Health Micro Insurance

See MHI Logic Model

Slum dwellers in Kolkata India, as with the urban poor in many parts of the developing world, live in continuous fear that borrowing from money lenders at high interest rates to finance medical care in cases of injury or illness will deplete them of their resources and further exacerbate their present poverty. In Fakir Bagan, median family incomes are around Rs. 2,000 (US$50) per month, while the cost of adequate health care averages around Rs. 10,000 per illness, and often much higher. A Calcutta Kids study conducted in 2007 found that when residents of Fakir Bagan cannot finance the costs of medical care with their own incomes, they are forced to borrow from money lenders at interest rates that average 80% per year. Accordingly these families become trapped in cycles of debt that deplete them of their resources and further exacerbate their already desperate poverty. The economic, physical and emotional costs of this existing system of health care financing are severe, as is clear from the following all-too-common story from Fakir Bagan:


My elder daughter became ill with loose motions and the doctor said admission to the clinic was needed 26 bottles of saline. We gave our house to the landlord and took money worth Rs.15,000. I had to pay 6% interest per month. For the Rs.15,000 I had to pay Rs.900 per month. Now the amount owed has become Rs.30,000 because we have been unable to repay.


Even worse, it is common for slum dwellers to forego care for serious illnesses altogether given the near impossibility of paying for it.


Models exist, however, in India and elsewhere to protect such individuals and families with micro health insurance. Calcutta Kids has for some time been interested in implementing a health insurance scheme within its catchment area, as a means of helping slum dwellers finance the costs of health care.


The earlier mentioned Calcutta Kids 2007 study was designed to explore the demand side of a potential micro health insurance plan for residents of Fakir Bagan, looking particularly at the premiums residents might be willing to pay. The study actually found that, given the desperate nature of the situation, the average resident's willingness to pay for a health insurance product is higher in Fakir Bagan than in other areas of India.


In response to these findings, Calcutta Kids has put together a taskforce to address the issue and to consider options. The task force is headed by Srivatsa Marthi, a recent economics graduate from the University of Toronto who is originally from Chennai, and by Noah.


The task force carried out an additional study in January 2008 of 185 households in the slum to obtain information on hospitalization rates, types of health care facilities used, and average costs of treatment at these facilities. Based on this information, potential insurance products are now being priced by professional actuaries. The plan is to present a number of different priced insurance products to local residents through a series of focus group discussions, and then, based on these discussions, to create a health insurance product that is particularly well suited to the needs of the people of Fakir Bagan. If the focus group discussions indicate that slum dwellers are indeed interested in participating in such a program, Calcutta Kids will begin implementing it, keeping centrally in mind the original goal of provide these families with a safe and easy means of accessing and financing healthcare services for serious illnesses.

See MHI Logic Model