THE ECONOMIC VALUE OF THE WILLINGNESS TO PAY FOR A COMMUNITY-BASED PREPAYMENT SCHEME IN RURAL CAMEROON

In rural areas of Cameroon, many poor people do not have access to health care services. While many attribute the limited access to health care to an inability to pay out-of-pocket costs for health care services, a community-based health insurance scheme developed specifically to overcome this barrier and increase access to health care has received limited take-up among rural households in Cameroon. We use a willingness-to-pay approach based on the contingent valuation method. This study seeks to assess the economic value of this scheme using a willingness-to-pay approach based on the contingent valuation method. The results indicate that rural households on average are willing to pay FCFA 1010 or $2.15/person/month. With 58.1% willing to pay for the second bid higher, evidence suggests that there is great demand for a community-based health insurance scheme in rural Cameroon. The results of this study have important policy implications showing that the rural poor are willing to pay insurance premiums to protect themselves and their families from the economic shocks associated with social disasters such as chronic disease. 1 Hermann Pythagore Pierre Donfouet is at the Department of Public Economics, University of Yaounde II and Ephias M. Makaudze is at the Department of Economics, University of Western Cape. E-mail: donfouetz@yahoo.fr This work was carried out with financial and scientific support from the International Labor Organization (ILO) under the Microinsurance Innovation Facility. The authors would like to thank Pierre-Alexandre Mahieu, Amjath Babu, T.S, Joseph H. Cook and the EUDN’s resource persons for useful discussion as well as Armand Beleck Matoh for research assistance. Any errors or omissions remain our responsibility. INTRODUCTION Good health is necessary for well-being and essential in striving to achieve the Millennium Development Goals with the ultimate goal of eradicating poverty. As implied by the theory of endogenous growth, a healthy general population underlies higher productivity, an essential factor for economic growth. As a result, many governments in developing countries have increased efforts to improve the provision of health care in both urban and rural areas. Despite these efforts, many developing countries are still far from achieving universal coverage. The situation is worse in rural areas where the standard of living is very low (WHO, 2000) and access to quality health care services is limited due to the absence of formal financial protection in the form of insurance schemes. As affirmed by Khan (2001), a majority of rural households (more than 90%) in many developing countries not only face limited access to health care but also poor quality water and unsafe sanitation. It is not surprising that compared to their urban counterparts, rural households tend to suffer disproportionately from higher levels of ill health, mortality, malnutrition and inadequate health care (Gwathin et al.2005). In order to reach the poor in rural areas with quality health care services, many policymakers and international organizations have been advocating for alternative health care insurance schemes. Given the current state of health care services for the rural poor, NGOs, policymakers, and health practitioners have turned their attention to proposals for community-based health insurance schemes. Community-based health insurance can form an important source of health security, especially for the rural poor. Examining the demand for health care by rural households using a willingness-to-pay technique in the form of community-based health insurance can provide important clues to help 3 policymakers and microinsurance practitioners in improving access to quality health care. Historically, social protection and risk management in developing countries has been examined from the supply side. More recently, many authors have begun to focus their analyses on the demand side. For example, researchers have started to explore the potential of community-based health insurance as an effective instrument to improve access to health care and alleviate poverty in rural areas. In several countries, community-based prepayment schemes have proven to increase access to health care services, especially among children, pregnant women, rural households, and informal workers, a majority of whom are excluded from formal insurance (Shaw and Griffin, 19995; Dror et al.2006). Recently in Cameroon, the government initiated an awareness campaign to create and expand community-based prepayment schemes with the goal of helping at least 40% of the population to gain improved access to health care by 2015. Currently, very few studies have been conducted in rural areas with the objective of assessing the willingness-to-pay (WTP) for a community-based health care prepayment scheme among rural households. The overall objective of this study is to assess the willingness-to-pay (WTP) of rural households in Cameroon for a proposed community-based health care prepayment scheme. More specifically the study aims to: • Find the determinants that influence rural households’ WTP for a community-based health care scheme; in other words, what are the major determinants influencing households’ choice for the proposed health care scheme? • Understand the reasons behind households’ rejections of this proposed scheme. • Based on the research findings, draw some useful insights and recommendations for policymakers. The remainder of the paper is organized as follows: Section 2 discusses the literature of the willingness to pay for a community health care prepayment scheme. Sections 3, 4 and 5 examine the elicitation format, econometric estimation, survey design and sampling, respectively. Section 6 discusses the empirical results of the study, and Section 7 concludes with some policy implications.