Health

General Information

According to the World Bank, 54% of people are vulnerable because of the hospitalisation of one member of the family. This shows that if a family member is hospitalised, suddenly the entire budget of that family goes into a spin. Here, the important thing to consider is that 43% of such people, who fell into poverty because of ill health, were unable to come out of the shock even after 3 years.

 The implications of hospitalisation for a breadwinner are obvious. First, he gets indebted, then loses non-productive assets like jewellery, and finally sells productive assets which are usually livestock and ultimately even land. Once the land is sold, then the downward spiral forces people to migrate to the outskirts of the metro cities. Karachi is one example, where more than 50% of the population lives in slums known in Pakistan as “katchi abadis.”

Once the implications triggered by these economic shocks are understood, it becomes obvious that the ultra-poor need health care and social security coverage, and in particular hospital treatment and hospitalisation coverage, which are not offered by even the best of the primary health care facilities and Basic Health Units (BHUs) in Pakistan. Now, if we look at the tertiary hospitals like teaching hospitals, for example, the Pakistan Institute of Medical Sciences (PIMS), we see that, for a fortunate few, the subsidy is only in the form of a bed, and perhaps, free consulting services after a person gets hospitalised. However, the cost of surgical and medical supplies comes out from the pocket of the patient or his/her relatives. So, hospitals are not providing medicines, which is a major cost that may paralyse and impoverish the entire household of the hospitalised. Consequently, the implementation of an efficient social security system is fundamental to reduce poverty and vulnerability.

Total public sector expenditure on health in Pakistan amounted in 2006 to Rs 39.203 billion, i.e. only 0.75% of the GDP (TABLES H AND I). Shortages of medical staff and supplies affect many poor families including aged population who can not afford to go to a private facility. The results from a recent study (Mahmood and Ali, Pakistan Institute of Development Economics in Islamabad, 2003) support the evidence that nearly 57 percent of sick persons go to a private facility for treatment and about 45 percent mentioned “no money available” as one of the reasons for not seeking treatment of their illness.

Microinsurance Schemes

The microinsurance sector is relatively new in Pakistan. The first microinsurance providers were created in the 1980’s and in the 1990’s.

Since 32% households in Pakistan live below the poverty line, there is a large potential for microinsurance. If properly designed and delivered, microinsurance would help in reducing the vulnerability of low-income households.
There are examples of community health insurance within Pakistan; this involves not-for-profit pre-payment plans with voluntary membership. In general, the cost implications of administering policies in far flung rural areas when transferred to the insured generally make the premium unaffordable and standalone. However, microfinance institutions (MFIs) in Pakistan are attempting to address this issue by offsetting administrative costs in pilot projects; some initial encouraging results have been demonstrated. However, these systems suffer from the risks associated with their size and vulnerability.

At present, there is a panel of about 150 hospitals listed for health microinsurance clients all over Pakistan. The profit they earn out of the treatment of these clients is invested in the infrastructures, cost of radiology, lab facilities, operation theatres and many other amenities.

Pakistan still needs a sustained effort to raise awareness amongst its people with regard to the benefit of insurance, followed by the delivery of insurance products to the poor. There is also great scope in Pakistan to diversify microinsurance products, for example, crop insurance. Indeed, there is a dire need of agriculture microinsurance: in case of natural calamities farmers have to bear the loss of their crop and face default on credit. The need to cover risk and investments of marginalised farmers is of paramount importance.
Existing microinsurance providers in Pakistan (alphabetical order):


•    AKDN Aga Khan Development Network
•    BRSP Balochistan Rural Support Programme
•    Development Action for Mobilization and Emancipation (DAMEN)
•    Kashf Foundation
•    NRSP National Rural Support Programme
•    PRSP Punjab Rural Support Programme
•    Sindh Agriculture and Forestry Workers Coordinating Organization (SAFWCO)
•    SRSO Sindh Rural Support Organization
•    SRSP Sarhad Rural Support Programme (SRSP)
•    SUNGI Development Foundation
•    TRDP Thardeep Rural Development Programme
 

For more information, also visit: www.rspn.org Rural support programme Network
 

Governmental Strategies to extend Microinsurance

In Pakistan, serious efforts for microinsurance at the national level only picked up in the last decade with the advent of Microfinance institutions (MFIs) and a mushrooming growth of NGOs. However, there is still scope for extensive growth in this area. The Government has been doing its part by providing support to the RSPs through the creation of SMEDA (Small and Medium Enterprises Development Authority) and recently by the State Bank of Pakistan’s directive to all banks to have at least 20% of their branches in the rural areas. This will open up new avenues to infiltrate financing into crops, livestock and other basic requirements.

The government is also currently working on microfinance policy. It  is involved in many social protection programmes, one of which is Benazir Income Support Programme (a cash grant programme being implemented nationwide and aiming to cover 3.5 million women during its first round).

The Planning Commission is also committed to organising roundtables workshops for gathering the viewpoints and perspectives of various experts and professionals for the development of the microinsurance policy.

Besides, the Asian development Bank (ADB) is also playing an important role in Pakistan in the microinsurance sector. From 2001-2008, the ADB had a $150 million Microfinance Sector Development Programme which included $80 million for on-lending, $40 million for social development and $20 million for community infrastructure. A more recent programme from 2006-2008 has been improving access to financial services of which one is microinsurance. A $20 million grant has been given to the Government by the ADB which will be administered through the State Bank of Pakistan over the next 2 decades.
 

The RSPN-Adamjee Health Microinsurance Model

The Rural Support Programmes Network (RSPN) was registered in 2001 under Pakistan’s Companies Ordinance (1984) as a non-profit company by the Rural Support Programmes (RSPs) of Pakistan. RSPN is a network of ten RSPs. The RSPs involve poor communities, mainly but not exclusively rural, in improved management and delivery of basic services through a process of social mobilization. RSPN is a strategic platform for the RSPs, providing them with capacity building support and assisting them in policy advocacy and donor linkages. Currently the RSPs have a presence in 94 of the country’s 138 districts and 2 Fata (Federally Administered Tribal Areas) Agencies.
Adamjee is a private company providing insurance. Pakistan is thus one of the countries in the world where a private insurance company has taken initiative to partner with RSPs to offer microinsurance.

The Adamjee-RSPN partnership started in 2005 – the very first health microinsurance scheme in Pakistan, providing hospitalisation and accident insurance to low-income rural population across the country who have organised themselves into community organisations (COs) fostered by the RSPs.

History

The RSPN-Adamjee health microinsurance scheme is Pakistan's first initiative of a kind designed to protect low-income people against a major health risk. The first policy for 'Hospitalisation and Personal Accident' was issued in 2005. The cover was simple and paid for hospitalisation charges due to illness or accident, and compensation in case of permanent disablement or accidental death. Six out of the ten RSPN members decided to participate: Balochistan Rural Support Programme (BRSP), Ghazi Barotha Taraqiati Idara (GBTI), National Rural Support Programme (NRSP), Sarhad Rural Support Programme (SRSP), Sindh Rural Support Organisation (SRSO), and Thardeep Rural Development Programme (TRDP). RSPN took the lead in brokering the partnership with Adamjee Insurance for its member RSPs.

Within the first year, the scheme was able to provide health insurance cover to over 220,000 low-income individuals. Up until now, the RSPN-Adamjee model has been able to reach out to almost 800,000 clients through an already established network of Rural Support Programmes (RSPs).

Initially the policy targeted the age group of 18-60 years only, whereby the issuance of policy and renewal were carried out on quarterly basis for a batch of insured persons as it was difficult to entertain people on an individual basis due to lack of software and adequate know-how. However, with the acquisition of technology, knowledge and expertise, now there is no age limit and, whenever a person wants, s/he can get a 12 month policy on a one-to-one basis. Furthermore, the RSPN-Adamjee policy was initially designed to provide cover for complications arising due to pregnancy and natural child birth was not catered for. However, at present, everything is covered by the policy for expecting mothers. The RSPN-Adamjee health microinsurance also decided to include the cost of transportation to medical facilities in the cover.

Scope

In the beginning, policy renewal presented a serious bottleneck with as low as 21% renewals per term as it was impossible to convince ordinary people from village communities to pay the premium again while they had not taken any claim. A lot of difficulty was encountered until an innovative idea was introduced by the National Rural Support Programme (NRSP). NRSP started capitalising on the programme's credit members as ambassadors for spreading the word about this scheme. The persons who took credit were also provided with insurance cover. The strategy was also effective in ensuring a quick spread. The enrolment increased, covering non-credit members also.
There is a potential risk attached to the credit provided to people regarding repayments in the event of the death of the person who has borrowed. Therefore, the same amount of premium also covers for the balance owed to RSP. In case of a natural death of credit members, if there is any balance left out of the sum ensured, it is paid out as a funeral expense to the family.

As compared to the credit members and the people who can afford to pay Rs.200-250 premium, there is a population that exists at the bottom of the heap - the people in the lower poverty band having no money. Since they cannot pay they don't come for credit to the RSPs. These are the people that need to be served. To reach out to this target population of the underprivileged and underserved, Adamjee and RSPN are working with the Government to pay the premium on their behalf and provide health care and personal accident insurance to them.

Sustainability 

The claim status clearly establishes it as making perfect business sense. The loss ratio is around almost 50% at the moment, which essentially shows that the insurance company is also making profit. So, the people are provided a service and the insurance company also gets to make it a profitable business venture. The claims ratio of 39% makes good business sense for the Adamjee insurance company.

The data show that 65% are medical claims and 35% are surgical claims, whereby 69% of the medical claims are due to water borne diseases. Hence, one message for the policymakers is about ensuring adequate provision of safe drinking water.

For more details about the eligibility conditions, the exclusions, the level of premiums and benefits depending on the risk covered (sickness, maternity, employment injury, unemployment, invalidity, old age and death), please visit the following website : The Pakistan page in the US Social Security Administration website.

Social security schemes and programs by branch