[Subgroup-health] FW: new member comment -1

[David Dror]

Welcome to the party, Peter. I am sure you can make a real contribution.
I entirely agree that managing micro health insurance requires, in addition
to common sense, also some structured capacity building. Nobody is born with
knowledge how to run insurance, and most of the people dealing with the
development of and support to micro health insurance cannot boast hands-on
experience with running a health insurance either (be it in government,
international agencies etc). So essentially we have a scenario in which lots
of well-intentioned people with no track record of successful management of
health insurance give advice to other people who need professional,
practical hand-holding in actual day-to-day management.
Your experience in insurance is a great asset for making the support
practical and specific.
David Dror

On Fri, May 16, 2008 at 4:46 PM, Peter Wrede <peter.wrede at akdn.org> wrote:

>  Dear All,
>
>
>
> It seems that there are a number of attempts to implement bottom-up
> mutual-like health schemes in Africa, for example the community health funds
> in Tanzania. Despite laudable government support, these schemes have so far
> not lived up to expectations, and one of the reasons found for disappointing
> take-up and renewal rates is shortage of management skills. It appears that
> to run a risk pooling operation – no matter how simple – requires more
> skills than common sense, and not a lot of people on the local rural levels
> are suitably trained. Combined with the frequent lack of financial literacy
> and insurance education of target customers (which somewhat limit the
> scope for subsidiarity and involvement), this often leads to a perception
> of intransparency and even distrust.
>
>
>
> The ILO has recognised that problem and have designed a number of tools to
> address it (including a simple IT system expected to drive management), but
> I believe that there is still room for a lot more education both of
> customers and of operators of health microinsurance schemes, which may
> outweigh the general question of which business model looks most promising.
>
>
>
> By the way, would you mind if I join this group? I work in The Aga Kahn
> Agency for Microfinance with John Pott since December, after 18 actuarial
> years in Life / Health insurance and reinsurance in developed and developing
> countries.
>
>
>
> Kind regards
>
>
>
> Peter Wrede
>
>
>
> Microinsurance Specialist
>
> The Aga Khan Agency for Microfinance
>
> 1-3 Avenue de la Paix
>
> 1211 Geneva 2, Switzerland
>
> Telephone:+41 22 909 7371
>
> Mobile:+41 79 500 2745
>
> Email: peter.wrede at akdn.org
>
>
>
>  ------------------------------
> *From:* John Pott
> *Sent:* vendredi, 16. mai 2008 05:03
> *To:* Peter Wrede
> *Subject:* FW: [Subgroup-health] new member comment -1
>
>  FYI
>
>  C. John Pott
> Project Manager
> AKAM Microinsurance Initiative,
> 1-3 Avenue de la Paix,
> 1211 Geneva 2,
> Switzerland
> Geneva Office Phone 00 41 22 909 7355
> Swiss based Mobile phone 00 41 79 2011 468
> email: john.pott.ext at akdn.org
>
> ------------------------------
> *From:* subgroup-health-bounces at microfinance.lu on behalf of Iddo Dror
> *Sent:* Thu 5/15/2008 09:54
> *To:* subgroup-health at microfinance.lu
> *Subject:* Re: [Subgroup-health] new member comment -1
>
> Dear All,
>
> Bill McPate raises a lot of good pointers from the case in the UK, but as
> Denis Garand notes, the Benenden model would need to be adapted to the
> reality of developing countries, and people in the informal sector.  Apart
> from the issue of deduction of premiums at source, there are other issues
> which are no less important in the adaptability of such a mutual system to
> the context of developing countries, such as:
>
> 1. Individual versus group application.  The UK model, as I understood it,
> allows for individual affiliation.  If so, this leaves the door open for
> moral hazard and adverse selection, even in a mutual system.  To move away
> from this, some groups in India are starting to implement "en-bloc"
> affiliation (all members including their households must join in order for
> the cooperative to be eligible to join the system), which appears much more
> suitable for mutuals in developing countries.
>
> 2. Subsidiarity – The UK model did not seem to me to fully incorporate the
> principle of subsidiarity into its operating structure. When we talk about
> reducing transaction costs, handling tasks at the lowest possible level
> certainly offers advantages.  Subsidiarity serves other purposes through,
> not least giving an assurance to members that they are protected against "an
> elite group" within the mutual taking decisions that may serve the interests
> of a few but go against the interests of most members (demutualization can
> be one such example, but there are others), hence creating an incentive to
> join.
>
> 3. Involving members in the testing of actuarial assumptions.  This is an
> area that is under explored, and it is not clear to me why…  If one is
> talking of a mutual, than why not give members at least a chance to validate
> the actuarial assumptions that are being used to price "their" packages?  The
> members, who are aware better than most what the local costs are should be
> able to see a breakdown per benefit of the actuarial assumptions of package
> costs, and can help make these more relevant by giving inputs on benefits
> that seem to be price out of context for their local reality.   This would
> not only add transparency (and credibility) to the process, but also help
> design more relevant packages, as evidence shows that where prices are out
> of sync with local context, it affects members' decisions.
>
> It would be nice to see these taken up for discussion when the group meets,
> as it seems to me that there is more than one model of mutual, focusing on
> core principles and structures may help us come up with operational models
> for different types of groups / geographies.
>
> Best regards,
>
> Iddo
>
>
> --
> Iddo Dror
> Director of Operations
> Micro Insurance Academy
> D-127, Panchsheel Enclave
> New Delhi 110017
> India
>
> Tel:  +91 11 4174 9101
> Fax:  +91 11 4174 9102www.microinsuranceacademy.org
>
>
>
> bill mcpate wrote:
>
>  Dear All,
>
> I am new to the group but have a strong belief that the experience of the
> health mutual I managed in the UK could be of value to the group's efforts
> to find solutions to delivering healthcare in developing countries. This may
> not be the best time to introduce detail to the discussions of the
> subgroup but if you will allow me to "get it off my chest" it will also
> serve as an introduction to my background.
>
> The Benenden Healthcare Society is a mutual healthcare organisation
> providing affordable health services to almost 1 million members in the UK
> who can be broadly identified as public servants and their families.
>
> The Society was first formed in 1905 to provide sanatorium care for
> tuberculosis or TB.  The type and method of care was not specified and
> discretion was applied by the elected members to determine the most
> appropriate service for members with TB. As vaccines and treatments were
> developed to deal with TB, the services changed to encompass other medical
> conditions and a wider benefit range. Since the formation of the National
> Health Service in 1948, these services have supplemented the care available
> through the state system. The benefits are discretionary and supported by an
> ethos of trust rather than contractual and supported by insurance
> principles.
>
> Amongst the issues you have discussed to date is the dilemma between
> concentrating on principles and detail. Perhaps we need to concentrate on
> both.
>
> The principles/values of the mutual health model will be familiar to you
> all- *Solidarity, Autonomous management, Not for Profit orientation,
> Inclusivity and non-selection.*
>
> However, there are a variety of ways that a health system can be designed
> to utilise these principles.  The design features in the Benenden model
> appear in other systems but the way that they combine seem to offer a unique
> solution:
>
> *The community of members is based upon groups of workers.*
>
> The affinity between member of staff provides the necessary solidarity to
> support universal discretionary benefits and collective action.  Our
> group, in 1905, comprised postal workers. As their confidence grew in
> managing the fund, this was widened to other groups of workers and family
> members. Cotton workers might be a typical start up community today,
> developing to include family members later.
>
> *The Employer recovers contributions on the Employee's behalf.*
>
> Providing the workers receive payment through some form of payroll system,
> deductions from pay is the mechanism used for collecting contributions to
> the mutual fund. This overcomes the problem experienced by some other forms
> of micro insurance of high costs for premium collection. Employers will be
> motivated to cooperate in this way by the attraction of a healthier
> workforce. (It is accepted that the dependence upon a payment system for
> cost control will limit the scope of application for this model).
>
> *The Community decide themselves what services they wish to provide.    *
>
> The postal community in the UK in 1905 chose cover for TB care because
> purchasing care in a sanatorium was only affordable by the rich so their
> prospects of surviving TB were poor. There are numerous candidate conditions
> in the developing world, for example TB, malaria or AIDS.  The range of
> services for those conditions would also be a matter of member choice. It
> may be education, diagnostic services or clinic facilities that they deem
> most important. Their health service choices will be based not only on need
> but also affordability. Affordability and therefore inclusivity can be
> prioritised in this model because the benefits are discretionary.
>
> *Suitability for Developing Countries*
>
> There are a number of reasons why I remain convinced of the suitability of
> this model for developing countries:
>
> a)      In contrast to dependence upon the external efforts of others,
> such as the state or donor countries, the members take responsibility for
> organising this form of health system themselves.  As widely recognised,
> when people are engaged in looking after their own health the outcomes are
> improved.
>
> b)      Compared to the enormity of the health challenge facing many
> countries, this model can be introduced with a narrow benefit focus, such as
> a single disease. It has the natural potential to grow and take on a wider
> range of health services over time.
>
> c)       The trust and accountability inherent in the model will enable
> funds to be safely targeted on the changing needs of members. Governments
> can also trust this model to fit in with the development of state health
> services.
>
> You have more experience than me in the problems of the developing world so
> please let me know why you think that this model may not be appropriate.
> Returning to Valerie's e-mail of 8th May could this be one solution to the
> search for a model that "responds to the priority protection needs of the
> insured" that is also "inclusive"," available" and "affordable"?
>
> Bill McPate
>
> The Benenden Healthcare Society
>
> ------------------------------
>
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-- 
Hon. Professor of health insurance, Erasmus University Rotterdam
Chairman, the Micro Insurance Academy, New Delhi (
www.microinsuranceacademy.org)
Access my publications freely at: http://ssrn.com/author=183410 (Social
Science Research Network)
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