WHAT IS A HEALTH CARD WORTH? AN EVALUATION OF AN OUTPATIENT HEALTH INSURANCE PRODUCT IN RURAL INDIA

Low-income rural Indians have poor access to quality healthcare services in their vicinity, insufficient usage of preventive products, and a paucity of health financing schemes, leading to poor health outcomes and high out-of-pocket health expenditure. In 2009, a pilot project was implemented by CARE Foundation in which low-skilled resident Community Health Workers (CHW) were trained and deployed in 50 villages in Yavatmal in Maharashtra, India, to offer first-level primary and preventive care consultations. After screening the patients and gathering information, the CHWs used mobile phones to consult with a doctor in a nearby town, and either made referrals to the doctor, or prescribed another appropriate course of action as required by the case. The CHWs further sold an outpatient health insurance product and a range of preventive products. The insurance did not cover hospitalization. This paper presents the findings of a randomized controlled trial that evaluated the impact of the 1 We thank CARE Foundation for supporting the study, and ILO’s Microinsurance Innovation Facility for funding the intervention and the research. Thanks are due to Aslam Nadri for advising the intervention and this study and to Akhil Behl and Tilak Mukherjee for their roles in designing and managing the experiment. We are grateful to Jeanna Holtz, Michal Matul, Britta Augsburg, Sharon Barnhardt, Douglas Johnson, Wendy Janssens and participants at the University of Twente Microinsurance conference for their valuable comments. All residual errors are our own. 2 Mahal Monash University (ajay.mahal@monash.edu); Krishnaswamy – Contacting author, Center for Insurance and Risk Management (karuna.krishnaswamy@gmail.com); Babu CARE Foundation (girishbabu@carehospitals.com); Ruchismita Center for Insurance and Risk Management (rupalee.ruchismita@cirm.in). CIRM Design and Research Labs, designs innovative risk management solutions and builds an enabling environment for the state and the market to offer high quality formal risk management solutions for low income households, to further CIRM’s goals of Safety Nets for All. The company provides innovative design and consulting advice to insurers and intermediaries backed by its portfolio of primary research, sector policy advocacy and on-ground innovative experiments. www.cirm.in info@cirm.in initiative on the targeted population. We found that people with the health insurance card that permitted cashless visits to the CHWs had different outcomes compared to people who visited the CHWs without insurance (paying a modest Rs.12 ($0.24) per visit). Households assigned to the treatment group in our study had substantially higher number of visits to the CHWs, and more referrals to the doctor and to hospitals. We also found that the insurance only group spent fewer days on a hospital bed, and spent less out-of-pocket on hospitalization expenses. Our interpretation is that the insurance product incentivized frequent visits to the CHWs, leading to earlier identification of illnesses and more timely referrals to a hospital where the patient could get treated at an earlier stage, and hence at a lower cost. We conclude that while there is need for further research, insurers as well as government agencies deploying hospitalization insurance schemes could benefit if the inpatient cover was bundled with outpatient insurance, as it could reduce claims ratios, improve financial viability, and enhance future enrolment rates.