Grameen Kalyan was created to remedy the grave financial burden of serious illness and general health conditions on poor members of Grameen Bank. GK’s primary goal is cost-effective welfare and healthcare services for its members as well as nonmembers living within its operational area. As an insurer and health service provider, GK implements an affordable health microinsurance scheme, running a network of community-based health centers and satellite clinics, managing a referral system for secondary and tertiary care, and coordinating outreach health services (domiciliary service) by community-based female health workers. GK’s operational cost recovery rate has reached 83% (at the stage of continuous expansion) in 2008, up from 38% in 1997.Key program components include: 1. Health microinsurance. This is pivotal in GK activities, ensuring target group participation and raising revenue for the program. The scheme employs a sliding scale fee structure. Nonmembers of Grameen Bank pay slightly more (300 taka or about $4.28) than members (200 taka or about $2.85), but there is no distinction in service and benefits, and each plan covers up to six members of a cardholder’s family. The plan provides free preventive care, family planning, and health education services to all, irrespective of enrollment. For health center visits enrollees pay 20 taka or about $0.29 and nonenrollees pay 50 taka or about $0.71. Enrollees also receive a discount on medicine and laboratory tests. In catastrophic circumstances enrollees can receive a subsidy from GK of up to 2,000 taka orabout $29. 2. Primary healthcare. GK’s health centers are usually attached to a Grameen Bank branch and provide primary healthcare using a staff of doctors, paramedics, managers, lab technicians, and community health assistants. Each center’s operational area corresponds to that of a Grameen Bank branch, an area with a radius of about eight kilometers. The center operates on an outpatient basis; providing treatment and advice and referring patients to a hospital when necessary. Medical staffs also organize weekly satellite camps for members in remote areas. The salary structure considers the distance of workplace from the capital city (that is, workers in more remote areas receive higher salaries). 3. Training and human resources development. GK has received technical support from development partners to implement a range of human resources development activities, including capacity building and monitoring, annual work plans, training materials, accounting and reporting, and networking at home and abroad.
Community based health insurance schemes: Community-based health insurance (CBHI) schemes (also called mutual health insurance, mutual health organisations, community-based pre-payment, community health funds etc.) take many different forms. They can broadly be defined as “any scheme managed and operated by an organization, other than a government or private for-profit company, that provides risk pooling to cover all or part of the costs of health care services” (Bennett, 2004) and generally include an element of community participation in their management or some form of democratic accountability of the management to the members. Most frequently, these schemes provide cover for those outside the formal employment sector and often serve rural communities. They may be linked with a particular health service provider (e.g. the scheme may only provide cover for services provided at the local hospital) or may cover services provided at a range of health facilities among which members can choose. These schemes primarily developed as an alternative to user fees, i.e. instead of paying a fee at the time of using a health service, community members make small pre- payments to the scheme which then cover the fee charged for the health services used. The majority of the oldest and largest CBHI schemes are to be found in Central and West Africa; the widespread development of such schemes in East and Southern Africa is a relatively new development.
Private voluntary employment based insurance: This form of health insurance has been in existence for many decades (the first one being established in South Africa in 1889 (McLeod, 2005)) in a number of Southern African countries (particularly South Africa, Zimbabwe and Namibia) and is usually referred to as a ‘medical scheme’. Medical schemes began as non-profit organisations, as a way for private firms to provide for the health care needs of their employees. Contributions to the schemes were made by both employers and employees and were community rated. Initially, the vast majority of medical schemes were ‘closed schemes’ in that membership of each scheme was only open to employees of an individual company. This has changed over time (particularly in South Africa and to a lesser extent in Zimbabwe), with schemes becoming ‘open’, i.e. allowing anyone to join (except in some cases high risk individuals).
Fee exemptions: There are a range of official exemptions in for example Ghana, including specific services (those for major communicable diseases, immunisations, antenatal and post-natal care) as well as certain services for specified demographic and socio-economic groups (children under five years, pregnant women, the elderly/people above 70 years and ‘paupers’). Most importantly, the Ghanaian government has an explicit mechanism for funding exemptions in that facilities can submit a statement of fee revenue ‘lost’ through exemptions and request reimbursement. This is a major innovation as exemptions are ‘unfunded’ in most countries, leaving health care providers with weak incentives to exempt patients from fees. Despite having a relatively comprehensive policy, there is considerable evidence that the exemption policy is poorly implemented. For example, one study in the Volta region of Ghana found that 84% of patients who were eligible for exemptions did not receive them (Nyonator and Kutzin, 1999). Another study found that almost half of the clients interviewed who were eligible for exemptions had in fact paid for services (Garshong et al., 2002). Research has also highlighted that the poor very seldom receive exemptions while the demographic categories (under-fives, elderly and pregnant women) are more frequently exempted (Adams et al., 2002).
Rwanda experience: A strategy (ubudehe- collective work) is employed to select and manage destitute people in order to determine MHO contribution subsidizations and exemptions. This approach is based on traditional values aimed at rallying the people around a collective and shared effort, with a view to improving their social conditions. In the past, the population living in the same smallest village level unit used to organize themselves to work in farms and build houses for poor people. Building on this practice was recognized and encouraged by some of the country’s development partners. Under the new organization, the community identifies destitute people itself and determines the assistance they need. The participation of government and development partners involves sending aid to such organized population groups that have identified their own needs, within the overall context of poverty alleviation.
Alternative forms of health financing
Alternative Forms of Financing Health
Lyla Latif, Kenya
The Need for Alternative Forms of
A host of innovative schemes to cushion the poor against the
financial risks of getting sick, such as low-interest loans,
medical-savings accounts and insurance financed by a
community-funded risk pool, are being tested in several
Bulletin of the World Health Organisation, Volume 84:2006
Every year an estimated 25 million households — more than
100 million people — are plunged into poverty when they or
their relatives become ill and they must struggle to pay for
health-care services out of their own pockets.
World Health Organisation, 2014
Definitions of Health Financing
Mobilisation of health care financing
Allocation of funds to the regions and population groups and for
specific types of health care
Mechanisms for paying health care
Hsaio, W and Liu, Y, 2001
Sources of Health Financing
Health is financed through private expenditure, public expenditure and/or
Public expenditure includes all expenditure on health services by
central and local government funds spent by state owned and
parastatal enterprises as well as government and social insurance
where services are paid for by taxes, or compulsory health insurance
contributions either by employers or insured persons or both this
counts as public expenditure.
Voluntary payments by individuals or employers are private expenditure.
External sources refer to the external aid which comes through bilateral
aid programme or international non governmental organizations
How is Health Financed?
General revenue or earmarked taxes
Social insurance contributions
Private insurance premiums
Direct out of pocket payments
Alternative Forms of Financing
Sales taxes: Ghana funded its national health insurance
partly by increasing the value-added tax (VAT) by 2.5%.
"Sin" taxes, particularly on tobacco and alcohol: a 50%
increase in tobacco tax alone would yield an additional
US$1.42 billion just 22 low income countries for which
sufficient data exists.
A currency transaction levy would be feasible in many
Solidarity levies - Gabon raised $30 million for health in
2009 by imposing a 1.5% levy on companies handling
remittances and a 10% tax on mobile phone operators.
Also, levy on airline tickets.
Health Systems Financing and the Path to Universal Coverage
World Health Organisation
Alternative Forms of Financing
Resource prioritization. (Most resource rich countries in Africa allocate a large proportion of
their revenues to unsustainable and unproductive activities, such as fossil fuel subsidy.
This displaces resources needed to finance ‘useful’ development and also encourages
excessive consumption of fossil fuel; thereby elevating its negative consequences for the
Microcredit services to health insurance. (E.g., the Grameen Kalyan Health Program,
A share of VAT taxes and a voluntary contribution from businesses for health (proposed by
Private capital through Public Private Partnerships.
Promoting faith based organisations as health care financiers.
Types of Health Financing Systems
General tax revenue (budget allocation)
Mandatory health insurance (e.g., NHIF, Kenya)
Private voluntary employment based insurance
Community based health insurance (e.g., Central
& West Africa)
Out of pocket payments
Fee exemptions (e.g., Ghana)
Some Examples of Health
Financing in Africa
In 1995, the Uganda Ministry of Health introduced a regulation
for community based health financing, which empowers
communities to meet their health financing needs by pooling
resources. It is an alternative to a national insurance plan,
favouring local management of health financing and coverage
adjusted to community needs and resources.
Rwanda has extended its health insurance coverage through
Mutual health organisations
Gabon has implemented mandatory health insurance through
the National Health and Social Security Fund
Chad has exempted direct payment for emergency care
Burundi employs free health care and performance based
Uganda has abolished user fees
Zanzibar as at July 2013 was carrying out a study to provide a
solid foundation upon which policy-makers could make an
informed and evidence-based decision on the establishment of a
health insurance scheme in Zanzibar as an element of health
financing reform for UHC in Zanzibar.
There is now political support for the African Public Health
Emergency Fund (APHEF). In July 2012 African leaders endorsed
its establishment at the 19th Ordinary Session of the Assembly of
the Heads of State and Governments of the African Union in Addis
While it is difficult to increase tax revenue in African countries
due to the limited tax base and although it is often not feasible
or advisable to increase tax rates any further, it may be feasible
to improve tax compliance and the efficiency of the tax system
and then, to slowly introduce these alternative forms of