inclusion has become a major imperative for development of rural regions and elimination of poverty. Within India, several attempts at financial inclusion have been made, but these efforts have remained mostly unsuccessful and regionally uneven. It appears that financial inclusion, which must be associated with the delivery of credit, savings and insurance services, has remained imperfect on ground because of major impetus given to a ‘credit only’ or a ‘credit first’ approach. This happens because in the absence of affordable healthcare facilities or health insurance, ill health gets extended and often culminates into capacity failure. Given that a potent solution is hardly achievable through the market or government forces, it is argued that community health insurance schemes can take better care of the health of insured households through a judicious mix of ex ante preventive care and ex post curative care even in rural and semi-urban regions. If community run programs can become self-sustained, financial inclusion can be perfected. However, the literature unequivocally and emphatically asserts that the demand for health insurance among microfinance clients is absent. In order to disprove this non-exceptionable statement, this study purposively selects one community organisation – ‘Annapurna Pariwar’, whose health insurance policy has been operational for more than 12 years and now has more than 120,000 insured members and seeks to answer three questions – (a) can community health insurance become self-sustainable? (b) how can a community organisation improve its insurance enrolment? and (c) does insurance membership improve household status? Through a detailed analysis of the organisation, this study finds that community insurance schemes can become manageable if the demand for it is stable and predictable, and this demand can be improved with time by having proper institutional norms and claim handling processes in place. Finally, this study also finds the ameliorating effect of insurance to health shocks faced by the household. These results therefore have major implications for health insurance practice and also hold the guiding light for perfecting financial inclusion.