metadata: authors: 0: author: Shepard, Donald S.
1: author: Vian, Taryn
2: author: Kleinau, Eckhard
count: Congo, Democratic Republic of
docna: 0: docna: Health insurance in Zaire
docty: Policy Research Working Paper
subtopic: Health Care Services Industry,Labor Markets,Health Economics & Finance,Health Service Management and Delivery,Health Insurance
teratopic: Health, Nutrition and Population
abstracts: cdata!: This study of health insurance systems
            in Zaire was carried out as part of a larger program of
            initiatives designed to improve the sustainability of health
            care systems and increase the health status of the Zairian
            population. This paper presents the objectives of the study
            and a discussion of the economic aspects of health
            insurance, background information about the health sector
            and health financing systems in Zaire and highlights of
            previous related work. The major motivations for this study
            were: (a) to provide information for the ongoing social
            sector adjustment dialogue in Zaire; and (b) to serve as a
            case study in the World Bank's Region Study of Health
            Finance. Specifically, the study sought to document
            different types of insurance systems in Zaire, and to
            conduct in-depth case studies of several schemes. The
            in-depth case studies presented in this report evaluate the
            design, management operational efficiency of four health
            insurance programs from both rural and urban areas. The case
            studies also attempt to analyze the effects of insurance on
            equity of access, utilization of health care services, and
            mobilization of financial resources for the health sector.
            From these analyses, the report draws conclusions about the
            advantages and disadvantages of health insurance programs as
            a means of financing health care services in Zaire, and
            suggests avenues for future research, policy, and
            programming initiatives.
geo_reg_key: 517196,517191
repnme: repnme: Health insurance in Zaire
display_title: Health insurance in Zaire
listing_relative_url: /research/1990/08/700186/health-insurance-zaire
topicv3: Health Financing m1326577 625,Rural Health m1327297 1317,Health Insurance m1327759 1287,Nurses and Midwives m1504316 3588,Health m1504661 3480
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Health, Nutrition and Population
origu: Policy, Research & Ect Affairs
no_of_pages: 86
model_extractions: **Poly, Research, and External Affairs**

# **Ppulation, Health, and Nutrition**

# WPS 48g

This paper -a product of the Population, Health, and<sup>Nutrition Division, Africa Technical Department</sup> - was written as part of the Africa Regional Study on<sup>Health Financing to aid the ongoing sector</sup> adjustmcnt dialoguc ir. Zaire. The study received outside<sup>financial support from SIDA, NORAD, and the</sup> U.S. Agency for Intemational Development. It was prcsented<sup>at a seminar in April 1990. Copies of this</sup> paper are availablc free from the World Bank, 1818 H Street<sup>NW, Washington DC 20433. Please contact</sup> Karol Brown, room J9-112. extension 35073.

After identifying 12 systems of health insurance in Zaire, Shcpard, Vian, and Kleinau prepared detailed case studies of four systems (two urban and two rural) and brief studies of four others. The case studies focused on the terms of the insurancc plans, their organization and management, resourcc mobilization, efficiency, equity, client perccptions, and the quality of services. Among the lessons Icamed:

* Simplc control methods, such as printed premium stamps, detailed descriptions of enrollces, and the enrollment of entire families helped reduce fraud and error.

* Appropriate investment strategies preserved the value of premium income. Investing in imported drugs was a hedge against crosion of the purchasing power of premia.

* Plans vary substantially in the services covcred. Consumers found coveragc of ambulatory care attractivc despite substantial premia or required copayments. Only half the plans covcred inpatient care.

* The most successful schemes had modest premia.

* Acceptablc quality of service is a precondition for successful implementation of an insurancc scheme.

* The implementation of voluntary schemes requircs publicity within the community at the outset.

* The risk that insurance plans would be ovcrcharged was limited by the decentralization and direct management.

* Financial analysis of the insurance system requires better accounts. Fcw insurance plans had good financial reports of the health delivery plan, much Icss of the insurance plan.

* A financial guarantor (for example, a development organization guarantceing the first year's services) boosts the public's confidence in the insurance system.

* Evidence of adverse selection and moral hazard was found in most plans. Their impact can be moderated by requiring that the entire family joins or by cnrolling cmployce groups.

* Informal associations exist that finance members' hcalth care through intcrest-free loans to pay for births, hospitalizations, and other emergencies.

The PRE Working Paper Serics disseminates the findings<sup>of work under way in thc Bank's Policy, Research, and Extemal</sup> AffairsComplex. Anobjective of the scries is to get thcse<sup>findings out quickly, even ifprcsentations arc less than fully polished.</sup> The findings, intcrprctations, and conclusions in thcsc<sup>papers do not necessarily reprcsent official Bank policy.</sup> Produced by t-hc PRE Dissemination Center
# Table of Contents

# ACKNOWLEDGMENTS

# ACRONYMS

|I. INTROD<br>|UCTION ...............<br>I<br>|
|---|---|
|A.|OBJECTIVES<br>..<br>I|
|B.|HEALTH INSURANCE<br>.<br>I|
|C.<br>|HEALTH SECTOR ORGANIZATION<br>AND FINANCING IN ZAIRE .:<br>3<br> <br>|
|D.|PREVIOUS RELATED WORK<br>.<br>.<br>4<br> <br>|
||1.<br>Health Financing Research: User Fees vs. Insurance .4<br> <br> <br>|
||2.<br>GOZ Commission on the Organization of Insurance Systems<br>5<br> <br>|
|E.|SUMMARY OF RESEARCH METHODS<br>.<br>.<br>7|
|II.<br>CAS|E STUDIES: DESCRIPTIONS AND IMPACTS.<br>8|
|A.|CASE STUDY OF BWAMANDA .12<br> <br> <br>|
||1.<br>Terms of the insurance Plan<br>..<br>12<br>|
||2.<br>Organization and Management<br>..<br>17<br> <br> <br>|
||<br>3.<br>Resource Mobilization<br>..<br>20|
||4.<br>Utilizat-an and Access to Services<br>..<br>24<br>|
|B.|CASE STUDY OF BOKORO<br>..<br>28<br> <br> <br>|
||I.<br>Terms of the Jnsurance Plan<br>..<br>28<br> <br> <br>|
||2.<br>Organization and Man&gement<br>.<br>.30<br>|
||3.<br>Resource Mobilization<br>..<br>31<br>|
||4.<br>Utilization and Access<br>..<br>34|
|C.|CASE STUDY OF ST. ALPHONSE<br>.<br>.37|
||1.<br>Terms of the Insurance Plan .36|
||2.<br>Organization and Management<br>.<br>.38|
||<br>3.<br>Resource Mobilization: Financial Situation of Plan and Center . .<br>38<br> <br> <br>|
||4.<br>Utilization<br>..<br>40<br> <br>|
|D.|CASE STUDY OF CASOP ........................<br>...............<br>44<br> <br> <br>|
||1.<br>Terms of the Insurance Plan ............<br>44<br> <br> <br>|
||2<br>Oranization and Manaement<br>46|
||.<br>g g ....<br>..<br>......<br><br>|
||3.<br>Resource Mobilization: Financial Situation of Plan and Clinic<br>...<br>47<br>|
||4.<br>Utilization<br>............<br>47|
|E.|OTHER INSURANCE PLANS<br>.....<br>48|
||1.<br>Reseau Medecins d<br>e<br>Familles<br>i(REMEF)<br>48<br> <br>|
||1.1<br>Terms of the Insurance Plan.48<br> <br>|
||1.2<br>Resource Mobilization .49<br> <br>|
||1.3<br>Utilization .49|
||2.<br>Masisi Health Zone Insurance Plan .51|
||2.1<br>Terms of the Insurance Plan .50|
||2.2<br>Utilization and Success of the Plan .50|
||3.<br>Mutuelle Union et Prevoyance' (UP)<br>.<br>.51|
||<br>4.<br>SNHR Employees in Rutshuru<br>.<br>.51|
|F.|<br> <br>INFORMAL ASSOCIATIONS .52<br> <br>|
||1.<br>Size and Membership .52<br>|
||<br>2.<br>Contributions .52<br> <br>|
||3.<br>Reasons for Saving .53|
||4.<br>Emergency Loan Funds .53|
||<br>_5._<br>Use of Money Lenders for Medical Emergencies .53|
||<br>6.<br>Roles of Informal Associations .54|

i
|111.<br>CONCLUSIO|NS AND RECOMMENDATIONS<br>.............................|55|
|---|---|---|
|A.<br>TERM|S OF THE INSURANCE PLAN ...........<br>..<br>.................|55|
|1.<br>|The Insurance Schemes Cover Selective Types of Services<br>.......<br>|55<br>|
|2.<br> <br>|The Most Successful Plans Have Modest Premiums<br>....<br>.........<br> <br>|55<br>|
|B.<br>ORG<br>|NIZATION<br>AND MANAGEMENT ......<br>....<br> <br> <br> <br> <br>|56|
|1.|An Acceptable<br>Quality<br>of Services<br>Is a Precondition<br>for<br>||
|2.|Insurance .56<br>Voluntary<br>Schemes Have Found It Important<br>to Sensitize the<br>||
|3.|Population .57<br>Committed, Decentralized Management Provides Flexibility and<br> <br>||
|4.<br>|Accountability<br>.57<br>Simple Control Methods Can Reduce Risks of Error or Fraud<br> <br> <br>|57|
|5.|Appropriate<br>Investment<br>Strategies Can Preserve the Value of<br>||
|6.|Premium Income over the Year .58<br>Financial<br>Analysis of the Insurance<br>System Requires<br>Better<br>||
||Accounts .58<br>||
|7.|A Financial Guarantor Can Help Build Confidence in Launching<br>||
||an Insurance System .......................................|59|
|C<br>RESO|URCE MOBILIZATION|59|
|.<br>|<br>.................||
|1.|Access and Resource Mobilization Motivated Health Insurance||
||Sh|5|
||cemes .<br>.................................................|9|
|D.<br>UTILI<br>|ZA.ION<br>AND ACCESS ................<br>....................<br>|59|
|1.|Evidence of Adverse Selection and Moral Hazard wag Found, But<br>||
|2.|Plans Minimized Their Impact ..............................<br>Systems of Utilization and Cost Control Can Help Make Insurance<br>|59<br>|
||Affordable<br>..............<br>................................|60|
|E.<br>INFO|RMAL ASSOCIATIONS ................|60|
|1.|Informal<br>Associations<br>Financed<br>Health<br>Care Only Through<br>d|6|
|<br>|Emergency Loan Funs ....................................<br> <br>|0<br>|
|F.<br>STRE<br>|GTHENING<br>EXISTING INSURANCE SYSTEMS .....<br>.........<br>|61<br>|
|1.<br>|Training<br>.<br>...............................................<br>|61<br>|
|2.<br>|Exchange Visits...........<br>........................<br>|.......<br>61<br>|
|3.<br>|Information Systems.......................................<br>|61<br>|
|4.<br> <br>|Technical Assistance<br>......................................<br>|61<br>|
|G.<br>ESTA|BLISHMENT OF ADDITIONAL INSURANCE SYSTEMS ........|62|
|1.|Rural Health Insurance Systems .............................|62|
|2.|Urban Health Insurance Systems ............................|62|
|REFERENCES .63|||
|ANNEXES .65<br>|||
|ANNEX I|Description of the Zaire Health Zone Structure And Management<br>||
|ANNEX II|Organization .66<br>List of Prices 1988 and 1989 Bwamanda Reference Hospital and<br>||
||Health Centers .71||
|ANNEX III|Exchange and Inflation Rates .74||
|ANNEX IV|<br>Documentation<br>for Bwamanda Health Insurance Plan .75||

ii
# ACKNOWLEDGMENTS

The study team is indebted to the following officials for advice and support: Martha Ainsworth (for supportive management and invaluable comments), A. Edward Elmendorf (AFTPN), Jacques Baudouy (AF3PH), Eliane Karp (AFISD), and Jerome Chevallier (Kinshasa) from the World Bank; Professeur Kabuya, Directeur, Programme d'Ajustement Secteurs Sociaux (?ASS); Mark De Feyter and Paul Cartier of the Medical Section, Belgian Cooperation in Zaire; Mimi Gerniers of Sante Pour Tous Kinshasa; Dr. Duale, (Director), Dr. Frank Baer (Manager), Dr. Nkuni Zinga (Planner), Mme Mbala (Data entry specialist), Kanica Rwdadi Yandu (translator), Steven Brewster (Administrator) of SANRU; and Pere Andre Dhont (Advisor) of the Center for Integrated Development, Kinshasa.

The team thanks the following persons for collaboration in designing and collecting data in this study: Dr. Ebenga Lombilo (Charge de mission), Dr. Kokenambeli (Physician), Citoyen Vangi (Accountant), Citoyen Munsie Ivul Ankong (Economist), Citoyenne Kagabo Kayijuka (Sociologist), Citoyenne Lofo Lituka (Demographer), and Citoyenne Walo Onyumbe Lem (Sociologist), Citoyen Mossoko G'be Mogh-Bokolo (Mathematician) of the Mission d'organisation des mutualites; Dr. Freddy Moens (Director of CDI Medical Section), Dr. Angbalo (Chief Physian, Bwamanda Rural Health Zone), Dr. Sema (Medical Director of Bwamanda Hospital), and Citoyen Mombimbo (Administrator-Manager) from Bwamanda Hospital; Citoyen Dungu Tati (Commission de developpement) and Citoyenne Nsona Sala (Nurse and Acting Director) from St. Alphonse; Citoyen Ilunga Betu Kambala (Secretaire National/FNMOS), Dr. Bosasi (Medecin Directeur), Citoyen Mpaka, AdministrateurGestionnaire from Polyclinique CASOP; Dr. Lokonga Nzeyabe (Medecin Chef de la ZSR), Dr. Kitenge Lubangi, Dr. Idrissa Yaoma (Prefect de l'Institut Technique Medicale de Bokoro), Sr. Vandesande Lieve (Gestionnaire SAFEMK Socures de l'Enfence du Jesus), Cit. Monshe Mbula (Infirmiere Chef de la zone de sante), Cit. Boyulu Vijon (PAC, charge d'annimation), Cit. Mwalenya Bongha (Comptable de SAFEM et de l'hopital), Cit. Moke Bokwande (Comptable du BCZS), Cit. Mputu Ebily (Titulaire du Centre de Sante de Bokoro), Cit. Mputu Nshole (Titulaire du Centre de Sante de Kempa), Dr. Lillquist Agneta (Coordinateur du programme de control de la Lepre de l'eglise baptiste), Cit. Mbengo (President du SECREB), Cit. Nziminse (Vice-President du REB), Cit. Monshe Ngojo (Secretaire du SECREB), Dr. Lahaye Jean Pierre (Medecin Chef de la Cooperation Belge a Kindu) in Bokoro.

For assistance in data analysis, the team thanks Pradeep Goel, Francisco Ramos-Gomez and Allison Brucker of the Harvard Institute for International Development.

This study was conducted as part of the Africa Regional Studies Program on Health Financing in Sub-Saharan Africa, managed by the Africa Technical Department, Population, Health and Nutrition Division, with financial support from NORAD and SIDA. In addition, this study on Zaire received support from the Social Dimensions of Adjustment Unit, and from the U.S. Agency for International Development.
# **ACRONYMS**

|BCZS|Bureau Central de la Zone de Sante|
|---|---|
|BF|Belgian Francs|
|CASOP|Caisse de Solidarite Ourviere et Paysanne|
|CISL<br>|Confederation<br>Internationale<br>des Syndicats Libres<br>|
|CDI|Center for Integrated Development<br> <br>|
|CMT|Confederation<br>Mondiale du Travail<br>|
|COOPEC|Savings and Credit Cooperatives|
|FONAMES|Fonds National Medico Sanitaire<br>|
|GOZ|Government of Zaire|
|HMO|Health Maintenance Organization|
|MCZ|Medecin Chef de Zone|
|MUZAS|Mutualite Zairoise de la Sante<br> <br>|
|NGO|Non-Governmental<br>Organization|
|PAC|Programme des Actions Complementaires<br> <br>|
|PASS|Programme d'Adjustement<br>des Secteurs Sociaux|
|PRICOR|Primary Health Care Operations Research Project<br>|
|PVO|Private Voluntary Organization|
|REACH|Resources for Child Health Project|
|REMEF|Reseau Medecins de Familles|
|SAFEM<br>|Service d'Approvisionnement<br>en Fournitures, Equipements et Mcdicaments<br>|
|SANRU|Projet de Sante Rurale<br>|
|SECREB|Societe Cooperative d'Epargne et de Credit de Bokoro|
|SNHR|Service National d'Hydrolique<br>Rural|
|SPTK|Sante Pour Tous Kinshasa|
|STD|Sexually transmitted disease|
|UNTZ|Zairian National Workers Union|
|UPM<br>|Union et Prevoyance Mutuelle<br> <br>|
|USAID|United States Agency for International<br>Development|
# **L** INTRODUCTION

This study of health insurance systems in Zaire was carried out as part of a larger program of initiatives (described elsewhere) designed to improve the sustainability of health care systems and increase the health status of the Zairian population (1). The objectives of tn' study are presented below, followed by a discussion of the economic aspects of healt, insurance, background information about the heaith sector and health financing systems in Zaire, and highlights of previous related work. The introduction ends with a summary of methods used by the research team to collect and analyze data.

# **A.** OBJECTrIVES

The major motivations for this study were:

- 1) to provide information for the ongoing social sector adjustment dialogue in Zaire; and

- 2) to serve as a case study in the World Bank's Region Str-dy of Health Finance, which is concerned with options for mobilizing additional resources for the health sector.

Specifically, the study sought to document different types of insurance systems in Zaire, and to conduct in-depth case studies of several schemes.

The in-depth case studies presented in this report evaluate the design, management and operational efficiency of four health insurance programs from both rural and urban areas. The case studies also attempt to analyze the effects of insurance on equity of access, utilization of health care services, and mobilization of financial resources for the health sector. From these analyses, the report draws conclusions about the advantages and disadvantages of health insurance programs as a means of financing health care 3ervices in Zaire, and suggests avenues for future research, policy, and programming initiatives.

# B. **HEALTH** INSURANCE

Health policy makers often propose health insurance as a possible health financing mechanism for developing countries. In theory, insurance can mobilize additional resources for health without a drain on the public sector and without substantially restricting access; it can also pose potential problems, however, such as over consumption of services ("moral hazard") and increases in medical prices and unit costs. This section reviews economic aspects of insurance to provide a theoretical framework for the evaluation of health insurance systems in Zaire.

Health insurance is defined as 'the means by which risks, or uncertain events, are shared between many people." (2) The insurer (or his agent) collects premiums which are used to compensate the insured individuals against financial losses resulting from an insured event. Insurance relies on the fact that people are willing to pay a premium to be compensated for financial losses from an event which might not happen. Insurance also relies on the fact that events that are risky or unpredictable for a given individual, can be highly predictable for large numbers of people. For insurance to be feasible, therefore, risks must be 'pooled' or spread widely among large numbers of people, and the risk events must be independent of each other. (2) Insurance systems are different from prepayment systems because insurance systems provide coverage for uncertain future events, while prepayment systems provide coverage for certain future events. In other words, insurance systems are based on probabilities, which prepayment systems are not. In prepayment systems individuals pay a set amount in advance which entitles each covered individual to consume a specified quantity of services in the l
future. The price of the individuai prepayment is set by multiplying the average cost of the covered services times the quantity of services covered, plus a fair share of administrative costs and desired profit. (If prepayment covers several services with different costs, the fee would be calculated by multiplying average cost times quantity for each service, and summing across services.) Individuals may favor prepayment in situations where future events are highly predictable, but future cash flow is low or unpredictable. Demand for prepayment systems does not depend on risk aversion, and has little to do with the individual's assessment of the probability or likeliness of illness (it assumes a probability of 1.0).

Insurance systems, on the other hand, require individuals to pay a set amount in advance (the premium) which entitles them to consume services in the future only if those services are needed (i.e. if illness occu-s). Thus an element of uncertainty is involved in insurance. The level of the premium is set by multiplying the probability that an individual will need the covered services (i.e. the probability of illness) times the average cost of the covered services, plus a fair share of administrative costs and desired profit. Premium calculations based on the statistical frequency of disease in the population are called 'actuarially-based" premiums.

Demand for health insurance is influenced by the price of the insurance (premium), and individual's assessment of the probability of financial expenditures resulting from illness, the magnitude of those expenditures, the individual's income, and the degree to which he or she is risk adverse. These factors are especially difficult to study in developing countries, where little research has been conducted on issues such as individuals' perceptions of probabilities of loss and willingness to pay to avoid risk. Demand issues are critical in LDCs, however, since many people may lack the means and/or will e: purchase the amount of insurance coverage deemed secially desirable. (2) A further distinction between insurance systems and prepayment schemes is that insurance systems are redist.ibutive. In insurance systems, everyorte may pay the same premium, but only sick individuals will draw the benefits, whereas in prepay nt schemes each participant draws out benefits equally to what he or she paid in initially.

Insurance systems can be organized as either 'direct' or 'indirect." In direct insurance systems, the institution responsible for financing the health care services (the insurer) is also the provider, and is responsible for making decisions about how those services are produced, and the amount of services used to treat patient. Direct insurance systems are often more efficient, since there are built-in incentives to keep down the cost of providing services. In indirect systems (also called 'third party payor' systems) the insurer is a separate entity from the health care provider. Since the provider does not have to pay for the services, there is less incentive to manage costs efficiently.

Two potcntial problems which can threaten the financial viability of an insurance system are "moral hazard' and madverse selection." these concepts are summarized briefly below [a more detailed discussion may be found in Mills (2)1.

'Moral hazard' is defined as 'the tendency of individuals, once insured, to behave in such a way as to increase the likelihood or size of the risk against which they have insured." Moral hazard refers to the danger that insured individuals, having paid a premium in advence, will demand more services than they would have had they not been covered by insurance. The problem occurs because individuals no longer face a direct payment at the time they consume the services, although there is still a cost to produce those services. This is considered inefficient because the marginal cost of the services consumed is more than the marginal value of those services to the consumer.

Moral hazard thus results in an 'over' consumption of health resources. Insurance systems 2
must develop safeguards to reduce moral hazard. Frequently used methods include coinsurance (required contributions from the insured individual for his or her coverage) and deductibles (an initial amount per illness episode which must be paid by the insured iuidividual before the insurance covers the remainder of expenses). While co-insurance and deductibles reduce the danger of moral hazard, they may also discourage insured individuals from seeking care in a timely manner, which can result in larger health care costs later on. (2) A second potential problem facing insurance systems is adver.e selection. Adverse selection occurs when individuals at greater risk of illness are enrolled in an insurance program in lqrger proportions than they are found in the general population. Individuals at greater risk or illness are more likely to desire insurance, since losses from illnesses are more certain events for them. However, if premiums are calculated based on the statistical probability of illness in the general population, an over-enrollment of individuals who are at greater risk of illness will cause costs to be greater than revenue, thus threatening the financial viability of the system.

The case studies in this report analyze how successful insurance has been in spreading risks of financial losses associated with catastrophic illness, and in increasing the financial resources available to pay for health care services. The studies also discuss the factors influencing demand for insurance and analyze evidence of moral hazard and adverse selection.

# C. HEALTH SECTOR ORGANIZATION AND FINANCING IN ZAIRE

Although Zaire was left with an extensive health care infrastructure at the time of independence, the health care system deteriorated progressively until in 1977, less than 10% of the population had access to primary health care services. (3) Starting in the 1970's, however, pilot projects were begun which promoted primary health care services such as basic curative care, vaccinations and prenatal care through the establishment of networks of health centers, each network centered around a reference hospital. Often, these hospitals and health centers were managed by a church.

In 1975, these projects became the model for a national proposal to create a decentralized system of *health zones." Each would be organized around a reference hospital and contain 10 to 20 satellite health centers, providing integrated primary and secondary-level health care services to populations of approximately 100,000 residents. The proposal became part of Zaire's Five Year Health Plan in 1982, and has been implemented with the support of the Government of Zaire (GOZ), the churches, and many international donors. As of 1989, over 100 of the 306 proposed health zones have been established and are functioning well. In 1987, over 46% of Sh: population had access to primary health care services (3). Appendix I provides a morr, detailed explanation of the organization and management structure of the health zones.

Zaire has a range of health care financing systems. The most commoa form of health care financing is user fees, which are administered in a number of ways. A 1986 study of ten health zones revealed that nine zones charged fees per episode of illi ess to financing ambulatory curative care. (4) With this payment system, follow-up consultations were provided at no additional charge. In three of these nine zones, drugs and laboratory test were also included in the episode price.

In most health zones, the price of inpatient care is calculated according to the number and types of services and procedures provided (drugs, exams, bec. days, etc.). The per-case pricing methodology in practice at Bwamanda Hospital (described in the first case study in Section II) is encountered less frequently.

3
Two health zones in the Kivu Region, Kasongo and Kindu, have employed a s stem of pricing per episode for both ambulatory and inpatient care. It permits the patient to receive all services required, for one set fee. The hospital charges a referral fee to the health center for each hospitalized case referred. While this aystem achieves an important social objective of assuring continuity of care and access for people who might not otherwise be able to afford inpatient care, it has not proved financially viable. The nospital referral fee reportedly is inadequate to cover its operating costs, but the set fee c'nnot be raised without excluding ambulatory patients with minor illnesses. Both zones rely on substantial external subsidies from international donors to pay operating costs.

According to the manager of the USAID-financed Basic Rural Health Project (SANRU), several zones have also initiated prepayment systems using health cards. Area residents are allowed to purchase the health card at a set price which entitles the bearer to a fixed number of curative care visits. The price is discounted slightly from the full price which walk-in patients must pay. The advantage of this system is not necessarily the cost saving (since inflation may offset any benefits from price discounts), but rather that it provides farmers with a way of paying for health care when cash is available.

In the formal sector, Zairian laws require that employers pay for health care services for their employees and employee's dependents. Firm employees and their dependents represent about 18% to 27% of the country's 31 million population, according to two recent studies (1,S). Some large enterprises own and run their own health facilities, where they provide services to employees and dependents at no charge. Other firms contract with health zones or other private providers to treat employees.

Finally, there are several health insurance programs functioning in Zaire, most managed by non-profit or private organizations. These programs are the subject of this report.

## D. PREVIOUS RELATED WORK

# I. Health Financing Research: User Fees **vs.** Insurance

Considerable research and policy analysis on health financing has been conducted in Zaire, including studies sponsored by the GOZ, the World Bank, USAID/Kinshasa, AID's PRICOR and REACH Projects, and other donors (1, 3-16).

The Health Zones Financing Study, sponsorvd. by the SANRU Project and REACH Project in 1986, examined the financial performance *.! ten well-functioning health zones, one in each region of the country. The study revealed that approximately 80 percent of health zone operating expenses were being covered by user fees. The remaining expenses were financed through government and private subsidies, in equal proportions (4). Almost no ambulatory care is provided free of charge to the general public in Zaire. These surprising results provided evidence that Zairians were willing and able to pay for health care services, and indicated the importance of the decentralized community-managed health zone organizational structure.

Other studies have examined the different incentives of fee-per-visit versus fee-per-episode payment systems (11), the effects of inflation on health zone pricing policies (7), determinants of consumer demand for health care services (8,16) and deficiencies in health zones' financial management information systems (15).

This research has clearly demonstrated that user fee systems have increased the financial resources available to the public health sector, resulting in an increase of utilization of health care services by the population.

Several troubling issues remain, however. Health financing experts have questioned the 4
equity and financial viability o, health systems which rely so heavily on user fees, especially with regard to expensive inpatient care (17-20).

Bad debt is a documented problem in inpatient care facilities, and is the primary reason why hospitals have the lowest rate of cost recovery of all health iacilities in Zaire (4). For tnese reasons, a recent study concluded that user fees may not be the optimal financing mechanism for inpatient care (5).

In theory, insurance programs may avoid these problems, since the premiums are based on the statistical probability of illness, and are therefore set at a fraction of the avcrage cost of a hospitalization. The population may be more willing and is certainly more ab!e to pay the price of an insurance premium than to pay the full cost of inpatient care. Thus, compared with the current user fee system, a hospital insurance program has the potential to mobilize grcater and more steady financial resourt'. while providing protection to individuals against the enormous burden of catastrophic illness.

As early as 1986, rcscarchers in Zaire identified insurance systems and pre-paid plans as an additional health financing mechanism which could help protect individuals against the cots of catastrophic illness, and at the same time provide a steady source of increased revenue for the health sector (4). Most recently, a paper commissioned by the World Bank in the course of social sector adjustment work reiterated the potential advantages of health insurance systems in Zaire, especially in comparison with the current, almost universal systems of user fees for inpatient services (5).

The study noted that Zairians can expect to have high inpatient expenditures if they fall ill and require hospitalization, given the user fees now in place. Perceiving that they will be faced with such high expenditures when hospitalized, sick individuals can take three actions: 1) avoid sceking care at all; 2) obtain care and spend a large portion of annual disposable income or sell household assets to pay for it; or 3) obtain care and not pay for it, thus increasing the hospital's burden of bad debt. Whatever option is selected, the outcome is negative. In the first two cases, the individual's welfare is harmed by not seeking necessary care, or by being forced to spend a large portion of very limited household resources on one episode or treatment. In the last case, the financial sustainability of the health care provider is undermined by the extra burden of frec care provided to inpatients.

Given the success of Zaire's user fee system in mobilizing resources to finance ambulatory care, the case for insurance programs for ambulatory care is less strong. Insurance may be desirable, however, as a way to stimulate demand for services, if under-utilization is a perceived problem.

# 2. GOZ Commission on the Organization of Insurance Systems

At the same time, the Government of Zaire has sh, ' i great concern for insurance programs. In 1989, the Conseil Executif commissioned an insurance systems study (Mission d'Organisation des Mutualites) which included four parts:

- I) An inventory of existing *mutual associations" (a term that includes many different types of formal and informal clubs and cooperatives);

- 2) A public opinion survey;

- 3) Plans for proposed changes in laws regarding the organization of insurance in Zaire;

- 4) Options for pilot testing and alternatives for organization, financing, training and promotion of insurance programs (13).

_5_
Results of the inventory and cpinion survey are summarized briefly below. Some of the othei proposals suggested by the Commission are mentioned later in this report.: In 1989, the Commission attempted to conduct an inventory of all mutual associations in Zaire. Difficulties in communication linmited the focus to about 1,000 associations in t1-e Kinshasa area, however. A total of 562 associations (mostly informal) completed the survey form. Some associations were contacted directly; others were identified through government administrative channels and by announcements on public radio.

The survey defined a mutual association very loosely. All types of formal and informal groups were targeted, including cultural groups, agricultural and handicraft cooperatives, health zones, and savings organizations.

The inventory found that most informal associations were small (less than 50 members) and require a monthly contribution of between 100 to 500 Z in order to finance certain benefits. About 30% of the associations surveyed provided financial assistance in case of illness. Finan..al assistance was also provided for events such as a death in the family, marriage, birth, or other fintancial problems. The GOZ findings about informal associations were similar to the findings of the World Bank team research, discussed in Section I.

The inventory a!so described ten, more formal assoc.ations (numbers I through 10) which offer or a-e planning to offer some form of health insurance. In the course of the present study, two additional systems were identified (number 11 and 12). All 12 systems are described in Section II.

1. Bwamanda Health Zone, Equateur Region 2. Bokoro Hlealth Zone, Bandundu Region

3. St. Alphonse Health Center, Kinshasa 4. Caisse de Solidarite Ouvriere et Paysanne (CASOP), Kinshasa 5. Reseau Medecins de Familles (REMEF), Kinshasa 6. Masisi Health Zone, Kivu Region 7. Mutuelle 'Union et Prtvoyance' (UPM), Kinshasa 8. Mutualite de Solidarite Chretienne, Kinshasa 9. MUZAS, Kinshasa 10. LETISSA, Kinshasa

- I. Sona Bata Health Zone

12. SNHR Employee Cooperative in Rutshuru.

The public opinion survey, also in 1989, interviewed 850 individuals in Kinshasa from different socio-economic levels and professional groups to learn about the Prevalence of membership in mutual associations and perceived advantages and disadvantages to membership.

Sixty-three percent of respondents were members of some sort of mutual association (not necessarily related to health). About half of current members responded that they were satisfied with how the association operated. For those who were dissatisfied, the key reasons were financial: either a lack of sufficient financial resources, or irregularity of contributions by members. The survey also detailed reasons why people join mutual associations, and what role members saw for the State. On the latter question, most respondents saw the State's role as one of 'encadremento rather than supervision or management.

I This report does not attenpt to analyze the legal changes proposed in the Commission report. While legal issues will become very important as the insurance industry develops, they were not considered of primary interest for the initial evaluation of existing systems.

6
# **E. SUMMARY OF R_EARCH METHODS**

Duririg the three-week study, the team collaborated<sup>closely with the members of the GOZ</sup> Commission. The team conductece interviews<sup>with officials from various government and</sup> non-governmental agencies, including<sup>the World Bank office and the Programme</sup> d'adjustement des Secteurs Sociaux (PASS)<sup>project in Kinshasa, USAID and the USAID-</sup> sponsored Sante Rural (SANRU) Basic Rural<sup>Health Project, Zaire's Expanded Immunization</sup> Program (EPI), the Cooperation Medicale<sup>Belge au Zaire, Projet Sante Pour Tous, Kinshasa</sup> (SPTK), and the Center for Integrated Development.

The team reviewed data already collected<sup>by the GOZ Commission, in particular the opinion</sup> survey and sur-cy of existing mutual associations. Through this review, four health insurance plans were selected for in-depth<sup>study:</sup> two offered by rural health zones (Bwamanda arnd Bokoro) and two which cover<sup>ambulatory care services in Kinshasa (CASOP,</sup> offered by the Syndicat National UNTZA,<sup>and St. Alphonse, a community-initiated plan</sup> assisted by SPTK and the Catholic Church).<sup>More information about how the case studies</sup> were selected is presented in Section 11.

Members of the team visited Bwamanda and<sup>Bokoro, interviewing medical staff there to</sup> obtain detailed information about organization<sup>and management of the insurance plans,</sup> premiums and enrollment rates, etc. 71 hospital<sup>patients in Bwamanda and Bokoro, and 26</sup> residents in Bokoro Zone were surveyed to<sup>obtain information about satisfaction with the</sup> program, and to compare characteristics<sup>of members and non-members. Financial and</sup> utilization records were reviewed in both zones,<sup>to evaluate evidence of moral hazard and/or</sup> adverse selection, and to measure the effects<sup>of health insurance on the financial condition</sup> of health facilities and the health status of<sup>the population.</sup> In Kinshasa, team members collected descriptive<sup>information and reviewed financial and</sup> utilization data from the facilities in which<sup>these plans were based (St. Alphonse and CASOP).</sup> A 205-patient survey was also conducted. Finally, team members visited several other insurance systems in the Kinshasa area.

To supplement information about formal hcalth<sup>insurance plans, information was gathered</sup> from 22 informal savings associations (uuikelemba'<sup>and wmoziki'), which sometimes come to the</sup> aid of members with catastrophic illness.

7
# IL **CASE STUDIES DESCRIPTIONS AND IMACTS**

This section provides information about eight insurance programs, seven of which were selected from the ten mutual associations identified by the GOZ Commission as offering health insurance programs. The eight insurance programs (and their original number) are:

- l. Bwamanda Health Zone

2. Bokoro Health Zone 3. St. Alphonse Health Center 4. Caisse de Solidarite Ouvriere et Paysanne (CASOP) _5._ Reseau Medecins de Familles (REMEEF) 6. Masisi Health Zone 7. Mutuelle "Union et Prevoyance" (UPM) 12. SNHR Employee Cooperative in Rutshuru The other four known insurance programs (numbers 8 through ll) were not reviewed here either because plan officials were not available for interviews no. 8 (Mutualite de Solidarite Chretienne, and no. 10 LETISSA) or because the systems are not functional (no. 9 MUZAS, and no. II Sona Bata)." From those programs reviewed, the team selected associations I through 4 for in-depth case analysis. These schemes were chosen for several reasons. First, the team wanted to study insurance systems which had been operating for at least a year, and for which information about utilization and financial performance was available. Program no. 12, a small cooperative, may have been less than a year old. The team wanted enrollment of at least 1000 members so that utilization rates would be stable. This criterion eliminated programs nos. S (REMEF), 7 (UMP), and again 12 (SNHR cooperative). In addition, the team wanted to analyze insurance systems in both rural and urban settings, covering different types of care (e.g. ambulatory, hospital). Finally, travel and communications were clearly a constraint, given the short duration of the study. The health insurance plan in the rural zone of Masisi was not selected for this reason. Tables I1.1 through 11.3 summarize pertinent characteristics of the four plans. Each of the case studies then provides detailed description of (l) the terms of the insurance, (2) organization and management, (3) effect on resource mobilization, and (4) effects on utilization and access. A brief sketch of the remaining four plans (nos. S tnrough 7 and 12) follows.

The section also includes information about informal savings associations, some of which offer financial assistance to members in times of need.

2 MUZAS is a proposed centralized national health insurance plan, described in the GOZ Commission report.

8
Table 11.1 Description of Models in Case Studies, Part 1

|NAME OF PLAN<br>.........<br>.. .. . .... .|BWANANDA<br>INSURANCE PLAN<br> ......................<br>...... I-|ST. ALPHONSE<br>INSUJRANCE<br>PLAN<br>-- - - - - - - - - - - - -|8OKORO HEALTH ZONE<br>"ABONNEMENT"<br>-- - - - - - - - - - - - -|CASOP/UNTZA<br>- - - - - - - - - - - -|
|---|---|---|---|---|
|REGION|Equateur|Kinshase|Bandundu|Kinshasa|
|RURAL/URBAN|Rural|Urban|Rural|Urban|
|TYPE OF MANAGEME|NT Health Zone<br>Assisted by the Center<br>for Integrated Development<br>(CDI),aproject started<br>by Belgian<br>votunteers|Onehealth<br>center<br>uithin ahealth<br>zone: assisted by<br>SPTK and Catholic<br>parish|Health Zone<br>Assisted<br>by medical staff<br>of the Belium Cooperation|UNTZA<br>(Zairian<br>National<br>Workers Union)|
|DATE STARTED|April,<br>1986|February,<br>1987|1985|1968|
|ELIGIBLE<br>POPULATION|1986: 118,612<br>1987: 125,480<br>1988: 130,000<br>1989: 134,680|1989: 10,000 residents<br>of<br>catchments area of St<br>Alphonse Health Center|1986: 112,911<br>1987: 116,815<br>1988: 109,685<br>1988: 110,000|1989: 3 million<br>(pop.<br>of the city<br>of Kinshasa)|
|NLWBER OF MEMBERS<br>(ENROLLMENT RATE)|1986: 32,750(28X)<br>1987: 58,100 (46X)<br>1988: 80.595 (62X)<br>1989: 81,142 (60X)|1987-89: cumulative<br>enrollees 1689 (17X)<br>1989: 620 (6X)|1988: 4,410 (4X)<br>1989: 4,444 (4%)|1989: 6,691 in Kinshasa<br>(0.2X)|
|SERVICES<br>COVERED|Hospital:<br>all<br>types<br>of haspitalization<br>inc.<br>deliveries<br>(w/prenatal<br>care).<br>Health center:<br>chronic care treatment|Curative care outpatient<br>visits<br>atafixed price<br>perepisode,<br>including<br>basic drugs**and**up to 4<br>follow-up visits|Primary outpatient care<br>including mostdrugs,<br>laboratory<br>exams,forms,<br>consultations<br>atreference<br>hospitalifreferred.|Outpatient curative care<br>ataflat rate per day<br>including<br>essential<br>drugs|
|SERVICES<br>NOT COVERED|Hospital: deliveries<br>w/o prenatalcare;<br>private doctor visits<br>Health center:**all**<br>care except chronic|Laboratoryexan,<br>special<br>drugs abovenor al health<br>center stock. Doesn't<br>cover hospital care, del-<br>iveries, or preventive car|Hospital<br>irpatient<br>care,<br>chronic diseases, STDs,<br>deliveries, Preventative<br>care, MCH, FP, antibiotics<br>e&injections|Laboratory<br>tests;<br>special<br>drugs not included in<br>health center drug List<br>hospital inpatient care;<br>deliveries, Ante-natal<br>care, MCH|
|UNIT CF ENROLLMENT|Individual; however, if<br>one eiber ofafamily<br>joins,<br>all<br>mebers<br>must<br>join|Individuat|Individual, however, if one<br>membr of a family joins,<br>altmist join.|Femily membrship|

9
Table 11.2 Description of Models in Case Studies, Part 2

|............<br>.......<br>.......<br>...........<br>NAME OFPLAN|.......................................................................................................<br>BWANANDA<br>INSURANCE<br>PLAN|ST. ALPHONSE<br>INSURANCE<br>PLAN|80YORO<br>HEALTH<br>ZONE<br>"ABONNEMENTO|CASOP/UNTZA|
|---|---|---|---|---|
|...................<br>PREMIUM<br>PRICE<br>PER YEAR|...........................<br>Premiun per household mo<br>186:<br>20 Z<br>1987: 30Z<br>1989: 125 Z|...........................<br>m. 1987: 50 2<br>1988: 100Z<br>1989: 300Z|...........................<br>1985<br>1989:<br>600 2<br>1989: 1,200 Z<br>Paid100Xby mpaoyer.|.........................<br>1989: 100-200 Z/month<br>Onetime fee of100Z for<br>wemership booktet|
|00 ALL MEMBERS<br>FACE THE SAKE PRIC|Yes<br>E|Yes|Yes|No.3 tevets<br>of contribu-<br>tions depending<br>on income|
|CO-PAYMENTS|20Xfor**slt**<br>hospital<br>and health center**serv.**<br>except deliveries<br>_w/_<br>prenatal<br>care<br>(free)|meeberspaya flat fee<br>per episode (500 Z In 1989)<br>Vatid for 5days.|25 Xforcovered<br>services;<br> Allexcludedservices<br>are<br>charged<br>**at**full<br>rates.<br>Paid 100X by rployer.|Meybers**pay**a**fee**per day<br>(450 Z for indiv. members<br>in 1989).|
|DEDUCTIBLES|None|None|Norne|None|
|PRICES FACED BY<br>UNINSURED|Uninsured aretreated<br>at full<br>charges. Three<br>payor categories<br>for<br>non-memoers<br>(1)employer-<br>billed,<br>(2) non-resident<br>(3)all others|Non-merkers pay pervisit.<br>Price includes basic drugs.<br>In 1989, first visitu400<br>Z,<br>follow-upvisits<br>*1502|Uninsured**are**treated at<br>futlcharges.<br> <br>|Uninsured**are**treated at<br>higher prices|
|LIMIT ON MAXIKMI<br>SERVICES<br>TOA<br>MEMBER|No|Five day timit for episode.|At discretion<br>of health<br>personrel<br>in case of<br>excessivw<br>utilization.|No|
|UTILIZATION<br>REVIEW<br>CASE MANAGEXEN|/<br>No<br>T|No|Each treatment<br>Episode<br>is<br>noted on*eSbership<br>docu-<br>ment, including drugs<br>coauwed.|No|
|QUALITY OF CARE|Stockouts rare; several<br>doctors and well-trained<br>rnirses (some expatriates)<br>infrastructure<br>good.|Stockouts rare; no doctors;<br>several uell-trained<br>nurses<br>(some expatriates);<br>infrastructure<br>good.|Stockouts**rare,several**<br>doctors**end**well-trained<br>nurses(same *xpatriates);<br>infrastructure<br>good.|Stockouts rare,**two**<br>doctors rd several well-<br>trained nurses; infra-<br>structure fair.|
|VOLUNTARY/<br>COMPULSORY|Votuntary; but if one<br>family wmbeer joins,<br>allmistjoin|Votuntary|Voluntary; butifone<br>fmily<br>enIer<br>Joins,<br>**all***utjoin.|Voluntary except if<br>compeny joins, employees<br>must pay contribution|
|TYPE OF INSURANC|E Direct, offered by provider|Direct, offered by provider|Direct, offered by provider|Direct but my change|
|ACCOJNTING|Irsurance pLan aectg kept<br>**seperate.**Hosp.&heaLth<br>centers bill<br>the plan for<br>**services**rendered.|Accounting for planIs<br>co iredwith health center<br>accounting.|Accounting for plan is<br> combined<br>with health center<br>accounting.|Accounting for plan is<br> cebinedwith polyctinic<br>accounting<br>in**same**aspects|
|ADMINISTRATIVE<br>COSTS|5.7Uofpremiues|Not distinguished from<br>health centeradin.|Notknoum|Notknown|

10
Table 11.3 Description of Models In Case Studies, Part 3

|NAKE OF PLAN<br>..................<br>..|BWAMANDA<br>INSURANCE<br>PLAN<br>........................|ST. ALPHONSE<br>INSURANCE<br>PLAN<br>.......................|BOKORO<br>HEALTH<br>ZONE<br>"AAONNEMENTU<br>...........................|CASOP/UNTZA<br>..................|
|---|---|---|---|---|
|VERIFICATION<br>OF<br>INSURANCE<br>STATUS|AtLhospital cases must<br>bereferred<br>fromHC.<br>MC checks im<br>eership card<br>against<br>family<br>health<br>card. Clerk athosp. aelso<br>checks card against ember-<br>ship register|Clerk checks meitership<br>card and compares to<br>national<br>ID card.<br>Sautimes clerk checks<br>against<br>mwb, register<br>|Registration form with all<br>member names exists In<br>dupticate<br>at heaLth<br>cente<br>and with household.<br>Famil<br>form presente**d**uring<br>consultation.|Present meebership card<br>(with photo) or give<br>r employee<br>ID number<br>y|
|ENROLLMENT<br>PERIOD|8weeks per yr, Feb-Apr,<br>following<br>harvest<br>period|Any time during<br>**year,**<br>except<br>sick people<br>aren't<br>aLlowed to join and receive<br>care immedistely**at**emaber<br>**rates**|Any timeduping<br>year.<br>-|Any time during year.|
|DURATION<br>OF BENEFI<br>INVESTMENT<br>OF FUND|T<br>One year<br>FuidIsinvested**at**CDI<br>(2.5-3X<br>interest<br>per month<br>or loaned to pharmacy to<br>purchase drugs.|One year<br>Funds are kept**at**perish.<br>) Not Invested.|One year<br>Local expenses<br>**are**dedcted<br>from revenues,<br>balence<br>entirely<br>used for referred<br>patients**and**central<br>operating costs.|As long as monthly<br>dues<br>paid<br>None|
|FINANCIAL SITUATIO<br>OF PLAN|N<br>Every year, plan**has**<br>covered**expnses.**In 1989<br>plan will need to**use**<br>surplus from previous years<br>to cover expenses|Unknown<br>|Underfinanced prior to 198<br>10Xmorkup at present<br>utilization<br>rate of membe|9 Unknown<br>rs|
|TOTAL PLAN REVENU<br>(INCL. INTEREST)|E 1986:unknown<br>1987: 2,245,752 Z<br>1988: 4,958,855 Z<br>1989: 10,887,846 Z (proj.)|Unknown|1986: unknown<br>1987:unkrxmn<br>1988: 2,646,000 Z<br>1989: 5,332,800 Z (proj.)|1989: 403,980 Z|
|TOTAL PLAN EXPENS|ES<br>1986: unknown<br>1987: 1,736,878 Z<br>1988: 4,802,190 Z<br>1989: 11,125,106 Z (proj.)|Unknown|UnknIwn|Unknown|
|FINANCIAL SITUATIO<br>OF HEALTH<br>FACILITY|N Cost recoverysthospitel<br>increased by30Xbetween<br>185**and**_1988._<br>Health centers recover over<br>lOOK of costs.|Highly profitable.<br>Over<br>50 excess revenue over<br>expensesIn 1989<br>(projected).|Health centers cover their<br>operating expensesinc.<br>supervision and<br>adeinistration<br>by BCZS|Unknown, but looks<br>profitable|
|CHANGES<br>IN<br>UTILIZATION:<br>........................................|Hoepitel utilization<br>**rates**<br>higher for members then for<br>nor-mmsbers.<br>.....................................................|Unknown<br>......................................|Planmebers**have**11to 12<br>timeshigher utilization<br>than uminsured&urWmloyed<br>4%(mubers)<br>conume31X|MNasers<br>seemto make more<br>follov-Lp<br>visits than<br>non-mtbers|

11
## A. CASE STUDY OF BWAMANDA

The health zone of Bwamanda, located in the Equateur Region of Zaire, operates under the medical services of the Center for Integrated Development (CDI) of Bwamanda. The CDI was started in 1969 with assistance from Belgian missionaries, to support economic and social development, including agriculture, health, nutrition, and infrastructure. The health zone's 1989 population of 134,682 is served by a 156-bed reference hospital, 20 comprehensive health centers, and two smaller health posts.

The following section gives a brief introduction to the insurance plan operating in Bwamanda, and its context. The section describes the terms of the insurance package, charactcristics of the population served, and the organization and management of the plan. Subsequent sections describe the financial condition of the insurance plan and the hospital, and analyze issues of efficiency, cquity, and demand for services.

This discussion draws on previous work by health zone staff and other research teams, reported in several documcnts; Moens (1988), Bitran (1986), Vian and Nsembani (1986), and Bwamanda Health Zone (1985-1988) (Annual Reports of the Health Zone).

# 1. Terms of the Insurance Plan

Several concerns led decision makers to consider the development of an insurance plan as a health financing option for the zone of Bwamanda. Most important, the zone's medical staff wished to increase economic access to health care and to improve the hospital's financial situation. Regarding access, fluctuations in income due to seasonality of crops meant that it was not easy for individuals to pay the full cost of a hospitalization. Medical staff were also concerned that individuals who had becn referred to the hospital were delaying several days to come, in order to gather enough money to pay for the care (14).

Regarding the financial situation of the hospital, a study in 1986 showed that the hospital had recovered less than half of its operating expenses through user fees in 1985. Compared to the eight other hospitals analyzed by Bitran et al, Bwamanda performed the worst in share of costs recovered from patients (4).

The process of designing the insurance plan included considerable participation from both medical staff (including health center nurses) and the communities. First , hospital staff discussed the acceptability of the plan with health center nurses. Through these workshops discussions, the basic parameters of the plan were set, for example, a small so-payment, no deductible, and annual collection rather than semi-annual premiums. The idea of covering ambulatory care through the insurance plan was also discussed during these preliminary workshops. Overwhelmingly, the nurses rejected this idea because they believed it would result in overutilization of medical services (14).

At the level of the community, meetings were held to explain the basic elements of the proposed insurance plan, and to ask community members for their preferences regarding premium and co-payment levels. Presented with two options, the communities expressed preference for a higher premium and lower co-payment (14). Health zone staff regularly solicit community opinion regarding the health insurance plan, through the CDI's community development committees.

The Bwamanda insurance plan covers hospitalizations (including deliveries), dental extractions, and ambulatory surgery (circumcisions) at the Bwamanda Hospital. Covered care span six clinical services: Pediatrics Internal medicine 12
Intensive care Surgery Obstetrics (where mother has attended prenatal convsultations) Gynecology The insurance plan also covers the cost of treatment of chronic illness at the health center and health post.

Each clinical service has one to four sub-departments, bringing the total number of covered hospital clinical services to 14.

Two add-tional clinical services have been designated by the hospital but are not covered by the insurance plan. These are: 1) private doctor visit or physical examination, and 2) deliveries of mothers not enrolled in prenatal consultations. Including these two services, the hospitil has a total of 16 clinical services. The Bwamanda hospital has employed a system of flat rate charges for episodes of illness or hospitalization for 10 years.

The charge varies by payor category. A list of hospital services, along with pricing information according to payor category, is attached in Annex II. Each price covers all resources required for treating the inpatient episode, including nursing, doctor visits, laboratory and X-rays, pharmacy, operating room time, housekeeping and supervised day treatment, etc. The standard price given in column A, applies to an uninsured patient included in the zone census. A non-member (column B) generally pays 20% of the standard price. People from outside the Zone (i.e. not in the census) generally pay twice the standard price; employed persons whose employer pays directly pay 250% of the standard price.

The population eligible to join the insurance plan includes all residents of the health zone of Bwamanda. Villages are often very large (1,000 to 2,000 inhabitants); the population density is 54 persons per square kilometer. Health centers usually serve between 4,000 to 8,000 people, and 99% of the population lives within 7 kilometers of a health center (14).

According to the health zone census, about 17% of the population are children under five. In a 1987 survey of 518 households, about half the households reported annual revenue of less than 7,500 Zaires _($58).'_ The same survey showed an average household contained five children and 7 to 8 members overall.

About 90% of the population of the health zone are farmers. The major crops are coffee, soy beans, corn, cotton, peanuts and cassava. In some parts of the zone, fishing is an important activity. About 4.6% of the zone's population are salaried employees and their families. These employees work for private or parastatal companies. The largest of these employers is the CDI itself, with 617 employees (a total of 3,480 covered beneficiaries). An unknown number of residents earn salaries working for small shops or other small businesses.

Table A.l shows the evolution of membership in the insurance plan, from 1986 to 1989.

To better characterize insured and uninsured patients, the study team interviewed 50 of the 196 hospitalized patients in a systematic survey hospitalized on November 2 or November 3, 1989. The questionnaire (in Lingala) is in Annex V. Table A.2 compares the insured and uninsured inpatients who used the hospital. Insured patients were more like'v to be female and were less educated. Otherwise, there were no noticeable differences. As only one respondent was employed, it was not possible to separate ordinary uninsured and employed 3 The Zaire, the unit of currency of Zaire, has been subject to rapid inflation. As of the time of this study (mid-October, 1989) one US dollar was worth 430 Z officially and about 470 Z on the parallel market.

13
Table A.1 Swanmnda Health Insurance Plan Menbership Rates 1986 1989

|.........................<br>.............................|..................<br>1986<br>....|.............<br> <br>1987<br>...............................|<br>1988<br>...........|1989<br>....... .....................|
|---|---|---|---|---|
|Neffbers|32750|58100|80595|81142|
|Total Population|118612|125480|130000|134680|
|Percentag**e**nrolled|27.6|<br>46.3X|<br>62.02|60.2X|
|Change inenrollmen<br>rate**(prcentage)**<br>......................|t<br>18.72<br>............................|15.72<br>..............|-1.72|................|

*1989 population estimated based on growth **rate of** 3.6X

patients. Table V.1 in Annex V analyzes missing data to show how various ambiguities in the survey were resolved.

**Table** A.2 Survey of 50 Bwamanda HospitaL Patients: Frequ ncies

|.................................................<br>Xof Respon<br>|..<br>....<br>dents:N<br>|umbers<br>|
|---|---|---|
|Insured Un|nsured|used|
|<br>Characteristic<br>(0a29)<br>|<br>(0Zi)||
|<br><br>..................<br>......................................||.....<br>......................|
|Gender:<br> <br>|||
|FemaLe<br>69<br>X<br>|43X|S0|
|Nale<br>31X|57X||
|Whatdo you think of the idea of<br>|||
|health insurance?<br> <br>|||
|Good<br>1002<br> <br>|61X|S0|
|Don'tknow<br>02|10l||
|Could you pay 10,000 Zaire for an<br>illressepisoderequiring minor surgery<br>||50|
|in a hospital?<br> <br>|||
|Yes<br>522<br>|43X<br>||
|No or no response<br>48X|482||
|How would you pay thisunot?<br>||35|
|Installment<br>252<br> <br>|272||
|Cash<br>752|73X||
|**Uhere**would you get the money?||48|
|Cah from houehold<br>72|102||
|Sav!ngclubor association<br>42<br>|02<br>||
|By selling household itwn<br>_32<br>|**252**||
|outside the hou shold<br>|||
|Contribution of a fmi lym*bers<br>7r<br>|402||
|other<br>362|**252**||
|No**response**<br>32|02||
|Did you**go**to school?<br> <br>||so|
|Not**at all**<br>**662**<br>|**382**<br>||
|Pr1mary school, 1-3**years**<br>17X<br>|192||
|Primry school, 4-6 years<br>102<br>|142||
|**Secondary**school<br>**7r**|29X||

14
<!-- Start of picture text --> Does your househctd grow:<br>Soya 76X 76X 50<br>Corn 93X 86S 50<br>Coffee 45X 52X 50<br>Does your houschold have a:<br>Radio a 5S 50<br>Sewing machine 10% 10X 50<br>Bicycle 34X 19X 50<br><!-- End of picture text --> The insarance premium for 1989 was set at 125 Z ($0.35) per person. In theory, if a family wishes to enroll in the plan, all members of the family must be enrolled, although this practice is not always followed (see discussion, section 2). The size and composition of the family are determined from the family health card, which is filled out for every family in the zone during the health zone census completed every two years. All adults wishing to enroll in the plan face the same premium. Table A.3 shows premiums for 1986-1989: Table A.3 **Amual** Premium **for Bwamada** Insurance Plin, Per Person '

|... ........<br>|.......................................<br>**NOMINA**<br>|......<br>**L**<br>|1986<br> <br>|1986<br> <br>|
|---|---|---|---|---|
|YEAR|ZAIRES|DOLLAR<br>I|<br> <br>ZAIRES|<br>DOLLARS|
|......................|..............................||||
|1986|20|**s0.33**|20|$0.33<br>|
|1987|30|**S0.23**|22.9|$0.38|
|1988|so|50.27|24.6|50.40|
|**1989**|125|S0.35|28.8|50.47|

'Exchange rates **and** infiation rates **are** found **in** Anex 111.

The insurance plan employs co-payments but no deductibles. In 1989 the co-payment was established at 20 percent of the standard flat-rate charge for 13 of the 14 covered charge categories. (Payor A, the most common payment category, is for non-insured zone residents whose health care is not paid through hospital billing to an employer, as described later in this section.) The exception is obstetrical care to women who were enrolled in prenatal care; in these cases, no co-payment is charged. The 20 percent co-payment applies to treatment of chronic illness cases at the health center level as well.

During 1988, the health zone experimented with a system of variable rates for co-payment, depending on the distance from the hospital. Plan members who lived furthest (over 50 km) away from the hospital of the patient were charged only a 5% co-payment, compared to 10 percent for those living 25 to 50 km and 20 percent for those who lived closest (under 25 km). The plan asked nurses to make a special effort at enrollment especially in outlying areas.

When the hospital staff reviewed the insurance plan at the end of 1988, they thought that the system had not increased access for members living far from the hospital. It was difficult to control, as well, leading the zone to abandon it in 1989. According to Figure A.l, however, which shows the relationships between insurance status and distance, the 1988 program changes (either the variable co-payment rates, the stepped-up awareness campaign, or both) may have influenced the decision of distant residents to enroll in the program. Enrollment declined less with distance from Bwamanda center in 1988 than in the three other years of the insurance plan. There is a clear decrease of the membership rate the further the villages are away from Bwamanda for 1986, 1987 and 1989. Regression analysis confirmed that the slope 15
was significantly negative (p < .05) for all the years except 1988.

There is no evidence that the stepped-up awareness campaign was effective for the close-in health centers. The enrollment rate of villages about _75_ km away was _35_ percentage points higher than it would have been based on patterns from other years. The squares in Figure A.l show the actual observations for 1989 as an indication of the variability about the overall pattern. Each observation corresponds to one of the 21 health centers.

<!-- Start of picture text --> DISTANCE AND INSURANCE MEMBERSHIP<br>Btauunda Inurance Plan<br>90 r<br>70 - 0 O<br>60<br>50 =<br>j<br>0C 40-<br>30-<br>20-<br>10<br>0 r<br>0 20 40 80 10 100<br>DiStance frcm kMrMs (km)<br>o 1969 i. 1999 o Igo A 1987 x lsee<br><!-- End of picture text --> Figure A.l The Bwamanda plan has two important controls on covered expenses. First, all covered services are provided only by referral. Second, the flat rate charges limit the plan's expenses for each admission.

Since the insurance system is offered by the provider, there is no reimbursement system and thus no "cap" on spending use by the member. There are no limits placed on care-givers regarding the maximum number of services (patient days, laboratory tests, etc.) or expenses used to treat a patient. Standard treatment protocols do exist, and the doctors and other medical staff make efforts to follow them. There are no systems for utilization review or case management, however.

The insurance plan is voluntary; however, if one member of a family wishes to join, all family members are required to pay the premium. This is intended to reduce adverse selection, where only those who know they will probably need insurance subscribe to the plan.

16
The hospital continues to treat the uninsured, but<sup>at prices which are sometimes higher than</sup> the full payment on behalf of insured residents.

There are three types of uninsured patients treated<sup>at the hospital: Payor Category C: non-</sup> residents; Payor Category D: salaried employees,<sup>and their families, whose health care</sup> expenses are paid through hospital billing to the<sup>employer; and Payor Category A: health zone</sup> residents who do not fall into Payor Category<sup>D and decided not to join the insurance plan.</sup> Members of the insurance plan fall into Payor<sup>Category B.</sup> For the purposes of this discussion, therefore,<sup>four categories of patients exist:</sup>

# PAYOR CATEGORY DESCRIPTION

- . **..** ....... .................................................

- A Uninsured health zone residents without an employer<sup>who pays</sup> the health zone directly for employee care

- B Insured residents

- C Non-residents (not eligible for insurance plan)

- _DA_ Employees whose employer pays the health zone<sup>directly for</sup> services

As noted earlier, a full list of prices of hospital<sup>services according to payor category is</sup> provided in Annex II.

Annex IV discusses procedures for fee collection cnd<sup>describes how free care and bad debt are</sup> handled. Patients who cannot afford to pay are not<sup>turned away from Bwamanda Hospital,</sup> but are treated and allowed to pay in installments.

# 2. Organization and Management

The insurance plan began enrollment in April, 1986.<sup>During the first two years of operation,</sup> the insurance plan covered onty hospital services; coverage<sup>of chronic illness treatment at the</sup> health center level was added in 1988.

The Bwamanda insurance plan is offered by the provider<sup>-- the Bwamanda Rural Health Zone.</sup> Accounting for the insurance plan is kept separate<sup>from that of the health zone.</sup> The price of the premium is set both to be 'affordable',<sup>and to cover the expected hospital</sup> 4 All employers are responsible by law under the<sup>'Code de Travail' for providing or paying</sup> for the health care services for their employees.<sup>Some employers (in particular, the</sup> Government of Zaire) do not respect this law. Bwamanda residents who are salaried government employees therefore fall into payor categories<sup>A or B, depending on their decision</sup> to join the insurance plan. Other employers may<sup>decide to reimburse employees for their</sup> expenses (for example, employees in small shops, and<sup>domestic help), rather than having the</sup> hospital bill the employer. In such a case, the employee<sup>would again fall into category A or</sup> B, depending on whether the employer encouraged<sup>the employee to join the health insurance</sup> plan. The prices for payor category D are only<sup>valid for those employers who have an</sup> agreement with the hospital and other health zone<sup>facilities whereby the health zone bills the</sup> employer for the services provided. Category<sup>D includes mostly large, formal Fcctor employers.</sup> 17
operating costs (excluding depreciation) incurred by beneficiaries. Capital costs were considered the responsibility of the government and donors.

To calculate the each new year's premium, the medical staff (primarily the Director of the CDI's medical service) first build the budget for the new year, based on historical costs corrected for historical inflation, and incorporating estimates about the next year's inflation rate, further devaluation of the zaire, and other budget parameters. The staff then divide the estimated operating costs by the total population to obtain the per capita cost of hospitalization for the next year. Using various assumptions about the percentage of the population likely to enroll in the plan, and the expected revenue from uninsured patients (who would pay full charges), the zone calculates projected cost recovery for the hospital as a whole. The premium for the health insurance plan is then set through discussions involving the whole staff and incorporating social goals as well as cost recovery objectives. For example, the projected premium is compared with the price of two kilograms of soy beans (a commonly produced crop), as a measure of affordability. The medical staff tries to assure that the premium is sufficiently large to cover the claims of the beneficiaries, with some margin of error.

Financial records were not kept accurately the first year, although the plan seemed to cover costs. Using Bitran's data (4), the cost per hospitalization in 1985 vsas 3:6 Z. (1,803,844 Z total hospital operating costs excluding depreciation divided by 5,711 hospitalizations.) The probability of being hospitalized in 1985 was 5% (5,711 hospitalizations divided by 114,410 inhabitants). Therefore, the expected cost of hospitalization per inhabitanit was 15.8 Z (5% x 316). The premium was set 21% higher than the expected cost, presumably to cover administrative costs, and possible adverse selection.

The premium is collected once a year, at harvest time. There are two harvest periods in the Bwamanda zone; one in July-August, the other in January-February. When communities were asked when they would prefer to make the premium payment, they overwhelmingly preferred the months following the second harvest period (March to April), because they needed cash in August to pay for school expenses (14).

Collection of the premium takes place during a six-to-eight week period in February through April. Prior to this, several preparatory meetings are held with health center staff to orient them to any new changes in plan premiums and administrative procedures, and to present them with the time table and control procedures for the registration period.

Residents enroll in the insurance plan at their health center. When the payment is made, a stamp printed with the name of the health zone and the price is affixed on the individual's medical identity card. The medical card includes the individual's name, village, and enrollment number, and allows space for critical medical events to be registered (vaccinations, prenatal consultations, hospitalizations, etc.). A second stamp, with different color print, is placed on the family health card, which stays at the health center. The health center nurse signs his/her initials over the stamp on the medical card, taking care that the signature also touches the card, to avoid cases of fraud where unsold stamps are stolen and affixed to cards, or stamps are moved from one person's card to another's.

The health center nurse also registers information about each enrollee in special notebooks, which **are** organized by village. These notebooks are then used for control purposes at the hospital level to control that the bearer of an insurance card is really the person named who registered.

5 Annex IV provides examples of many of the documents described below and in the subsequent section on identification of the uninsured.

18
During the enrollment period, health zone administrative staff make frequent trips to the health centers to collect the premiums, distribute stamps, and monitor recford-keeping. Each health center is visited 10 to 12 times during this 6 to 8 week period. An example of the control sheet for the sale of membership stamps is attached in Annex IV.

According co Moens, the incremental cost of administering the program was 75,242 Z ($586) in 1987, or 4.2% of the premiums collected (14). This amount does not include the cost of salaries of health zone staff who are involved in regular record-keeping and control activities (verification of membership of hospitalized patients), since no additional staff were hired to work full-time on administering the insurance plan. The authors estimate that the full cost of plan administration in 1989 (including the cost of part-time administrative staff) will be 632,015 Z. ($1,784), or 5.7% of the premiums collected.

All cases which are seen at the hospital must either be referred by a health center or must pav for a private doctor visit not eligible for insurance coverage. When an insured patient arrives at the hospital, he presents his referral slip. The referral slip indicates the insurance membership number, which is also the number accorded the family during the nealth zone census. If referred, all patients may see the doctor in this manner, before paying any fees. Since referral is mandatory, most cases warrant hospitalization; the doctor then fills out a hospitalization card during the patient's initial encounter, transcribing the insurance membership number from the referral slip.

The cashier's office then checks the patient's insurance number against the insurance plan membership register, which was filled out by the health center nurse during the enrollment process. As mentioned earlier, these notebooks are organized by village. If the patient's name appears in the insurance membership register, the patient is charged the insured (Payor Category B) price, generally a 20 percent co-payment. If the name does not appear in the register, then the patient pays one of the other prices, depending on payor category. The cashier clerk writes a receipt, which is stapled to the patient's hospitalization card. Each payor category has a different color or type of receipt. A copy of the receipt rests with the clerk, who then transcribes the information into the cashier's register, a chronological register of all paying hospitalized cases.

Three categories of patients pay no fee when they receive care: (I) women delivering babies who are insured and received prenatal care; (2) trypanosomiasis patients who are covered under a special donor program; and (3) school children for whom an annual aggregate payment is paid by the schools.

Premiums are deposited in a special fund for the insurance plan, at the CDI. The health zone administrator keeps the financial records regarding deposits, withdrawals and transfers from the fund. Each month, the hospital bills the insurance fund for the services provided to hospitalized patients who are insured. The bill is calculated by multiplying the number of insured patients hospitalized in each service by the unit charge per service, minus the copayment.

The hospital administrator also records the amount of interest which the fund accumulates each month. Between 1987 and 1989, interest rates paid by the CDI have ranged from 2.5% (1989) to 3% per month (1987 and 1988). Administrative expenses (bonus payments to staff during enrollment period, transportation expenses, enrollment register-books and stamps) are also subtracted from the fund, although the chart of accounts is not used to record the nature of each expense.

At the start of the 1989 accounting year (April 1989), the insurance fund loaned the health zone's pharmacy 7 million Zaires (69% of the fund's balance). In August, the pharmacy repaid 3 million Zaires to the insurance fund. In lieu of interest, at the end of the year the pharmacy 19
administrator (a Belgian nurse) will calculate the benefit to the pharmacy from having purchased drugs early in the year, before the Zaire devaluated further, and will remit this amount to the insurance fund.

# 3. Resource MAobilization

A principal objective in establishing Bwamanda's insurance plan was to improve the financial situation of the reference hospital. Social goals were also incorporated into the design of the plan, notably the decisions to provide 100% coverage of deliveries and to provide coverage of chronic illness treatment at the health center level. This section presents a financial analysis of the relevant policy questions:

- Has the insurance plan helped the financial condition of the hospital?

- What effect has providing coverage of chronic illness care had on the cost recovery performance of health centers?

o Is the insurance plan financially sound? Do the premiums cover the cost of services to beneficiaries, plus administrative costs? How important is revenue from interest?

Table A.4 presents the financial statements for the insurance plan from 1987 through 1989.

The data show "hat in 1987 and 1988 the insurance plan covered 100% of hospital charges for health care benefits provided to beneficiaries, and covered incremental administrative costs, with positive margins. The plan is projected to cover hospital charges and administrative costs in 1989, as well.

Hospital charges are naturally the largest expense category (89% in 1989). Charges for chronic illness cases treated at the health center level account for 6 to 7% of expenses, while administrative costs are 4 to 6%.

Table A.5 shows the financial situation of the hospital for 1985 to 1986 and 1988 to 1989. (Data for 1987 were not available). The table shows that cost recovery of the hospital improved with the implementation of the insurance plan between 1985 and 1988. In 1985, the hospital covered approximately 48% of operating costs (excluding depreciation and expatriate salaries) with user charges. This figure jumped to 65% in 1986, and 79% in 1988.6 Using the inflation rates in Annex III, real operating revenue grew by 21% and real operating expenses grew by 70% from 1985 to 1989, the period over which the insurance program was implemented.

In 1989, operating revenue is projected to cover only **_35%_** of operating expenses. This figure is suspect, however, because of the complex accounting procedures and co-mingling of funds within the Bwamanda health zone. (The health zone only makes accrual and other adjustments once a year, when preparing year-end financial operating statements. These had not yet been made and were not factored in the projection).

The percentage of total expenses allocated to salaries increased from 41% in 1985 to **_53%_** in 6 Depreciation figures are not available for all years, and so were not included in Table A.5. In 1988, depreciation expense was 415,000 Z (S2,219). When depreciation expense is included, cost recovery falls to 76%.

20
Table A.4 FianciaL Situation of Swambnda Insurane **Plan,** 1987-1989 Current Zaires, with adjustments (see note)

||19<br>................<br>|87<br>|19<br>.............<br>|88<br>....<br>|198<br>...<br>,......<br>...<br>|9<br>.<br>.......<br>|
|---|---|---|---|---|---|---|
||Current<br>Zaires|Xof<br>Expen.|Current<br>Zeires|Xof<br>Expen.|Current<br>Zaires|Xof<br>Expen.|
|REVENUE<br>v<br>|||................<br>||.................<br>||
|Premiumi (urwdjusted)|1,785,060<br>||4,023,100<br>|<br>|10,177,250<br>||
|Adjusted*|2,065,314<br>|118.91<br>|4,851,859<br> <br>|101.01<br>|11,011,785<br> <br>|98.6X<br>|
|Interest|460,692|26.5X|<br>935,h75|19.51|<br>710,596|6.41|
|ADJ. PREh&INTEREST|:<br>2,526,006|145.41|5,787,614|120.51|11,722,381|104.9Z|
|EXPENSES|||||||
|Hospital<br>care|1,671,500<br>|96.21<br>|4,226,055<br>|88.01<br>|9,915.491<br>|88.8X<br>|
|Health<br>center<br>care|0|0.01|346,250|7.21|622,582|5.61|
||................||................||.................||
|Total care:|1,671,500|96.21|4,572,305|**95.2X**|10,538,073|94.3X|
|Vehicle;<br>stationary<br>|<br>N/A<br><br>|<br>|N/A<br>|<br>|198,920<br>|<br>1.81<br> <br>|
|Staff**bona**payments|<br>N/A||N/A||338,295|<br>3.01|
|Administrator<br>(101)|<br>N/A||N/A||22,800|<br>0.2X|
|Nembership<br>clerk(50X|)<br>N/A||N/A||72,00F|<br>0.6X|
||...............-<br>||----------------<br>||-----------------<br>||
|Total administration:|65,378|3.81|229,885|4.81|632,015|5.71|
|TOTAL<br>EXPENSES:<br>..............<br>....................|1,736.8<br>....|78<br>100.0|1<br>4,802,190|100.0|1<br>11,170,088|100.01|

NOTES:

**Erpeses and** interest in 1989 *re *xtrapolated from 5.5 months of **data.** ' PremiLm revenue Is received in a Lump **su** early in the year (on average in March), while expenses are evenly distributed throughout the year. Thus a sLight adjustment is needed within ench year, to assure comparability of nominal Zaires. The prmium revenue has been infleted by the following three-month inflation factors 1987: 1.157 1988: 1.206 1989: 1.082

Exchange rates and inflation rates for each year are fourd in Annex 111.

l988.7 If expatriate salaries were included, the hospital's total operating costs would rise by 8% (using salaries of Zairian staff) or 58% (using a conservative estimate of actual salaries). The amount spent on drugs rose from 31% in 1985 to 47% in 1986, then fell again to 30% in 1988.

Table A.6 shows the financial situation of Bwamanda's health centers and health posts. In 1988, the year the plan coverage went into effect at the health center level, health centers received 346,250 Z ($1,852) from the insurance plan for services provided to members. This accounted for 3.1% of their total operating revenue. The health centers had a 14.2% profit 7 The value of expatriate salaries has not been included in the financial statements because data are not available from all years. In 1989, the hospital benefitted from the donated services of five expatriate volunteers: three nurses and two doctors. Valued at the salaries of equivalent Zairian staff, this subsidy of in-kind services is worth 4,020,000 Z ($11,349), accounting for a 31% increase in personnel expense, and an 8% increase in overall hospital operating expenses. With the value of expatriate salaries included, personnel expense accounts for about 38% of total expenses.

21
# margin in 1988 (excluding depreciation).

## '.able A.5 Financial Situation of Swoenda Hospital, 19"5-1986, 1988-1969 Nominal **Zafres**

|198|s<br>1986<br>1988<br>1989<br> <br> <br>|
|---|---|
|......................<br>|*^s<br>^Zzes<br>ooovo*<br>**<br>......................<br>.................<br>.<br>.<br>......................<br>w*<br>*<br> <br>|
|Nominal Z.**X**<br> <br>|of Expen Nominal Z.Xof Expen Nominal Z.Xof Expen Nominal<br>Exp. Rev.|
|OPERATING<br>REVENUE<br>--- - -|........-------.-<br>.....-.---.--<br>.---<br>.-<br>.-.-|
|User fees<br>N/A<br>|N/A<br>873,652<br>29.8s2,267,eo8<br>24.02<br>3,960,089<br>12.92<br> <br> <br> <br> <br> <br>|
|Employer<br>**bllitng**<br>N/A|N/A<br>394,353<br>13.4X 2,045,425<br>21.6X<br>714,750<br>2.3X|
|<br>Insurance<br>plen<br>0|0<br>650,900<br>22.223,120,905<br>33.0X 5,204,045<br>17.02|
|Other<br>N/A|N/A<br>0<br>30,600<br>0.3X<br>743,925<br>2.4X|
|..........|......<br>..........<br>......<br>.........<br>......<br>...........<br>......|
|TOTAL:<br>878,583|48.72<br>1,918,905<br>65.42<br>7,464,730<br>78.9s 10,622,809<br>34.72|
|OPERATING<br>EXPENSES||
|Persomel(excl.<br>expats)739,207|41.02<br>1,007,462<br>34.3X 5,036,307<br>53.2x<br>9,082,368<br>29.7x|
|<br>Drugs**and**med.**supplies**563,607|31.22<br>1,337,286<br>47.32<br>2,830,552<br>29.921S,272,868<br>49.92|
|Office<br>sI.plies<br>75,515|4.22<br>40,093<br>1.42<br>204,086<br>2.22<br>526,853<br>1.72|
|Transport<br>84,729|4.7X<br>0<br>0.02<br>0<br>0.022,003,736<br>6.52|
|Maintenance<br>176,947|9.82<br>146,678<br>5.02<br>499,619<br>5.32<br>1,431,446<br>4.7X|
|Fuel&electricity<br>163,839|9.12<br>276,101<br>9.42676,749<br>7.22<br>131,813<br>0.42|
|Food service<br>&other<br>0|0.02<br>76,795<br>2.6X<br>212,687<br>2.22<br>2,174,505<br>7.12|
|.........|......<br>.........<br>......<br>.........<br>.......<br>.........<br>...|
|TOTAL:<br>1,803,844|100.02 2,934,415<br>1fl'2.O<br>9,460,000<br>100.0230,623,588<br>100.02|
|OPERATING<br>SUBSIDIES:<br>925,261|51.32 11015.510<br>34.62<br>1,995,270<br>21.1X20,000,779<br>65.32|
|NOTE: 1989 figures**are**extrapolated frm<br>TableA.6Financiat<br>1965|8months of**data.**<br>Situation of Health Centors in S_amenda,1985-1986,1988-1989<br>Nominal Zaires<br>1986<br>1988<br>1989|
|**Nominal2. X**of E|xpen. Nominal Z. X of Expen. Nominal Z. 2 of Expen.<br>**X**of Expen.|
|<br>PERATING<br>REVENUE<br>**--------------**<br> <br> <br>|<br> <br> <br>..<br>..<br> <br> <br> <br>|
|User fees<br>1,312,131<br>_1_|_06.52_2,283,794<br>109.22 12,393,789<br>111.1<br>19,231,628<br>92.52|
|<br><br>surance plan<br>0|<br> <br> <br>0.02<br>0<br>0.02<br>346,250<br>3.1%<br>993,873<br>4.82|
|TOTAL:<br>1,312,131<br>1|06.522,283,794<br>109.2x 12,740.039<br>114.22 20,225,501<br>97.22|
|PERATING<br>EXPENSES||
|Personrwel (excl.expets.)<br>476,244<br>38.6x|649,670 31.1X<br>2,93,758<br>26.72<br>6,537,590<br>31.42|
|<br> <br>Drugs and**med. 4uplIes**<br>521,298<br>42.32|<br> <br> <br>1,197,702 57.32<br>6,899,327<br>61.82<br>10,932,372<br>S2.62|
|<br> <br>Office supplies/mint.<br>126,405<br>10.32|<br> <br> <br>243,342<br>11.6"<br>1,283,712 11.52<br>1.888,631<br>9.12|
|<br> <br>supervision fe<br>1t08,600<br>8.82|<br> <br>0<br>0.02<br>0<br>0.02<br>1,040,469<br>5.02|
|<br>Hosp.**prenatal**services<br>0<br>0.02|<br>0<br>0.02<br>0<br>0.02<br>402,442<br>1.92|
|TOTAL:<br>1,232,547<br>100.0o|2,090,714100.02<br>11.156,797100.02<br>20,801,503100.02|
|'ROFIT(DEFICIT):<br>**79,s54**|6.s5<br>**193,080**<br>9.22<br>**1,583,242**<br>14.2X<br>(576,003)<br>**-2.82**|

NOTES: 1989 figures are extrapolated **frm** 8 months **of data.** Cost recovery in Bwamanda's health centers was high even before the plan went into effect: in 1985, the health centers had a profit margin of 6.5 percent, excluding depreciation. In 1986, 22
cost recovery was even better, with a 9.2% profit margin, although the financial<sup>records show</sup> that the zone did not charge the health centers for supervision<sup>costs in 1986 and 1988.</sup> Hospital costs in the Bwamanda health zone are similar to those<sup>of other well functioning</sup> zones. Of the eight zones for which Bitran et al compiled per capita<sup>hospital expenditures</sup> in 1985, Bwamanda ranked third lowest (4). It3 per capita cost was $0.42<sup>(21 Z) compared to</sup> the eight-zone average of $0.65 (32 Z).

# 4. Utilization and Access to Services

Theories of insurance suggest that insured persons may use more services<sup>than uninsured due</sup> to both adverse selection (the tendency of persons more likely to need<sup>services to purchase</sup> insurance) and moral hazard (the tendency of persons to be more prolifigate<sup>in demanding</sup> services when they face few financial penalties). These phenomena make the development<sup>of</sup> insurance more difficult because they raise premiums, further discouraging health,<sup>low cost</sup> people from buying insurance. The authors examined whether these theories applied to Bwamanda and confirmed that they did.

The authors' analysis of utilization data showed that distance and membership status strongly affect hospital utilization. Hospitalization rates are higher for members and workers<sup>with</sup> employer-provided health care coverage than for Bwamanda residents who have no form<sup>of</sup> health insurance or employer coverage. The authors examined this pattern<sup>with two sets of</sup> data: monthly utilization statistics tabulated by each service, and a ten percent sample of entries from the hospital register for all admissions.

Table A.7 compares the insurance status of hospitalized patients with the insurance<sup>status of</sup> Zaire's population. While 77% of the patients are insured, only 60% of the health zone population are members of the insurance plan. Persons covered by an employer<sup>are even more</sup> overrepresented among the patients than in the population. There<sup>are three times more</sup> employed persons, and only a third as many uninsured patients hospitalized<sup>than expected</sup> from their frequency in the population.

**Table A.7** Distribution of Payment Categories in the Population wnd Hospital Patients, Dec.1988 - Oct.1989 (maternity patients exctuded)

|PAYMENT|POPUL|ATION|HOSPITA<br>FROM|L PATIENTS<br>ZONE*|
|---|---|---|---|---|
|**CATEGORY**|PERSONS|<br>X|SAMPLE|<br>X|
|Eaployed|6,176|<br>**4.61**|54|<br>**17.3X**|
|**Insured**|81,142|**60.2X**|240|<br>**76.7X**|
|**Total**not Insured|<br>47,362|**35.2X**|19|<br>**6.1X**|
|TOTAL|**134,680**|**100.0l**|<br>313|**100.01**|

* **Th. original smple** of 329 patients Included **16(4.9X)** from outside of

**_Bwmwds_ zone.** They **were removed** fro the onot insuredO **category,**<sup>**Leaving**</sup> the 313 petients **reported here.**

8 These were derived by dividing the total expenditures for hospitals in the zone by the zone's population. This calculation does not adjust for net border<sup>crossing.</sup> 23
The systematic one in ten sample of patients from the admissions register covered patients admitted from December 1988 through October 1989. Data were analyzed according to four major service categories: pediatrics, internal medicine, gynecology and surgery. Obstetrical patients were excluded because of incomplete records.

Based on the hospital register, Table A.8 shows that the annual hospitalization rate was 10.5% for salaried workers and family members with employer-paid health coverage; 3.6% for members of the Bwamanda insurance plan; and 0.5% for Bwamanda residents without insurance or employer coverage.

Table A.8 1989 Acdmission Rates by Payment Category

||-----PaymentCategor|y-----||Over-|
|---|---|---|---|---|
|Service|Not<br>Insured<br>Insured E|mployed|TOTAL<br>ZONE|<br>all<br>Total|
|(Population)|47,362 81,142<br>Arnual Adm|6,176 1<br>issions:*|34,680|n.a.**|
|Surgery|166<br>547|71|788|840|
|Gynecology|29<br>132|26|276|<br>283|
|ALL (Exc.Obs.)|<br>231<br>2,640|594|**3,465**|3,330|
||Arv.uAl<br>Admi|ssion Rat|es X):||
|Surgery|0.35X<br>0.67X|1.15X|0.59X||
|Gynecology|0.06X<br>0.16X|0.43X|0.20C||
|ALL (Exc.Obs.)|<br>0.49X<br>3.25X|9.62X|2.57X||
||Risk Ratios for Admi|ssions:|||
|Surgery|1.0<br>1.9|3.3|1.7||
|Gynecology|1.0<br>2.7|7.0|3.4||
|ALL**(Exc.Obs.)**<br>.. ....<br>....<br>..<br>....|<br>1.0<br>6.7<br>......<br>............|19.7<br>.......|5.3<br>.....||

# NOTES:

* Mutbers of surgery and gynecology adtissions were extrapolated **from** complete **utilization** statistics from January through June, 1989 by doublIng the six-month total. Numbers of arusal ecmissions for all services (excluding obstetrics) were extrapolated from a 10X satpte of such admissions from December 1988 through October 1989 by multiplying the total by 12/11. The extrapotations were based on 657 wurgical a*dissions, 230 gynecology wdnissions, nd 329 total non-obstetricat admissions, respectivety.

* Overalt a*Issions lnctude admisslons of patients from outsid, of the Swawand hea'th zone.

The risk ratio for a payment category is the ratio of the admission rate for that category relative to the rate for uninsured persons. The risk ratios across these services show consistent patterns. Insured patients had from 1.9 to 6.7 times the admission rates of uninsured patients. Employed patients had dramatically higher admission rates: 3.3 to 19.7 times those of uninsured patients.

This pattern of higher rates for insured and employed persons, compared to uninsured, is probably the combined effect of moral hazard, some adverse selection, better access, (closer residents were more likely to be insured) lack of adequate controls (which may permit nonmembers to falsely present themselves at the hospital as members) and random variation due to small numbers. Table A9, based on the survey, provides further support of adverse selection and/or moral hazard.

24
# **Table A.9** Survey of HospitaLized Patients in Bwamanda

|. ..............................................<br>Characteristic|Insure<br>(N229)<br>Mean<br>|...........<br>d<br><br> <br>**STO**<br>|.......<br>Uninsur<br>(M221)<br>**Mean**<br>|..............<br>...........................<br>ed<br> <br>Stat.<br>STD Sig.<br>..............|
|---|---|---|---|---|
|...........................................<br>|..........<br>|......................<br> <br>|.............................<br> <br>||
|Age in years|20|<br>**19**|<br>22|**20**|
|**Payment**for current<br>hospitalizatio<br>in**Zaire**|n<br>1568|1700|<br>4083|4070<br>-|
|Number<br>of episodes<br>of**serious**<br>**ilLnes**<br>In househoidduring 1988**and**1989|**s 2.4**|**2.9**|<br>**1.6**|**1.2**|
|Nutber<br>of hospitalization<br>episodes<br>in.househotd during 1988 and 1989|2.6|4.4|1.7|1.2|
|Nuiber of times the patient was|||||
|hospitalized from 1985 thru 1989|2.8|2.7|1.3|1.8<br>-|
|Number<br>of persons in househoLd:|||||
|Children|5.5|6.7|5.6|3.1|
|Younger<br>aduLts<br>|**3.8**<br>|3.5<br>|2.7<br>|1.2<br>|
|Elders<br>|0.7<br>|1.1<br>|0.6<br>|0.7<br>|
|TOTAL|10.0|8.4|8.9|3.3|

For employed persons, both the hospital and the patient have every incentive to hospitalize. Care is free to the employee, and the hospital is paid two to three times the fee of a selfpaying patient. The problem of higher hospital use by insured patients has not had a serious effect on the financial solvency of the insurance plan, since the plan covers such a large percentage of the population (60%). With lower enrollment, such a problem could bankrupt an insurance system. The fact that insured patients use only a third to a half as much hospital care as employed persons suggests that the 20% copayment may have limited moral hazard.

Principles of medical geography suggest that people will consume more health services the nearer they live to the site of care. By examining the pattern, one can see whether the data on utilization rates are plausible. Further, by examining utilization for both distance and insurance status, simultaneous possible confounding between these variables can be eliminated. The figure shows that insured patients used more services, regardless of distance. A similar pattern held for internal medicine admissions (one third of all admissions), separately.

Overall hospital admission rates for all services (excluding obstetrics) were also examined by distance for 1989. Figure A.2 shows the regression of admissions for all payment categories and admissions with insurance coverage on distance from the hospital. The 21 observations are villages covered by Bwamanda Hospital.

There was no evidence of any meaningful difference in delay between insured and uninsured patients. A patient going to Bwamanda Hospital knows that he must pay on or near admission. As an uninsured patient faces higher fees, it may take him longer to assemble the necessary cash. Using data from Kombo, Bombisa, and Dondeme Health Centers, the authors found minimal delay among both insured and uninsured patients in both groups.

In previous work, Moens had examined whether patients actually followed up on referrals to the hospital. He found that rates were high and comparable for both insured and uninsured patients.

25
<!-- Start of picture text --> HOSPITALIZATION RATE FOR ALL PATIENTS<br>Ey DISTAN. PE 1000 PPU..ATI0N<br>so -<br>50<br>40<br>c 30-<br>20-<br>10<br>-10<br>0 20 49 6'1o<br>DISTANCE IN 1)J<br>+ rarAL ADMISSIONS v INSLwM WissIONS I<br><!-- End of picture text --> Figure A.2 The study team examined a number of other indicators of quality for differences between iniured and uninsured persons:

- Proportion of high risk pregnancies delivered in hospital

- - Proportion of all deliveries in hospitals

- Age adjusted overall death rate overall

- Childhood death rate Proportion of pregnant women enrolled in ante-natal care

- - Birth rate

- Length of hospital stay.

- - Delay in starting delivery.

The study team tested most of these indicators with a visit to Isabe health center, one of the health centers served by Bwamanda Hospital. In theory, the data to calculate most of these indicators should have been available at the health center through the family registration cards; the remaining data should have been available at the hospital. In practice, the data proved inadequate because family cards did not necessarily record every birth and death, particularly if they occurred at home or in the hospital. For example the Isable household cards in Isable showed 876 people. The cards reported only 21 births (about half the expected number) and 8 deaths (also fewer than expected).

Table A.10 presents comments of insured and uninsured patients towards possible changes in 26
insurance. Members (n-29) indicated their benefits and disadvantages. Non-members (n-21) indicated why they did not join. Members were interested in seeing ambulatory care covered at a modest increase in premium. Those not joining had diverse reasons, including living outside the catchment area.

Table A.10 Swamwda Survey: Attitudes

|.**....**.........<br>...........................................<br>No<br>Survey<br>question<br>X Resp|. of<br>ond.|
|---|---|
|Can you increase<br>your premium<br>from 125<br>to 200 Zaire to cover nmbulatory<br>**care?**|26|
|Yes<br>80.8X<br>No<br>19.2Z||
|why did you decide to be a meber?<br>Cheapest way to get care<br>89.72|29|
|Quality of careisbetter<br>**3.4X**||
|solidarity<br>3.4X||
|I thought<br>it was oblieatory<br>3.42<br>Other<br>**3.4X**||
|What benefits do you receive from your<br>membership?||
|The personnel seesmefaster<br>**37.0X**|27|
|I have better<br>health<br>3.72||
|i want to support the**institution**<br>**3.72**||
|Quality<br>of care is better<br>**22.22**||
|Other<br>**3.7X**<br>||
|No response<br>29.6X||
|Whatare the disadvantages or problem of<br>insurance scheme?||
|Too expensive<br>6.9X|29|
|Itisnecessary<br>to come for ftollow<br>up 17.2X<br>visits||
|No response<br>75.92||
|Why are you not a member<br>of the insurance<br>scheme|?|
|<br>I have no money<br>16.02|21|
|I didn't know at the time of<br>5.02<br>Other<br>**75.0O**||

27
# B. CASE STUDY OF BOKORO

The rural health zone of Bokoro, located in the Bandundu region of Zaire about 350 km northeast of Kinshasa, was created in 1981. Services at health centers and hospitals are coordinated by a central office (Bureau Central de la Zone de Sante, BCZS). The various organizations which provide health care in the zone are represented in the zone health committee: the government, the Catholic and Baptist missions, the Belgian Cooperation, etc. The zone recovers a substantial part (over 80% in 1988) of its recurrent costs including local salaries through fees for services. Certain services receive technical and financial assistance from a variety of sources to close the gap between the available budget and expenditures. The referral hospital Bokoro recovers over 60% of its costs through fees for services.

In contrast to the Bwamanda health zone, the referral hospital in Bokoro does not enjoy a monopoly position. It faces several officially recognized and some 'illegal" competitors for inpatient care. The hospital has made considerable efforts since its creation to improve access to ambulatory inpatient care all over the zone. As a result, occupancy rates in the Bokoro hospital have decreased drastically since the late 1970's. When the rate stabilized in 1987 at about 1200 admissions per year excluding the maternity, it was about half the level of 1978. The number of available hospital beds decreased simultaneously, from 127 in 1986 to 78 in 1989, resulting in an annual occupancy rate of 40% to 45%. The average length of stay is about 10 days.

In addition to the inpatient care, the hospital provides ambulatory care to 1,500 to 2,000 patients every year amounting to about 5% of its annual operating expenses in 1988.

# 1. Terms of the Insurance Plan

The Bokoro subscription plan is a direct insurance plan, offered by the provider, the Bokoro Rural Health Zone. Since its introduction in 1985 the insurance plan, called the "abonnement," has undergone dramatic changes. Originally intended to guarantee comprehensive care, including preventive, ambulatory and inpatient care at the peripheral and referral level, today this plan covers only curative ambulatory care. Due to financial difficulties, extra charges are imposed for chronic diseases like diabetes and hypertension. Preventive care, family planning, deliveries, prolonged treatment, treatment of sexually transmitted diseases and antibiotics and injections are not included in the insurance plan; patients must pay for these. First line treatments of tuberculosis and leprosy are provided free of charge through separate programs.

Table B.l shows the full charge schedule at the health center. Insured patients pay 25 percent of these charges; uninsured patients pay the full amount. There is no cap on spending. As virtually all enrollees are employees, any cap would be inconsistent with the Zaire employment laws, which require employers to pay for all medical care.

Most employers in the zone, including health services, missions, and processors of agricultural products (such as BIMPE) enrolled their workers and dependents in this plan. Presently over 4,000 persons are covered, representing 4.5% of the Bokoro Health Zone. Enrollment in the .nsurance plan (abonnement") costs 1,200 Z per person per year. When one family member enrolls, the entire family is obliged to subscribe. This requirement reduces the likelihood of an adverse selection as well as sharing one card among family members. Contributions for an entire family can easily reach 12,000 Z. This premium is very expensive for the general population; thus, the enrollment rate outside of employees is presently close to nil.

No co-payment was associated with the plan initially. To reduce the moral hazard patients must now make a 25% co-payment of the normal non-subscriber fees. Because only employees are enrolled and they should be reimbursed for this copayment, this policy should not affect 28
Table 8.1 Fees for Service **at** Health Centers Bokoro Health Zone, 1989

|.............................................<br>SERVICE CATEGORY<br>IZAIRES<br>.....................................<br>...............................**.**|
|---|
|CONSLILTATIONS|
|Children,<br>registered<br>at NCH<br>120|
|Children,<br>not registered<br>150|
|Patient<br>above 14 years<br>180|
|Patient<br>from outside<br>zone<br>250|
|MATERNAL<br>and CHILC HEALTH|
|Pre-school<br>care|
|inct.immdization<br>(5 yrs.)<br>200|
|Ante**natal**care**(9 months***)<br>200|
|Planrnd parenthood (12 months)<br>300|

- F) for one disease episode up to 5 days duration. Extra charges apply for: antibiotics, drugs after the fifth day, fee for after hour consultations.

- ') Excluded: weekly malari prevention.

utilization substantially. From the survey, it was not clear whether insured respondents were actually reimbursed for all medical costs.

Services are fully available to uninsured persons upon payment of a flat fee for an episode of care. A minimum charge was set at 180 Z for an adult in 1988 by the BCZS. However, the health committee for a health center can decide to charge more, for example 500 Z. Services covered by the flat rate are limited. Extra charges arise for antibiotics, prenatal and child care.

To better characterize the insured and uninsured population and to assess interest in other forms of insurance, a small survey was conducted. The questionnaire was similar, though not identical, to the one used in Bwamanda, discussed above. The questionnaire was written in Lingala. Annex V contains a copy of a completed questionnaire in Lingala and an English translation. Of the 47 subjects interviewed, 21 were a systematic one-third sample of the 63 non-maternity inpatients in Bokoro Hospital, and 26 were heads of families (all farmers and fishermen) from the towns of Bokoro and Kempa, 12 km outside Bokoro. These 26 families were chosen systematically from family cards in the health centers of Bokoro and Kempa. Table B.2 characterizes the insured and uninsured respondents.

Table 5.2 Bokoro Survey: Population Characteristics.

|**Characteristic**|Insured<br>**(Nu21)**|Unirnsured<br>**WMZ6)**|Valid<br>**Responses**|
|---|---|---|---|
|.........<br>.......................................||||
|Gender:||||
|**Fm_le**|29X|<br>**46X**|47|
|**Male**|**11**|S4X||
|**Average**Age|35|32|**47**|
|**SDO**f**Age**|14|20||

29
|*Patients from:||47|
|---|---|---|
|Sokoro Hospital<br>**38J**|50X|21|
|lokoro Town<br>33X|23X|13|
|Keop Toin<br>29X|272|13|
|Receives a**slary**each month<br>19X|8X|47|
|Occupation:||47|
|Agricutture/CuLtivation<br>572|65X||
|Fishing<br>102|82||
|Teacher<br>14X|02||
|Driver<br>02|4X||
|ELptoyed (details unspecified)<br>5|8X||
|Trader<br>102|42||
|No occupation or no response<br>52|122||
|Eptpoyer:||47|
|Pere-stataL<br>enterprise<br>52|OX||
|None or no response<br>952|1002||
|Wouldyou be**able**to pay incash 10,000Zaires||47|
|for anillness<br>requiring<br>minor surgery|||
|in a hospitaL?|||
|Ues<br>192|<br>4X||
|No<br>762|<br>**e8l**||
|No response<br>5S|<br>8J||
|,...........................................................||.........................|

* Percentage of respondents from each source Insured: Bokoro HospitaL, 382; Sokoro town, 542; Keqsa tow, 462.

# 2. Organization and Management

Three major concerns led to the introduction of an insurance plan in 1985 by the health zone authorities: a) the financial accessibility to health care was too limited for the majority of the population of the zone; b) a referral to the hospital was a severe financial burden; and c) revenues were not able to cover most recurrent costs.

The level of the premium is based on historic utilization rates, an average length of an episode and the quantity of drugs and materials consumed. The utilization pattern of a group of private employees (BIMPE corporation) was initially used as a standard. The premium was set to 600 Z in 1985 and remained constant until April 1989. In that month, the rate was doubled to 1,200 Z. Actual utilization in 1989 was found to be two consultations per member per year and the average cost was 500 Z per consultation.

In April 1989, the annual premium was doubled to 1200 Z. The increase anticipated continuing inflation (which sometime exceeded 100% per year), and a possible increase in utilization.

Insurance premia are paid to the provider, the health center. Premia for employed persons and their dependents are paid by the employer. In theory, people could enroll at any time during the year. In practice, enrollment tended to be highest after the two harvest and fishing seasons in this area, January, July and August, when the agribusinesses had the most cash and were best able to pay the annual premia for employees.

The names of all insured family members are recorded on duplicate forms. One copy remains at the health center and the other with the family. No unique identification numbers were used for each subscriber. The study team found no controls that would prevent non-enrolled persons from borrowing an insured person's enrollment form. It was not possible to assess the extent to which free care was provided to unregistered persons or persons where the 30
# membership had expired.

Although the Bokoro subscription plan does not cover inpatient care, it indirectly pays for the initial hospital consultation. Prior to admission the patient pays a consultation fee for the physician visit. About two thirds of the outpatients are referred by the health centers. For each referred outpatient, the hospital charges the referring health center 300 Z, thereby generating about 300,000 Z. Rcferred patients themselves pay nothing for this consultation, but they do pay regular hospitalization charges if they are admitted. Self-referred patients pay 500 Z for their outpatient consultation.

The system of referral accounts for health centers was introduced in 1985. These accounts were intended to pay for hospital care of patients referred from the health center for continued treatment of the same illness episode. Due to limited revenues, however, only outpatient consultations at the hospital are included today. Fifty percent of the health centers' profit (the balance of revenues after deduction of recurrent expenses and costs of drugs) is credited every month to the referral account.

This system of referral accounts, similar to one used in the town of Kasongo, was intended to provide a form of risk pooling. Minor outpatient episodes would have subsidized more costly problems requiring hospitalization. Kasongo reportedly has had similar problems to Bokoro, however. At the level of flat fees for outpatient care that are acceptable, it is not possible to generate sufficient revenues to finance inpatient care.

All revenues after deduction of local exoenses are transferred monthly to the central account of the health zone at the Service a' Approvisionnement en Fournitures, Equipements et Medicaments (SAFEM), which keeps separate accounts for the hospital, zone, and pharmacy. At the BCZS each health center has its own account showing debits and credits. Funds generated by the insurance plan are not separated from other revenues. As a result, it was nut be possible to estimate the administrative effort for the plan separately.

# 3. Resource Mobilization

The health zone as a whole operated at a deficit each year from 1986 through 1989. In 1988, the deficit was 2 million Z. The majority of health centers either have deficits or generate insufficient profits to cover the administrative costs of the BCZS. There is a severe disincentive for these health centers to function well. If they make a profit, only 15% is retained for investments and only 10% for discretionary use by the health committee. Moreover, there is no punishment for bad performance; rather the good centers will have to share the entire burden.

Preserving premium income over the year is a problem throughout Zaire. Savings kept in cash is eroded by inflation, and bank interest rates are generally far below inflation. The study team identified several institutions in which revenues from the health insurance plan could be invested. Last year a rural savings cooperative, Societe Cooperative d'Epargne et de Credit de Bokoro (SECREB) was created by private citizens. A very competitive interest rate will be paid this year for short term (several months) deposits. An alternative is several private merchants who supply farmers with tools and material and who buy their products. Several of them are seen by long time Bokoro residents as serious partners for investments.

Before examining the financial status of Bokoro hospital, its charge structure will be reviewed. An advance of 2,500 Z has to be paid on admission. This amount covers an anticipated period of hospitalization of 10 days; the minimum charge is for five days (1250 Z). Any unused balance is refunded to the patient. In addition the patient pays for various procedures and for certain drugs. Table B.3 shows a detailed price list for services provided at Bokoro Hospital.

31
Table 9.3 Fees for Service **at** Bokoro Hospital, 1989

|SERVICE CATEGORY<br>I|ZAIRES|SERVICE<br>CATEGORY<br>I|ZAIRES|
|---|---|---|---|
|AMBULATORY<br>CARE||INPATIENT<br>CARE||
|Consultation, referred<br>|300<br>|Deposit<br>|2,500<br>|
|Cons. non-referred<br>|500<br>|NiniamPayment<br>|1,250<br>|
|Cons.nurseonduty<br>|200<br>|Any additional day|250|
|Outpatient care* 1 week<br>|500<br>|||
|Diabetes (6 months)<br>|250<br>|Private room per day, standard<br>|500<br>|
|Privateconsultation<br>|1,000<br>|Private room per day, Luxury<br>|650<br>|
|Nedicalcertificate|500|Laboratory, cat. 4|250<br>|
|||Surgery,<br>cat. 1|2,100|
|Laboratory,<br>cat. 1|50|Surgor),<br>cat. 2<br>|3,150<br>|
|Laboratory,<br>cat. 2|100|<br>Surgery,<br>cat.3|4,050|
|Laboratory,<br>cat. 3<br>|150|<br>Surgery,<br>cat.4|4,850<br>|
|Laboratory,cat.4|250|Surgery,<br>cat. 5<br>|7,200<br>|
|||Surgery,<br>cat.6|8,650|
|X-Ray|1,000|Spinal<br>anesthesia|A50|
|Ultrasound,<br>extern,<br>w/ med.need|1,000|Ultrasound|500|
|Ulttasound,<br>extern,<br>on demnd|2,000|X-Ray|1,000|
|Echocardiogram|350<br>|||
|Surgery,<br>cat. 1|1,250|||
|Eye examination<br>.............................<br>.............|250<br>......................|...<br>.....|e....|

Table S.4 Firnncial Situation of Bokoro Hospital, 1986 - 1989 <!-- Start of picture text --> Percent Percent Percent I Percent<br>of total of total t of total I 1.HALF of total<br>1986 exenses 1987 * ees 1988 exeses I M989 expenses<br>------------- ------.. ----- ------------------ 1- ---------------------- 1-----------------------<br>Exp. Rev. |Exp. Rev. | Exp. Rev. Exp. Rev.<br>OPEiRATING REVENUE<br>User fees and I I I I I I I<br>insurance plan 2,218,013 91.7X13,189,941 1 99.3115,220,314 1 96.91I4,147,044 1 98.3X<br>Others 201,598 i 8.3X1 21,398 | 0.7%1 164,501 i 3.1X1 71,782 | 1.7X<br>------.--- ... .. I ..--- I ----- 1--I----- .---------- --- --<br>TOTAL: 2,419,611 | 96.7813,211,339 56.3X15,384,815 16.3X14,218,826 | 62.1X<br>OPERATING EXPENSES I I I I I I<br>Persorrel (excl.expats) 846,222 I 49.61 12,049,358 I 52.81 12,768,706 46.4% 12,932,384 1 44.5X<br>Drugs and med.supplies 404,718 23.71X, 990,890 1 25.51 12,322,755 I 38.9X 12,834,017 1 43.01<br>Office siplies 16,220 1.01 I 29,483 I 0.8X 39,113 I 0.71 I 78,296 I 1.2X<br>Tranrport 610 | 0.0% 96,548 % | 2.51 | 141,861 | 2.41 | 31,334 | 0.5X<br>Maintenance 61,403 3.61 I 105,648 2.7S 126,212 2.1X I 127,772 1.9X<br>Fuel £ electricity 216,910 12,71 I 4,757 11.5X 429,037 7.2x 55S,316 I 8.4X<br>Food service & other 159,499 | 9.41 | 166,234| 4.2 | 140,943 2.4X | 34,282 | 0.51<br>.---.- ------ 1 .------- 1- ----- --.-.-.-- - ---------- -----<br>TOTAL: 1,705,582 |lOO.0 13.8a0.918 |100.01 O5,968,627 1100.01 16,593,401 1100.0|<br>OPERATING SUBSIDIES: 33,099 | 1.3112,497,14 1 43.7X12,742,143 | 33.7112,574,322 | 37.91<br>I --- 1 1 ---- 1 --- I ...<br>100.0O1 I 100.0O1 I 100.0X1 I 100.0l<br><!-- End of picture text -->

32
Table B.4 shows the cash flow of<sup>Bokoro Hospital from 1986 through the first six months of</sup> 1989. Revenues from operations together<sup>with subsidies cover hospital expenses every year.</sup> While in 1986 almost 99% of operating<sup>expenses came from operating revenues, this share</sup> dropped to 56% the following year.<sup>In 1988 and 1989, respectively, 34% and 38% of operating</sup> expenses are covered from subsidies.<sup>The Catholic mission, the Belgian Cooperation, SANRU,</sup> FONAMES, and the government of<sup>Zaire contributes salaries for some of the personnel.</sup> The share of expenses for drugs and<sup>medical supplies has doubled over the past four years and</sup> is approaching 50% of the hospital's<sup>recurrent costs.</sup> It was not possible to distinguish<sup>between revenues from insurance funds and direct patient</sup> charges. The hospital budget is shown<sup>to cnable a calculation of necessary revenues from a</sup> hypothetical insurance for hospital<sup>care. Given the present subsidies and the present level of</sup> services the hospital would need a<sup>minimum of 40,000 subscribers. Including anticipated</sup> administrative costs for the insurance<sup>plan and an inflation rate of 60%, a premium of 200</sup> Z per person would seem necessary.

# 4. Utilization and Access

Rates of utilization of ambulatory care<sup>services at the Bokoro Health Center for the first six</sup> months in 1989 are shown in Table B.5.<sup>D.fferences in utilization between subscribers and the</sup> uninsured are striking. Based on the<sup>six months average, subscribers consult five times as</sup> often as non-subscribers with a new disease.<sup>Rates of treatment with antibiotics, antibiotic</sup> prescriptions, and injections show a similar<sup>pattern. Subscribers use two to nine times as many</sup> services. Their higher utilization rate<sup>is not necessarily due to insurance, however. Every plan</sup> subscriber is employed and all medical<sup>expenses for the family are covered anyway.</sup> In the household survey, mentioned earlier,<sup>respondents were asked about their preferences</sup> regarding health insurance. A single<sup>annual payment of 100 Z to 200 Z per family member</sup> seemed affordable. The preferred times<sup>to pay were January, July, and August. The survey</sup> of members showed that they were interested<sup>in broader coverage that would include hospital</sup> care as well as ambulatory care (see Table<sup>B.6). While hospitalized patients naturally preferred</sup> hospital care, a majority of healthy villagers<sup>preferred ambulatory care.</sup> A major handicap to wider enrollment<sup>is probably the lack of an incentive for the health</sup> personnel to attract new subscribers.<sup>The staff of health centers are evaluated and rewarded</sup> with an incentive payment for an overall<sup>high utilization rate, correct operational procedures</sup> and having more revenues than expenses.<sup>No incentive is provided for new plan subscribers.</sup> These would merely add to the work load<sup>but not necessarily increase the profit.</sup> Health zone administrators complained<sup>that clinical personnel did not believe in the value</sup> of the insurance scheme. Thus, their publicity<sup>and educational efforts were minimal or even</sup> negative. No clear policy had been formulated<sup>regarding the best enrollment period.</sup> The authors felt that if the premium<sup>were lower, substantially more subscribers would enroll</sup> and would dilute the present high risk<sup>membership with more low risk subscribers. The health</sup> committee members and health center<sup>staff with whom they spoke, however, could not follow</sup> t;.is argument.

The study team felt that respected community<sup>institutions could assist in publicizing the idea</sup> of a prepayment plan. In Bokoro, the<sup>Programme des Actions Complementaires (PAC) might</sup> serve this role. It was created to promote<sup>social services, agricultural and fishing activities</sup> and 4% associated with the BCZS. Also,<sup>two religious missions (Catholic and Baptist) have</sup> contributed greatly to the development<sup>of the Bokoro area over the past 70 years. They enjoy</sup> great confidence of the population<sup>which could be an important factor for a successful</sup> 33
Table 6.5 Health Care Utilization by 'lan Subscribers nd Non-subscribers at Bokoro Health Center *

|I<br>1989|<br>Jan|Feb|Par|Apr|May|Jun||AVERA|GE RATh|O#I|
|---|---|---|---|---|---|---|---|---|---|
|lPopulatfon sze<br>|I|||||||||
|<br>Non-subscribe<br> <br>|rs<br>3817<br>|3797<br>|3794<br>|3819<br> <br>|3799<br>|**2966** <br>||<br>3669<br>||||
|Subscribers<br>|I156|176|179|<br>174|174<br>|176<br>|173<br>|||
|Totat|3973|3973|3973|<br>3993|3973|3162 <br>|I3841<br>|||
|-----------<br>----------<br>|<br> <br>Now cases|-------<br>| ANNU|---<br>AL<br>UTIL|----<br>--<br>IZATI|------<br>ON<br>RATE.|-------|--<br>-1|-------1|- -----||
|Non-subscribe<br>|rs<br>I0.45|0.38|0.46|0.48|0.46|0.59|0.47|||
|Subscribers|4.59|1.69|1.86|2.25|1.79|2.30|I2.36|I5.0||
|tAntibiotic<br>prescr|.18|||||||||
|Non-subscribers|10.03|0.05|0.05|0.08|0.07|0.06|0.06<br>|||
|Subscribers|10.49|0.31|0.27|0.31|0.49|0.72|0.44|I7.3||
|linjections|||||||I<br> <br>|||
|INon-subscrib<br> <br>|ers<br>I0.14<br>|0.08|0.15|0.32|0.33|0.19||<br>0.20||||
|Subscribers<br>|I1.98|0.92|0.27|1.24|1.51|3.11|I1.72|88.6||
||AVE|RAGE<br>RAT|E PER N|EW CAS|E|||||
|fAntibiotic<br>Rx<br>|I|||||||||
|Non-subscribers|I0.06|0.06|0.06|0.09|0.09|0.10 <br>||<br>0.07<br>|||
|Subscribers|0.11|0.18|0.14|0.14|0.20|0.31|j0.18|I2.61||
|lInjections<br> <br> <br>|I<br> <br>|||||<br>|I<br> <br>|I<br>||
|<br>INon-subscribe<br>|rs<br>I0.32|0.21|0.31|0.66|0.70|0.33 <br>|I0.42 <br>|I<br>|I|
|Subscribers|0.43|0.55|0.62|0.55|0.84|1.35|0.73|1.7||

*) Data from the *BORDEREAU DE CONTROLD **E** CAISSEn pert A, Nber 14 - 16 wnd 19. ?) Ratio of average for subscribers divided by average for non-subscribers. *) Projected annual utiLization rates, calcuLated **as:** nimber of services in month * 12 / population size.

# insurance plan.

Table B.6 Sokoro Survey: Ouestions Asked Separately of Insured Respondents (N=21) <!-- Start of picture text --> QUESTIONS Respondents<br>Can you pay 100 Zeares for an in urance scheme 21<br>which wfil take care of all of your fmily? Wien?<br>Now 52X<br>In a week 19X<br>In a month 10X<br>kewer 19X<br>Can you pay 200 Zaires for an Insurance scheme _ich<br>wIll take care of all of your fteily? 21<br>Now 38X<br>In one day 5X<br>In a week 10X<br>In a month 29X<br>Never or no response 19X<br><!-- End of picture text --> 34
|When wilt you like to pay|||
|---|---|---|
|this amount7||17|
|Any time|41K||
|Dry season (3rd quarter)|41X||
|After harvest<br>(end of 3rd, begin.<br>4|24X||
|3rd, 4th or 1st quarter|18X||
|Why will you like topaydtthattime?||17|
|Enptoyer<br>covered|24X||
|Cash availeble|18X||
|Selling<br>the harvest|12X||
|Selling<br>fish|29X||
|Selling<br>coffee|18X||
|SeLting<br>products|12Z||
|Selling<br>fish and coffee|6X||
|Selling<br>coffee and harvest|6X||

If this insurance woulo cover either the cost of care at the hospital or at the hospital, 21 Which would you prefer? Health center 33X Hospital 57X 1 don't know 10l Were you sick last month and sought care? 21 Yes, sought care at heaLth center 14K Yes, sought care at hospital 19X No answer or did not sought care 67K 35
# C. CASE STUDY OF ST. ALPHONSE

The St. Alphonse Health Center is the first and only operating health facility in the urban health zone of Matete, Kinshasa. Since the Matete Health Zone is not yet functional, St. Alphonse is supervised by the Kisenso Urban Health Zone. The Kisenso zone receives technical assistance, capital and operating subsidies from the Belgian-sponsored project 'Sante Pour Tous Kinshasa" (SPTK). St. Alphonse Health Center began operation in 1987, largely through community action channeled through the Development Commission of the St. Alphonse Parish. The health center received investment subsidies from many donors, including the OXFAM Project (Great Britain), the Canadian and German Embassies, and SPTK. At present, the health center is self-financing with a large profit margin.

# 1. Terms of the Insurance Plan

The St. Alphonse insurance plan covers ambulatory curative care episodes of illness at the St. Alphonse Health Center. Plan members are entitled to pay a fixed fee for each episode of illness up to five days, rather than paying for each day of treatment as non-members are required to do.

Table C.l lists the prices according to payor category (member vs. non-member). An episode of illness includes up to five consultations and all basic drugs required. Per visit fees also include consultation and basic drugs, but for one day of care only. For both payor categories, laboratory exams are charged separately. Drugs which are not usually kept in stock at the health center level (for example, quinine for chloroquine-resistant malaria) are charged separately as well.

Table C.1 Prices, St. Alphonse Health Center Kinshasa, 1987-1989 <!-- Start of picture text --> ZAIRES<br>.............................................................<br>ADULT I CHILD l<br>1 ------------- ---------- 1---------------------------<br>l OIN0N-NEN1NiON-ENBI I NON-MENSINON..-ON1<br>------- IEMBER |MEMBER IFIRST IOTHER INENSER IFIRST |OTHER I<br>IDATE IPREK!UNIEPISODEIVISIT |VISITS IEPIS XE|VISIT IVISITS I<br>I------- I----- I--------I--------I---1-----I---1---- I--1--- - --1-- -----1I<br>IJAN. 871 50 1 100 I 110 1 50 1 80 (*) I (C) I<br>IJAN. 88l 150 1 150 1 150 I S0 I 100 1 100 1 50 1<br>IJAN. 891 150 1 300 1 200 1 50 1 300 1 200 1 SO I<br>INAR 89I 300I 5001 400 1 150 1 500 400 1 150 I<br>....................................................................<br>C') No price was estebltihed for non-nember children the first year.<br>In 1989 differential pricing for adult/children was bwndoned in<br>favor of one price for slt age groups.<br><!-- End of picture text -->

The health center also offers prenatal consultations and well-baby care; however these services are not covered by the insurance plan. Deliveries are referred to other facilities, although the health center would like to open a maternity service in the future.

The population eligible- to join the insurance plan includes the approximately 10,000 residents of the health center's catchment area. No census has been carried out, nor is one planned in the near future. Enrollment in the insurance plan is voluntary. Since the health center opened in February 1987, 1,689 residents have joined the insurance plan, although only about 620 (6.2%) are currently covered under the plan.

36
According to a member of the St. Alphonse Development Commission, many residents in the catchment area are salaried workers with employer health coverage. St. Alphonse health center does not bill employers for care, so there is no record of the number of patients who may not have joined the insurance plan because they are already covered by their employer.

The insurance premium for 1989 was set in March, at 300 Z ($0.85) per person. The 1988 premium price was 150 Z ($0.80), increased from the initial price of 50 Z ($0.39) in 1987. In early planning meetings, community members expressed a preference for family enrollment, but the health center staff and development commission members felt that without a census such a system was open to abuse. All individuals pay the same premium.

As discussed above, the insurance plan has a co-payment of 500 Z ($1.41) per episode of illness. The insurance plan has not established any deductibles. In 1987 and 1988, the co-payment differed according to age, with a lower co-payment paid by children. All SPTK-supported health zones abandoned this practice in 1989, in favor of a single co-payment. Table C.l shows co-payments from past periods. The episode of illness covered is restricted to five days, and does not cover expensive, special drugs.

The health center treats patients who are not members of the insurance plan; in fact, almost _85%_ of new cases seen at the health center in 1988 were in non-members (see Table C.2 for utilization figures). Non-members do not qualify for the episode of illness price, but are required to pay for each day of care. Currently non-members pay 400 Z ($1.13) for the first day of care, and 150 Z ($0.42) for each subsequent day of care. The average number of visits per episode of illness for non-members thus far in 1989 was 3.6, or an average cost per episode of 790 Z ($2.23) [(I visit x 400 Z) + (2.6 visits x 150 Z)]. As with members, while consultations and basic drugs are included in the price, laboratory exams and special drugs are charged separately.

**Table C.2** Utilizatiln, **St. Alphonse Health** Centar Kinshasa, 1968-1989

<!-- Start of picture text --> ........................ ...................................... ............<br>1968 1 1989<br>----- ------------------ -1----------- ----- ------ 1<br>1X IX I number 1 I<br>I umber Itotal irew I (8 mo.) Itotal Inew I<br>I -utI. Icas&$ I (*) lutil Icses I<br>I----- --- 1--I--1---- I------ I-----1--- I---1-------1I<br>Members episodes 1 1,413 1 5.2X1 13.7X1 434 1 3.011 10.3X1<br>hon-members first visit I 8, 8981 32.6X1 86.3X1 3,788 1 26.4X1 89.7X1<br>Mon-m'rbers other visits(+)I 16,477 1 60.3X1 - 9,710 1 67.861 --- I<br>CPH new cases enrolled 376 1 1.4Z% - 302 j 2.1X1 --- I<br>CPS rew cases enrolted 168 0.6O 1 -- 98 1 0.7X1 --- I<br>TOTAL: |27332 ....... |100.OX1iO0.OX| .... --- 1----I-1-- I ------- 14.332 1I------I------1I 1100. 01100.0%1<br>1-------------- ------- -1- ------------ --------- 1<br>Visits per episode I I<br>(nomrebs) I 2.9 1 3.6 l<br>.................................................<br><!-- End of picture text -->

- **Jan.** to Sept., *xcltud1n **Aprlt (no** deta avalt. for **April)**

- * Follow-up **visits are calculated** by dividing total **receipts** for **follow-up** visits by priee **per follow-up visit.**

37
# 2. Organization and Management

The insurance plan began with the ope-1ing of the health center, in February 1987. The Development Commission of St. Alphonse parish was instrumental in creating the health center and mounting an awareness campaign amnng the population in the health center's catchment area. The Development Commission has been in existence for over 10 years, and manages a diverse range of activities in addition to the health center, including a food cooperative, tie-dying cooperative, and an adult literacy program.

The health insurance plan-awareness campaign took a full year and involved considerable effort. Four members of the Development Commission worked full-timc for two months, conducting door-to-door vi;its to explain the purpose of the insurance plan. They were assisted by six students from the National Art Institute who were enrolled in the Institute's program in 'animation culturelle.' The students worked full-time for three months.

In spite of this concentrated effort, most residents were not convinced about the benefits of joining an insurance plan. The plan bcgan with only 50 members. The St. Alphonse insurance plan is a direct insurance plan, offered by the provider, which is both the center and the zone. Accounting for the insurance plan is mingled with that of the health center. The price of the premium is set by SPTK/health zone central office staff. It was not possible to meet with these people, so little is known about how the premium price is established.

Individuals may join the plan at any time during the year, with coverage starting immediately and lasting one year from the time of enrollment. The only restriction is that people cannot join the plan while they are sick. Enrollees receive a membership card which specifies name, age, sex, membership number, date joined, and date of expiration. The health center nurse also records information about each enrollee in a membership register. This register records membership number, date (without year), name, address, sex, and age. Membership numbers are sequential until 1,000, then begin again with number 1. When a person wishes to renew his or her membership, a new card is issued (with a new membership number) and the old card is destroyed. Therefore it is difficult to analyze renewal rates.

There are few recurrent costs associated with administration of the insurance plan. Since the plan began, no new registers or membership cards have been purchased. The membership verification process is very simple (the receptionist compares the membership card to the person's national ID card), and accounting is combined with that of the health center, so personnel expense for record-keeping is negligible. The current cost of printing a membership cards is about 20 Z ($0.06), so the card expense for the 620 current members is approximately 12,400 Z ($35).

To identify plan members, as mentioned above, the membership card is compared to national ID card. Cards are not checked against the membership register.

Premiums are deposited in an account at the parish, as are all receipts of the health center. A member of the Development Commission works at the health center as an administrative assistant, and prepares a monthly financial report according to the SPTK model. The report shows cash flows as well as an income statement. Premiums are recorded as a cash receipt, but not as income. No interest is earned on premiums.

# 3. Resource Mobilization: Financial Situation of Plan **and Center**

Table C.3 presents the combined financial situation of the insurance plan and the health center for 1988 and 1989.

The data show that the health center is extremely profitable, with a margin of almost 65% in 1988, and _52%_ in 1989. Insurance premiums and member co-payments do not contribute a 38
Table C.3 Finmncial Situation, St. Alphonse 1988-1989 Nominal Zaires <!-- Start of picture text --> 1988 1989 l)<br>. ........ ...................... I--------...............<br>X of Total Exp.1 X of Total Exp.<br>OPERATING REVENUE ...................... I----------------------<br>Insurance premium 88,090 4.2K1 77,625 2.2X<br>Member episodes 279,300 13.3X1 303,225 8.7X<br>Non-mesbers firat vfait 1,158,950 55.1X12,017,080 57.6X<br>Non-m mbers other visits 823,860 39.2X11,470,525 42.0%<br>CPN & CPS 110,600 5.3X1 469,350 13.4X<br>Sale of drugs C*) 544.080 25.9K1 171,675 4.9%<br>Laboratory (+) 265,960 12.6X1 579.150 16.5X<br>Sale of foodstuffs 163,580 7.8X1 195,150 5.6X<br>Other 33,710 1.6K1 33,000 0.9X<br>TOTAL: 3,468,130 164.9%15,316,780 151.7X<br>OPERATING EXPENSES |<br>Personnel 832,426 39.6X 11,962,990 56.0X<br>Drugs and med. supplies 977,856 46.5X 11,215,200 34.7%<br>Supplies, util., mint. 177,121 8.4X 322,043 9.2X<br>Purchase foodstuffs 34,475 1 6K 4 500 0.1X<br>Other 81,785 3.9X I 0 0.0C<br>---------....--- 1-------------<br>TOTAL: 2,103,663 100.0% 13,504.732 100.0X<br>BALANCE: 1,364,467 64.9K11,812,048 51.7X<br><!-- End of picture text -->

- 1989 fIgures extrapolated based on 8 months of actual data A* fter Nov. 1988 **reverse** from sales of drugs drops sharply. This my Indicate a chnge in pa wAnt system

- (more drugs included per episode) Laboratory receIpts recorded only for May through Dec. in 1988

- **Exchange** rates whd Inflation rates for each year are found in Amex III

large amount to the total revenue of the health center in either year Examining revenue as a percentage of total expenses, premiums covered 4.2% of expenses in 1988, and only 2.2% in 1989. Member co-payments covered another 13.3% of expenses in 1988 (8.7% in 1989). In both years, nearly all of health center expenses were covered by consultation fees paid by nonmembers. Other services (sale of drugs, laboratory, preventive care, etc.) contributed to the positive margin.

# 4. Udlization

Table C.2 showed member and non-member utilization for curative care cases, and combined utilization for preventive care. Member episodes accounted for 13.7% of all new cases of illness in 1988. This share dropped to 10.3% in 1989.

Unfortunately, follow-up visits for members are not recorded by the health center, so it is not possible to evaluate from its utilization data whether payment by episode encourages members to come back to the health center more frequently than non-members. For nonmembers, from 1988 to 1989 the number of visits per episode of illness increased dramatically from 2.9 visits per episode to 3.6. Changes in the relative price of follow-up visits compared to the initial visit may explain some of this difference (the relative price of follow-up visits 39
dropped in the first two months of 1989, then increased again in March). It is also possible that the diligence with which records are kept at the health center improved somewhat in 1989.

To better understand the characteristics of insured and uninsured patients, a random sample of consecutive ambulatory patients was surveyed in October 1989. The questionnaire was written in French and posed in Lingala by bilingual Zairois interviewers (see Annex V). Table C.4 presents the characteristics of respondents by insurance status for this plan and the CASOP, the other Kinshasa case study, described below. Table V.2 in Annex V documents the decision rules for resolving missing and ambiguous data on membership status, which arose in 9% of responses.At the St. Alphonse center, 79 patients responded of whom 13% were insured. At the CASOP, 126 patients responded of whom 51% were insured.

Table CA4 Kinshass Survey: Population Characteristics

|Insured<br>Characteristic<br>(HW74)<br>..<br>.................<br>...................................................|Uninsur<br>(Hu131)|ed Valid<br>Responses|
|---|---|---|
|Center:|||
|St. Alphonse<br>14X|53X|205|
|CASOP<br>86X|47X||
|Gerder:<br>|||
|Female<br>44X<br>|63X|205|
|Male<br>55X|34X||
|Age group:|||
|<br>0-14<br>10X|11X|205|
|15-44<br>79X<br>|76X||
|**45 and**above<br>11|13X||
|Average<br>+S.D.<br>29 *14|<br>27 +13||
|Receives<br>a salary<br>each month<br>42K|33X||
|Occupation:<br>|||
|Professional, "cadre"<br>7X<br>|10X|205|
|Skfiled worker<br>13X|8X||
|student<br>24X|16X||
|Unskilled<br>worker<br>24X|16X||
|**Former**<br>**1i**<br>|2X<br>||
|Other<br>11X|13K||
|None<br>20K|35K||
|Eqployer:<br> <br>|||
|State<br>**21K**<br>|6X|205|
|Pare-statal enterprise<br>3X|2X||
|Private<br>enterprise,<br>for profit<br>11K|14X||
|Private<br>enterprise,<br>not for profit 6K|3X||
|Independ"nt<br>1K|7X||
|Household<br>1X|2Z||
|Other<br>Os|1X||
|Hone<br>or no response<br>56X|66X||
|Coqenpoys formdical care.:|||
|In full<br>35X|19X|205|
|**Some**<br>**6X**<br> <br>|**3X**||
|**Hon**<br>**3K**|13X||
|**Hot eployed**<br>**56X**|66X||
|**Is**nother**ftily**<br>**meber**<br> <br>|||
|_ployed<br>**nd**covered for|||
|medical<br>exenses?<br>44X|27X|202|
|<br>p<br> <br>.....................<br>...................................|<br>........||

40
As time for pretesting the survey and training the interviewers was limited<sup>to a few hours,</sup> the survey should be viewed as an indication of characteristics rather than a prec,se<sup>scientific</sup> inquiry. The resu!ts show that both insured and uninsured patients are young adults,<sup>of whom</sup> about a third are emiployed. Insured patients tend to be slightly more likely to be employed ^nd have better jobs than uninsured, but differences are small.

Table C.5, based on this survey, shows actual paymeLl's reported by insured and<sup>uninsured</sup> patients for their current episode. The results show confirm that uninsured patients do pay more than insured patients, but both groups do pay something. These data from an independent source (the patients) confirm that actual charges are consistent with the official price list.

Table C.5 Kinshasa Survey: Iltness and Expenditures.

|.................................<br>............................<br>Characteristic<br>.......<br>............<br>............<br>.........................|............................<br>Insured<br>(074)<br>Mean|SO|Uninsur<br>**WMzl3**<br>Mean<br>..<br>..<br>.............|...................**..**....<br>ed<br>**l)**<br>SD|
|---|---|---|---|---|
|Duration of present tltness<br>episode in days|**53**|225|27|109|
|**First**visit for this episode.|35X||39X||
|Number of**previous**visits for<br>current episode|**2.0**|**2.6**|**1.6**|**4.2**|
|Payment**for**current<br>**visit**<br>**In**Zaires|**222**|521|511|856|
|Total payment for current visit incLudi|ng:||||
|**Lab.,**x-ray**end**consultation<br>SO.00- **t0.99**(O- 430**Zafres).**|**90°**||**76**||
|***1.00**-<br>**#2.00**(430 - 860 Zaires).|4X||7X||
|**52.01**- S5.00(861 - 2150Zaires).|4X||10X||
|<br>Morethan S S (More than 2150Zaires)|1X||7r||
|<br>MAN|0.5||1.2||
|Nedicine<br>included in total payment:|||||
|<br>**Altl IncLuded**|57X||56X||
|Some inctuded|42X||43X||
|None included|1X||1X||
|**Total payment for**sit<br>**previous**visits<br>**for**current<br>episode<br>**in**Zefresmeen<br>**SD)**|<br>115|309|<br>**308**|1,106|
|Expect**wny follow**<br>**up for**<br>**this episode**|**85**||**85X**||

Table _C.5_ also compares utilization data of insured and non-insured respondents. The results demonstrate some moral hazard or adverse selection, in that insured respondents<sup>had more</sup> previous visits. Table C.6 further describes the attitudes of the two groups. Insured persons tend to be slightly better off than uninsured; for example, the time they would require<sup>to</sup> mobilize 50,000 Z (S 125) was less than for uninsured respondents. Table C.7 presents questions asked separately of members and non-members. It is striking that 43% of non41
members had not heard about the plans before. Thus, posters and displays at the plans' clinics about the insurance system might be an effective and inexpensive way of increasing enrollment.

Table C.6 Kinshasa Survey: Population, Attitudes **and** Opinion

|.....<br>.<br>.<br>.<br>.<br>.<br>.<br>..<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>.<br>Insu<br>Characteristic<br>(11|.<br>.<br>.<br>.<br>red Uni<br>74)**WM**|.<br>.<br>.<br>.<br>nsured<br>**UI3I)**<br>R|.<br>.<br>.<br>Valid<br> <br>esponses|
|---|---|---|---|
|.......<br>.....................................................<br>||||
|Wiould you be able topay10,000 Zaires<br>|||205|
|for an illness requiring minor surgery<br>||||
|inahospical?<br>||||
|Couldpaytoday<br>'|35X<br>|34X<br>||
|Could pay some other day<br>|58X<br>|552<br>||
|Could never pay or no response<br>|72<br>|112<br>||
|*Afterhowmany days? (Average)|11|12||
|Would you be able topay50,000 Zaires<br>|||205|
|for an Illness requiring minor surgery<br>||||
|in ahospital?<br>||||
|Could pay today<br>|132<br>|112<br>||
|Could pay some other day'<br>|752<br>|70X<br>||
|Couldc never pay or no response<br>|132<br>|20X<br>||
|*After howmanydays? (Average)|30|40||
|Where would you get the 50,000 Zaires<br>(see question above)?<br>|||205|
|Cash, from household<br>|38X<br>|222<br>||
|Saving clubl<br>or association<br>|11X|6X||
|By selling household items or Livestock<br>|52|102||
|Takingaloanfromsomebody<br>||||
|outside the household.<br>|232|232||
|Donation from somebody outside<br>||||
|the household<br>|02<br>|1X<br>||
|Contribution of famiLy mrbers<br>|92<br>|192<br>||
|Other<br>|3X<br>|42<br>||
|No response|112|152||
|Would you suggest this insurance<br>||||
|plan to other family mnbers?|852|85X|135*|
|What do you think of the organization<br>|||205|
|of health insurance schemes?<br>||||
|Favourabte<br>|**962**<br>|**922**<br>||
|Not favourable<br>|1X<br>|3X<br>||
|Do not know or no response<br>..<br>.................<br>......................................|3X|5X|...|

* Applicable only to St. Alphonse. In CASOP, filies had to join.

Table C.7 Kirahass Survey: Questions Asked Separately of Insured and Uninsured **Respondents**

|.....................................................<br>**QUESTIONS**<br>What are**the**inconweniences or problem<br>of your<br>bership?|**2**|
|---|---|
|Too expensive|6.92|
|Benefits not worth the feesIpay|1.42|
|Itisnecessary to cowforfollow<br>kVvisits.|**26.4X**|
|Other|**15.32**|
|lNothing|47.2X|

42
**LWy are** you not **meaber** of **the insurance plan?**

|Too expensive|15.9X|
|---|---|
|<br>I have no money|7.9X|
|<br>Whyshould I pay before I_m_sick?|4.0X|
|Never heard about this before|42.9X|
|I*not often sick|0.8X|
|Idid not know at the time of||
|enrollment|10 .3|
|I do nottrust this insurance|5.6X|
|I can pay for each consultation|9.5X|
|<br>Other|3.2X|
|......<br>..........<br>_....................................||

As in Bwamanda, it was difficult to characterize the insurance status of about 18 respondents (approximately 9% of the respondents). As shown in Appendix Table IV.2, however, it was possible to impute the membership status based on responses to other variables.

43
## **D. CASE STUDY OF CASOP**

The Caisse de Solidarite Ouvriere et Paysanne (CASOP) is sponsored by the Zairian National Workers Union (UNTZA). The health insurance plan is only one of the many social services provided by the CASOP, which operates nationwide. The research team studied how the insurance plan works by looking at the CASOP's only polyclinic in Kinshasa, which serves all CASOP members in the city.

# 1. Terms of the Insurance Plan

The CASOP plan covers ambulatory curative cases of illness treated at the CASOP polyclinic in Kinshasa. Plan members are entitled to pay a lower fee than non-members for each day of care, which includes a nurse consultation and some basic drugs. Families of members are entitled to the same benefits as members, for no additional premiums.

Table D.1 contains a list of prices according to payor category. Theoretically, there are four categories: individual member, individual non-member, company member, company nonmember; but there are currently no companies which are affiliated with CASOP's clinic that are not members, so in effect there are three active payor categories. Individual members are insured and pay least. Individual non-members are uninsured individuals. Company members are insured and benefit from having their companies billed the fees for their services. For all payor categories, laboratory exams and x-rays are charged separately. Drugs which are not usually kept in stock at the health center level are charged separately as well.

TabLe 0.1 Price Lfst CASOP PoLyctinic, 1989

|l<br> <br>ISERVICE|~<br>~<br> <br>I<br>MEMBE|~<br>~<br>~<br>i<br>I<br>R IMON-MEMBE|~I<br> <br>COMPANY<br>RI MEMBERI|
|---|---|---|---|
|I------<br>-------------------<br>fConsuLtation<br>**with:**|--------------<br>I<br>|-----------------<br>I<br>I||
|IMedicat Assistant|2<br>**250**<br> <br>|1<br>350<br>|1400|
|iGenerhl<br>**Physician**|I<br>350<br>|1<br>500<br>|600|
|Ispeciitized<br>**Physicien**|*****<br>450||<br>700**j**|<br>800|
||IVwith drug|1300||<br>1550|1600<br>0|
|ILaboratory:<br>**BLood**<br> <br>||<br>100<br> <br>|1<br>200 |<br> <br>|<br>200I<br>|
|ILaboratory:<br>Stools<br> <br>I<br>|I<br>100<br>I|<br> I<br>2001<br>I<br>I|<br> <br>150I<br> <br>I|
|<br> <br>INorml<br>delivery|<br>7<br>7000|<br> <br>I<br>10000||<br><br> <br>12000|
|jXray<br>(chest,<br>adult)<br>..........................................................||<br>1400|1500|I<br>**1700**||

* **This Is** the type of coanultctlon chosen by out petients **according** to the cifnic **adeinistration.**

The clinic also provides prenatal care, vaccinations, nutrition demonstrations, and minor surgery, all of which are not covered under the plan.

Nationally, the CASOP has more than 42,000 contributing members. When family members are included, the total reaches one quarter million. In Kinshasa, the total number of members (including families) was 6,691 in September ;989. Since membership is open to the entire population, this represents a tiny fraction (0.2%) of Kinshasa's total population of 3 million.

44
While all CASOP members and their families may use the polyclinic, Table D.2 shows that UNTZA staff and families account for a large fraction of utilization (34 to 47% of new cases in 1988 to 89). UNTZA is a company member', and is billed for the wco-payments' of employees treated.

**Table 0.2 UtIlization,** CASO **P** olyclinic, **Kirnshasa,** 1988-1989

||...............................|....<br>**198**||||...............................|...........................<br>**189**||||
|---|---|---|---|---|---|---|---|---|---|---|
|PATOR<br>CATEGOR|**VPE**<br>OFInumber<br>Y**VISIT**<br>I<br>**()**|**2 aIL**<br> Inew<br>Ic<br>e|**2lOtL**<br>ifolLowi<br>se,<br>**icaes**<br>|**2ltlt**<br>total<br>lass$|IVisitin<br>lper<br>Ispi|ruber<br>1(9 mo.)l<br>a.**(C)**|1I<br>total<br>|util|1<br> <br>Inww<br> <br>**cases**|1%<br>Ifollowip<br> Icases|IVisitl<br>er<br>I<br>**Iepia.1**|
||||IIIII<br>I1|I<br>11|||I1|I|II--<br>|-----I------<br>II1|
|**ILUITZA**|**.**<br>.--..<br>**INew**<br>110,548|| 47.5X|........<br>--------<br>1<br>---|.<br>-------<br>I--|----<br>I|| 3,628|------<br>1 33.7X|---<br>1<br>---<br>|.<br>-----<br>I---|.<br>----<br>I<br>I|
||staff|<br>IFoltow-upl16,269|<br>I<br>---|<br>I55.8X1|<br>---<br>|I||<br>8,987|<br>1---|<br>I48.821|<br>---|I<br>I|
|..........|ITotal<br>126,8171<br>||I---<br> <br>|1**52.2X**<br> <br>|**1 2.5**<br>|112,615<br>|1 --<br>|I<br>--<br> <br>|1 43.2X<br>|1 3.5 1<br>|
||<br>|<br>||-<br>|<br>|<br>|<br>||||
||. ......<br>----<br>---|<br>|- ------<br> <br>|----<br> <br>|--<br>|----<br>-|---<br>----|-----<br><br>|---------<br>|--<br> <br>|
|**IIndiv.**|INew<br>1 5,325|1 24.02|1<br>---|I<br>--|I|1 2,456|1 22.82|1<br>---|I---|I<br>I|
|Ins'bers|IFoltow-upi6,793|1<br>-.|1 23.321|<br>---||1 3,591|1<br>--|1 19.521|<br>---|I<br>I|
||<br>|<br>iTotal<br>112,118 <br>|1---<br>|I---<br> <br>|1 23.6X1|2.3|1 6,047||<br>---|I<br>--<br> <br> <br>|1 20.7X<br>|1 2.5i<br>|
|1-- --------<br>IColany|I--------1-I------1-I-----1-I-----1-I<br>INsW<br>14,079|-----1--------<br>1 18.42|---1I------<br>1<br>---|I---<br>I||12,988|1 27.72|1I------<br> <br>1<br>---|I----1-<br>I---|I...<br>I<br>I|
|<br>lbilted|IFollow-upI<br>4,434|1<br>--|1 15.221|<br>---<br>|I|1 4,102|1<br>---|**1**22.3XI|<br>---|I<br>I|
|lm.&<br>non|iTotuL<br>| 8,513||<br>---|I<br>--- 1|16.6X||2.1|1 7,090 1|<br>---|I<br>---1|24.3X|| 2.41|
|1----------1|I--------1I-------1|-----|1------1-<br>|------<br>|I<br>-|------|I-1-----1|I-----1I------|I-----I||
|<br>Nmon-|<br>INew<br>1 2,264|<br>1 10.22|<br> <br>1<br>---I|<br> <br> <br>---<br>I|<br> <br>|<br>1 1,707|<br>1 15.82|1<br>---I|<br>---|I<br>I|
|Ibers|IFotlow-upl<br>1,648<br>|1 ---<br>|1 5.7X1|<br>---<br>I||1 1,751|1 ---|I9.52|1---|I<br>I|
||<br>.Total<br>| 3,912||<br>---|I---|7.6X||1.7|| 3,458||<br>---|I---|I11.8X|1 2.0 1|
||I-----------1I-------1------||I-----<br>-1-|----1-----1--|--|---<br>|1------1|I-----1-I-----|-I-----1||
|........<br>ITOTAL|<br>**INew**<br>122,216|<br>1100.021|<br> <br> <br>---<br>|<br>I<br>---<br>|<br>I|<br>110,779|<br> 1100.021|<br>---<br>|I---|I<br>I|
|**IALL**<br>PAYOR|SIFollow-UP129,1"<br>|I---<br>|1100.0X1|<br>---<br>|I|118.431|1 *--|1100.0|21<br>---|I<br>I|
|I<br>.<br>......**...**......|ITOTAL<br>151,360<br>................|1 --- <br>....<br>.....|I<br>---<br> <br>.<br>..<br>..|1100.02<br>....<br>.....|1 2.3<br>....|129,210<br>.......|1---<br>.............|I<br>---<br> <br>.|1100.02<br>............|1 2.7 1|

Jan. to Sept., *xcluding April (no data avail. **for** April) **Foatlow-p** visits **are** calculated by dividing totaL receipts by price per follow-up visit.

The monthly contribution to CASOP is 100 Z ($0.28) for the average worker. Honorary members (people with large incomes--self-identified) pay 200 Z ($0.56) per month, while farmers ('paysans') are charged 50 Z ($0.!4). In fact, the latter tariff is not used, since most people are able to afford 100 Z in the urban area of Kinshasa.

Upon joining CASOP, members must pay a one-time fee for the membership booklet (100 Z), and six months of contributions in advance, or a total of 700 Z ($1.98). People who fall in arrears of their monthly dues are given three months to pay up the full amount. If they cannot pay back dues by the end of three months, their membership is suspended. Companies (e.g. UNTZA) which join the plan for their employees pay for the membership booklets, ard use payroll deduction to collect the monthly contribution from the employees.

Individual members are subject to a co-payment. Since the end of 1987, their co-payment has been 450 Z ($1.27) for one day of care. (See Table D.l) A price change is planned very soon. Companies are billed at the individual member's 'co-payment' price for the services provided to their employees. Laboratory, x-ray, minor surgery and some drugs are charged separately. There are no caps on spending.

45
The insurance plan is voluntary for individual<sup>members. Companies may join voluntarl,,</sup> but once they have joined they must enroll<sup>all their employees. The employees are then</sup> required to make the monthly contributions.

The health center treats patients who are not<sup>members of the insurance plan. Table D.2</sup> showed that non-members accounted for<sup>between 9 to 10% of new cases in 1988 and 1989. A</sup> similar payment system applies, only non-members<sup>are charged higher prices. The average</sup> number of visits per episode of illness for<sup>non-members is lower than the overall average (1.7</sup> compared to 2.3 in 1988), possibly showing<sup>that higher prices discourage people from secking</sup> follow-up treatment.

# 2. Organization and Management

CASOP began in 1968, as a Christian mutual.<sup>When management changed into the hands of</sup> the Zairian Workers' Union, the name of the<sup>association changed. CASOP existed a long time</sup> before the polyclinic was added. By making<sup>a monthly contribution to CASOP, members</sup> receive benefits in the case of marriage, birth,<sup>hospitalization, need for social assistance,</sup> unemployment or a death in the family. The<sup>level of benefits is set in advance, usually on an</sup> annual basis. For example, a member who contributes<sup>200 Z ($0.56) per month will receive a</sup> hospitalization benefit of 50 Z ($0.14) per hospital<sup>day. Family members are entitled to 25 Z</sup> ($0.07) per day.

The member contributions are collected and<sup>managed by committees at the local level ("comite</sup> primaire"). These local funds are divided into<sup>differeLt pools, according to standard formula.</sup> For example, 10% of funds are reserved for<sup>hospitalization benefits, 35% for death benefits,</sup> 3% for marriages. The local committees must<sup>contribute 17% of the funds to the polyclinic,</sup> and 15% to administration at the regional and national levels.

When the polyclinic first opened, CASOP's idea<sup>was that membership contributions would</sup> enable the clinic to provide care at no price to<sup>members. This soon proved impossible, because</sup> utilization was high aind the services were too<sup>expensive. Health services received only a small</sup> portion of the premium. As CASOP officials<sup>felt that a higher premium would not be</sup> affordable, they introduced co-payments instead.

Polyclinic staff are all UNTZA personnel, and<sup>are paid through the UNTZA personnel office</sup> and not through the polyclinic. This situation<sup>is changing, however; a decision was made in</sup> May 1989 to make the polyclinic more independent<sup>from UNTZA.</sup> CASOP is a direct insurance plan, offered by<sup>the provider. This status may change, howevcr,</sup> as the policy of making the polyclinic 'more<sup>independent" evolves. Accounting for the</sup> insurance plan is mingled with that of the clinic.

The monthly contribution amount is set to take<sup>into account the costs of the benefits covered</sup> (hospitalizations, deaths) based on benefits paid<sup>out in the past and the cost of living in</sup> Kinshasa. It isn't clear how the percentage of<sup>the total fund allocated to the polyclinic (30%</sup> in 1988, 17% in 1989) is set.

Individuals may join the plan at any time during<sup>the year (even when they are sick), with</sup> coverage starting immediately and lasting until<sup>the member stops paying dues. Enrollees</sup> receive a membership booklet which specifies name,<sup>age, membership number, date joined,</sup> profession and marital status. A photo of the member<sup>is included as well. Similar information</sup> is filled in for the spouse; for children, name<sup>and age</sup><sup>**arc**recorded. There are many pages in</sup> the booklet, where stamps are affixed to record<sup>payment of monthly contributions.</sup> It is difficult to estimate the recurrent cost<sup>of administering the insurance plan, since it is</sup> part of a larger social insurance program with<sup>many administrative levels. The membership</sup> 46
verification process is not time-consuming (the receptionist checks the membership card to be sure it is us? to date, or notes the employee ID number in the case of company memberships). It was difficult to assess the accounting procedures followed for billing company members or monitoring the insurance plan.

Premiums are paid to local committees, who forward a percentage of the premium payments to the polyclinic. The amount received by the polyclinic in 1988 (fiscal year ending October 1989) was approximately 403,980 Z ($1,140).

# 3. Resource Mobilization: Financial Situation of Plan and Clinic

Despite repeated attempts to obtain financial data about the receipts and expenses of the polyclinic, the team failed to obtain any financial reports or summaries. The accounting systems of CASOP and the polyclinic are in extreme disorder.

# 4. Utilization

Table D.2 shows member and non-member utilization for curative care cases. Individual members accounted for 23 to 24% of all new cases of illness in 1988 and 1989. UNTZA staff, who benefit from company membership', accounted for 48% of new cases in 1988, but only 34% thus far in 1989. Non-members accounted for only 10% of all new cases treated in 1988, however the percentage of non-members seen has increased to 16% in 1989.

The number of visits per case for non-members is lower than the average (2.0 compared to 2.7 in 1989). The highest number of visits per episode is found in the UNTZA staff group, with 3.5 visits per episode. The greater number of visits among insured persons suggests that moral hazard or adverse selection operates to some degree.

47
# E OTHER INSURANCE PLANS

Some descriptive information was obtained on four other insurance plans. The findings are summarized in Table E.1 and described below.

Table E.1 Characteristics of Other insureace **Plns**

|,............................................<br>..............................................|..............................<br>REIEF<br>............................|NASIS|I<br>UPW|<br>SNHR|
|---|---|---|---|---|
|Region|**Kinfhasb**|Kivu|Notional|Rutshuru Hz<br>**(Shlaba?)**|
|Ruralt/Urban|Urban|**Rural**|**Painly**Urban|<br>**Rural**|
|**Mnagement**|**Zairian**PVO|**Health Zone**|<br>Zafrian**PVO**|<br>**SNHR**|
|Year Started|**19b6**|1988|1966|<br>?|
|Eligible<br>Population|**MM00**|214,240|<br>8**sillion**|**SNHR**.mbers<br>&fmilies|
|Nuwberof<br>Nf"rs|**roo**to**1000**|**7**|**few**|**20 fmilies**|
|Services<br>Covered|**All**hosp.&_ob._<br>incL.<br>referrels|Hospital<br>services|**Hospital**<br>& ambulatory|Hospital<br>services|
|**Premiu**|**500/mo.**sdult<br>_250/mo._<br>child<br>Discounted rates<br>for poorL**farmers**|150**Z/**year<br>|?|<br>**SDOZ/o.**|

**..** ,  ....... ........................ ..................................................

# 1. Reseau Medecins de Familles (REMEF)

REMEF is a direct insurance plan which functions like a ataff health maintenance otganization (HMO). Started in February 1986 by a Zairian doctor who had studied family medicine in the United States, the REMEF clinic is the base for medical staff who provide comprehensive health services and outreach activities to the families in the nearby communities. The REMEF has benefitted from some Canadian assistance and sponsors a private nursing school in addition to the polyclinic. The focus of the REMEF is maternal and child health services.

# Li. Terms of the Insurance Plan

The REMEF insurance plan covers all ambulatory and inpatient services, including drugs and laboratory, surgical interventions, and preventive care services. In May 1989 the polyclinic moved to its current location, where yive beds are available for hospitalizations. There is an additional maternity bed as well. If a patient requires referral to a secondary hospital or medical specialist, the cost of the referral and all subsequent services is assumed by the plan.

While no census exists, the size of the community served is assumed to be about 7,000, of whom 48
between 700 to 1,000 (10 to 14%) are members who pay their monthly premiums regularly. Since 1986, the REMEF has had a total of about 2,000 members. Currently small local businesses who enroll employecv and their dependents account for _557_ members, or between 55 to 80% of total membership.

In 1989, the adult monthly membership premium was set at 5;80 Z ($1.41), or 6,000 Z ($16.92) per person per year. Students and children are charged a lower rate of 250 Z ($0.70) per month, or 3,000 Z ($8.47) per peCson per year. Farmers ('paysan") are also charged the lower rate of 250 Z. A full-time public relations worker assumes the task of verifying membership category, either by calling schools or making home visits. Lower income families may be charged different rates, depending on the decision of the REMEF administrator, again pending investigation by the public relations worker. Company membership rates are the same as individual rates.

The plan has no limits on spending or duration of episodes of illness. There are no deductibles or co-payments. Membership is voluntary (except in the case of company employees) and whole families are not required to join if one member joins. The plan covers both treatment at the facility as well as the cost of referrals elsewhere.

Non-insured residcn:s may be treated at the faci'ity. They are charged 500 Z ($1.41) for each consultation, with drugs and laboratory payable separately. It is rare that non-members come to the facility to be treated, however.

# **L** Resourc Mobilization

-

Record-keeping is not well-developed at the REMEF polyclinic, so it is difficult to analyze the financial situation of the plan. No utilization registers or financial account books were available for review, and procedures for recording and verifying membership seem lax.

To gain some estimate of the size of operations, salary information was obtained for polyclinic employees other than doctors. Monthly salary expense excluding REMNEF's two doctors (one of whom is the Director) is approximately 95,000 Z ($268). Assuming a salary of 150,000 Z per month for each doctor (the high-end of the Bwamanda pay range), total personnel expense is about 395,000 Z ($1,115) per month, or 4.7 million Z ($13,380) per year. Since personnel expense probably accounts for 60% of total expenses (it was 56% at St. Alphonse), REMEF's total annual expenses for polyclinic operations may be 8 million Z or more ($22,590).

Revenue from premiums cannot be estimated accurately, since the number of individuals falling into each membership category is unknown. But even if all members were adult and the maximum membership figure is assumed (1,000), revenue only comes to 6 million Z per year. This indicates that REMEF may be receiving external operating subsidies from some source, or that the estimates of doctors' salaries and/or total membership are wrong.

## 1,1 Utilization

'Ttilization figures were available for two months, August and September 1989. These figures sn,o)w that utilization is much lower than either CASOP or St. Alphonse. REMIEF treated an average of 152 new cases per month in Aug. to Sept. 1989, whereas the average number of new cases treated each month at St. Alphonse is about 528, and at CASOP the number is close to 1,200. REMIEF't utilization data are shown in Table E.2.

9 The average family size of these members is small (3.2) which may be due to the large number of single persons employed in the hotel industry. Two small hotels are among the businesses which have contracted with REMEF to provide health care to employees.

49
**Table E.2** Utilization Data **(Cll** patients) **at** REMEF

||**Aug.**89|**Sapt.**89|
|---|---|---|
|**New**Cases|**138**|16S|
|Follow-up<br>**Visits**|147|162|
|Hospitalizations|19|3|
|**Deliveries**|3|4|
|**Transfers**|**0**|**1**|
|Growth<br>Monitoring<br>Visits|35|26|
|<br>**Dwes**of**Vaccines**<br>Administered|128|141|

REMEF's staff is dedicated and quality of care seems very high. The facility was extremely clean, bright, well-supplied and well-equipped. Technical assistance in organization of management systems and in management training would be well-placed, to assure continued evaluation and success of this health insurance experiment. The PASS may also wish to conduct a more detailed analysis of the costs associated with the plan, especially the plan's policy of paying for the treatment costs of all cases referred to other providers.

## 2. Masisi Health Zone Insurance Plan

The rural h, alth zone of Masisi is located in the Kivu Region, covering a population of approximate.y 214,240. Only recently started, the health zone benefits from the assistance of a Belgian Cooperation Zonal Chief Medical Officer who has had previous experience starting-up the zone of Kirotche, in the same region. Masisi has a 142-bed reference hospital and 19 health centers or health posts. To increase econcmic access to health services the zone began offering a health insurance plan in 1988. The Medicin Chef de Zone (MCZ) delivered a presentation about the insurance plan at the SANRU national conference in 1989. Since the research team for this study did not have time to visit Masisi, this section is based on the MCZ's presentation at the SANRU conference, as well as conversations with staff from the Belgian Cooperation and SANRU.

# _24._ Terms of the Insurance Plan

The plan covers all hospital services including deliveries and chronic care. The premium charged in 1989 was 150 Z (S0.42) per person per year, calculated on an actuarial basis assuming a hospitalization rate of 4.9%, an average cost per hospitalization of 2,000 Z (about SI I in 1988), and a _5G%_ margia for inflation. Premiums are invested in the purchase of drugs for the central pharmacy. The hospital bills the plan for services rendered to members. Members are identified by a membership card which is compared to a membership register kept at the hospital.

Enrollment of members takes place at the health center and community level, with the assistance of village health workers and health center nurses. Family enrollment was not required in the past, but is now seen as an important ingredient to financial sustainability, as discussed below.

## 2, SUtilization and Success of the Plan

Enrollment figures are unknown, but the experience of the first year showed that enrollment was low and the plan was in deficit after only six months of operation. The MCZ attributes SO
the early failure of the plan to the problem of adverse selection.<sup>His solution was to try to</sup> enroll greater numbers of the population, and to require that<sup>whole families join if one</sup> member within one family joins. The MCZ also observed<sup>that it was very difficult to enroll</sup> residents who lived far away from the hospital. More<sup>than price, distance seemed to have a</sup> much greater effect on access to hospital care. According to the<sup>manager of the SANRU</sup> project (which provides assistance to Masisi), an additional<sup>constraint may be the lack of</sup> village structure in the area, which makes community organizing<sup>and the conduct of awareness</sup> campaigns difficult.

The Masisi experiment is ongoing. The study team encourages the<sup>Government of Zaire to</sup> monitor tnis experiment and conduct an evaluation of<sup>its success after two full years of</sup> operation.

# 3. Mutuelle 'Union et Prevoyance **(UPM)**

Created in 1986, the UPM is a non-profit association sponsored by several<sup>workers unions</sup> and medical providers, including UNTZA, the Confederation<sup>Internationale des Syndicats</sup> Libres (CISL), the Confederation Mondiale du Travail (CMT),<sup>the Clinique Internationale de</sup> Kinshasa, Mecial Service International, and the Institut National de Securite<sup>Sociale (in 1988).</sup> The UPM is currently operational, but on a very limited basis. The<sup>plan is proposed to be</sup> extended nationally, and is indirect (i.e. the UPM is not the health<sup>care provider). It's</sup> objective is to offer both ambulatory and hospitalization insurance to the<sup>employed population</sup> through contracts with health centers and hospitals.

# 4. SNHR Employees in Rutshuru

According to a USAID official, 20 employees of Service National<sup>d'Hydrolique Rural (SNHR)</sup> in the rural station of Rutshuru (south-eastern Zaire) started<sup>a small cooperative, to assure</sup> financing for health care needs of the group and family members.<sup>In principle, the SNHR</sup> pays for health care services for the employees and their dependents;<sup>however, in practice</sup> hospital bills were left unpaid. Finally, the hospital began<sup>refusing to treat the SNHR</sup> employees unless they paid cash in advance. The employees decided<sup>to organize themselves</sup> and create an insurance fund; they began by contributing<sup>500 Z ($1.41) per employee per</sup> month to the fund. Decisions to spend the insurance money<sup>are made by the whole group, on</sup> a case-by-case basis. According to the USAID official, the<sup>experiment seems to be working</sup> well.

The team suggests that future research regarding insurance<sup>should try to obtain more</sup> information about the success of this experiment.

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## F. INFORMAL ASSOCIATIONS

To explore a possible base for insurance systems in existing informal savings associations, a Zairian sociologist conducted interviews with 50 members from 17 associations. Fourteen of the associatioas were located in Kinshasa, while three were in Bwamanda. The sociologist also drew on her previous research and publications on "likelemba" and "moziki" associations, conducted for the Department of Women's Condition (21).

Likelemba associations are strictly rotating savings clubs, where members contribute a set amount at a set time interval, with one member receiving the pool at each collection interval. For example, in a likelemba with ten members, each contributing 1,000 Zaires per month, the "savings pool" is 10,000 Zaires, which will go to a different member each month. The members of a likelemba association do not need to meet each time the collection takes place; usually one person is assigned the task of collecting the members' contributions and distributing the pool to the recipient. There are no provisions for paying interest or 'bidding" to obtain a more favorable (earlier) place in the cycle as occurs with Wang shares in Thailand; however, people who received the savings pool early during the first cycle move to the end for the second cycle.

Moziki associations have the same structure of a rotating savings club and add two additional featurcs. First, moziki members get together for a social gathering at the time the collection is made. Members make regular contributions toward the refreshments for this gathering. Second, the moziki associations often include an emergency loan fund ("caisse de secours"). Members contribute a fixed amount to this emergency fund each time they get together. If a member is in difficulty and needs to raise a large sum of cash quickly, he or she can request a loan from the emergency fund, repayable usually within I to 2 months, without interest. At the end of the moziki cycle (i.e. when each member has had a turn to receive the money from the savings pool), the emergency loan fund is divided up and redistributed evenly to all members.

As an indication of the frequency of such associations, an administrative census in Bokoro town identified 12 likelemba or moziki which have over 1,000 registered members. Another association in Kempa (12 km from Bokoro) counts 100 members. Of these 13 associations, 8 made payments for hospitalization.

Eleven likelemba associations and six moziki associations were surveyed. The general characteristics of the associations are discussed below.

# 1. Size and Membership

The associations ranged in size from 4 to 20 members, with an average size of 10 members. The likelemba were slightly smaller than the moziki associations. In about half of the associations all members were of the same sex. In both types of associations, 65-68% of members were female.

Members represented a range of occupations: ;nerchants and traders, food sellers, salaried workers, teachers, government employees, housewives, and some "family' associations (including members of the same family). Six of the associations regrouped people with the same occupation or employer. More than occupation, trust and rapport among members, as well as a similar ability and willingness to save, seemed most important to the success of an association.

# 2. Contributions

Frequency of contributions and meetings ranged from every two days to once a month, with members contributing from 1,000 Z ($2.33) to 100,000 Zaires ($232.50). Comparing equivalent monthly contributions, the average contribution for the 17 associations studied was 20,600 Z

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($47.91). Excluding three associations with contributions of 50,000 Z or higher, the average drops to 13,353 Z ($31.05).

# 3. Reasons for Saving

Fifty members were asked what they would do with the savings pool when it was their turn to receive it. The most frequently cited responses were business investment (44%) and purchase of a household durable good (34%). About 8% said they would use the money to pay for education, while 14% cited other uses, including purchase of clothing or jewelry, financing for a trip, and security deposit for housing.

Since school fees are usually paid in August and September, most members had probably already found the funds to pay for education by the time of the survey in October, thus education did not rate high among reasons for saving. Surprisingly, no members cited purchase of health care services as a reason for saving. The emergency loan funds organized through moziki associations were used to purchase health care, however, as described below.

# 4. Emergency Loan Funds

Four of the six moziki associations studied had emergency loan funds to which members contributed regularly. Equivalent monthly contributions to the loan fund ranged from 900 Z ($2.09) to 2,000 Z ($4.65) per member, creating a monthly pool of 9,000 to 40,000 Z ($21 to $93). Since the loan pool is additive, the total pool can grow to 81,000 to 800,000 Z ($188 to $1,860) by the end of the cycle.

In the four associations with loan funds, 10 of 54 members (18%) had received loans in the past 12 months. Loans ranged from 10,000 to 50,000 Z ($23 to $166), with an average loan size of 27,500 ($64). Four loans were made for health-related reasons; three helped finance birth, and one was for a non-maternity hospitalization. Other reasons for loans were deaths or marriages. Loans were repaid in I to 2 months, without interest.

An additional function of the loan fund is to assure that the association does not falter because one member fail make his or her contribution during a particular interval. The loan fund is used to complete the member's contribution, and the member repays the fund before the next meeting.

In the two moziki associations without loan funds (both of which were located in the rural area of Bwamanda), members stated that collections were sometimes taken up for members facing extreme difficulties. This money was given, not loaned, to the member in need. In a recent case, 500 Z ($1.16) was collected from each member for a total of 3,000 Z ($7) to give to another member who had been hospitalized. This amount represents about two-thirds of the standard price of a hospitalization in the internal medicine ward.

# _5S_ Use of Money Lenders for Medical Emergencies

A recent World Bank study of savings and credit cooperatives in Zaire documents the use of money lenders as a source of informal credit (22). In the associations surveyed, members were asked if they had ever borrowed money from a money lender to pay for extraordinary health expenses. Of the 50 members surveyed, one admitted she had borrowed 20,000 Z ($46) to pay for her sister's operation. She repaid the loan in one month, with 50% interest. The sociologist conducting the interviews noted that the practice of using money lenders is considered embarrassing, however, so people may have been reluctant to admit that they used money lenders.

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# 6. **Rolea of Informal Associations**

In conclusion, informal savings associations are used by many people in both rural and urban areas as a way to put aside a block of money for large consumer purchases, predictable education expenses or business investment. The rotating savings funds are not used currently to provide a cushion of security in case of medical emergency or other unexpected needs. A subset of informal savings associations--the moziki associations--does provide a mechanism for financing catastrophic hcalth care by granting short-term loans to members.

Because mcmbership in informal associations is very small (4 to 20 members), insurance schemes would not be feasible. The emergency loan funds are a good alternative, however, and associations should be encouraged to provide this service to members. Operations research might also explore the possibility of lengthening the repayment period for loans, and charging interest. These options may not be feasible, however, due to the short life of most of these informal associations. Most informal associations lasted less than a year, in the sense that membership generally turned over after one or two cycles when the savings objective had been obtained. Some of the same members may form a subsequent informal association, but it is considered a different association.

The savings and credit study proposed many ways in which donors can help strengthen COOPECs (Savings and Credit Cooperatives), another more formal but still grass-roots type of savings association. The study team recommends that the PASS implement that study's recommendations, especially to provide training in financial management to COOPEC managers and administrative staff. As COOPEC organizations begin to function more effectively, the possibility of providing health insurance through COOPECs directly (or using COOPECs to help administer insurance plans) can be explored.

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# **III. CONCLUSIONS AND RECOMMENDATIONS**

The case studies in this report have described 3 varied group of insurance schemes for rural and urban populations in Zaire. Several factors can be identified which favor or hinder the replicability and the development of health insurance plans. These conclusions summarize the 13 lessons learned from the case studies, and offer recommendations for next steps. Thc recommendations seek to strengthen existing systems, to learn from Zaire's rich experiencc in health insurance, to extend the existing systems, and to encourage appropriate initiatives. Our findings do not support the rapid implementation of a nation wide conventional health insurance system as a feasible solution. Instead, decentralized, locally managcd plaais seems to be a key success factor.

# A. TERMS OF THE INSURANCE PLAN

# **l. The Insurance Schemes Cover Selective Types of Services**

Theories of risk pooling suggest that insurance is most appropriate for events which are infrequent but would cause severe financial hardship. Inpatient care and treatment of certain chronic illnesses in rural Zaire meet this criterion. A typical rural hospital admission costing **$** 15, for example, would consume one month's income for a Zairois earning the per capita GDP. Several of the systems did, indeed, insure inpatient care: Bwamanda, REMEF, Masisi, and UPM. It was striking, however, that the systems in the other case studies (CASOP, St. Alphonse, and Bokoro) insured only outpatient care. The framers of the Bokoro plan had wanted insure both inpatient and outpatient care but found that the resources were sufficient only for outpatient care. Whereas the schemes in Bwamanda and Masisi explicitly covered care of chronic illnesses, the systems in Bokoro, St. Alphonse, and CASOP excluded it.

Insurance for ambulatory services, while theoretically less important than inpatient services, seems more attractive to many consumers. As ambulatory care is frequently consumed, consumers will immediately recognize the value of insurance coverage. Also, insurance may provide a way to pay for care at a time that cash is more readily available, such as at hai * cst time. The consumer surveys in this study indicated the attractiveness of covering ambulator y care. Among insured respondents in Bwamanda, 81% would like to increase their premiums sufficiently to cover ambulatory care. Among respondents in the Kinshasa survey, 85% would recommend their current largely ambulatory insurance plan to their family. The argument against such insurance is that moral hazard (excessive use of the insuied services) and added administrative costs make such coverage much more expensive than paying for the services directly.

# 2. The Most Successful Plans Have Modest Premiums

The fuller the range and depth of insured services, the higher the required premium is. Among the plans studied here, Bwamanda and CASOP had the most members, with 134,680 and 42,000 (nationlly) respectively. The 1989 annual premiums per family member were 125 Z (US $0.29) in Bwamanda and 1,200 Z ($2.79, a modest amount for Kinshasa) plus an enrollment fee in CASOP (100 Z per worker per month for an assumed family of 6). These plans limited services to those affordable within these financial constraints. T'ie Bwamanda plan was essentially limited to inpatient care that met three conditions: the patient had been referred from a health center within the system, hospital staff confirmed the need fol admission, and the care was provided ***n** the hospital offering the insurance. In CASOP, individual membership provided only a modest reduction in fees. At their Kinshasa polyclinic, insurance lowered the price of the most frequently chosen consultation (consultation with a specialized physician) by only 36%, from 700 Z for a non-member<sup>to 450</sup> **Z** for a member.

By contrast, in rural Bokoro the annual premium per person (not per family) was 1200 _Z_ 55
($2.79). In the survey in Bokoro, respondents indicated that they could afford an annual premium of 100 to 200 Z. The only subscribers in Bokoro were employees whose premia were paid by their companies. The plan insured only 4.5% of the zone's population. The premium was beyond the financial means of potential individual members.

# B. ORGANIZATION AND MANAGEMENT

# **1.** An Acceptablc Quality of Services Is a Precondition for Insurance

It is very difficult to measure quality of care without first developing common standards, and secondly conducting utilization reviews to examine the appropriateness of diagnoses and treatments, evaluate patient outcomes, and investigate deviations from standard protocols. Lacking common standards and historical utilization reviews, it is impossible to detect a causal relationship between the organization of a health insurance plan, and changes in quality of patient care. It is possible to record observations about general quality measures, however, including availability of drugs, training and level of staffing, and condition of infrastructure. It is also possible to formulate hypotheses about the nature of the relationship between insurance systems and quality of care, even if such hypotheses cannot be tested without additional data collection.

A likely hypothesis is that health providers which offer insurance programs have higher quality of care than health providers which do not have any form of community financing system (user fees, insurance, or other). This is because community financing systems, including health insurance plans, increase the financial resources available to health providers, thereby allowing the providers to spend more on quality improvements (assuring drug supply, hiring and training staff, etc.). There is no reason to believe, however, that insurance systems would be any better at improving quality than user fee systems, except that insurance systems may be able to mobilize greater financial resources, depending on how premiums are priced, levels of enrollment, and how premium revenues are invested.

Bwainanda, Bokoro, St. Alphonse, and CASOP, all had high quality of care, in terms of general indicators such as drug supply, staffing and infrastructure (see Table 11.2 in Section II). All four providers had a steady supply of drugs with very infrequent stock-outs. Bwamanda, Bokoro and CASOP all have several doctors and well-trained (A-I level) nurses; St. Alphonse Health Center has several well-trained nursing staff. All four facilities have good to fair infrastructure, with well-maintained buildings and most essential equipment. The facilities were busy with patients, suggesting that patients had sufficient confidence to spend their time and money to seek treatment. Compared to other health zones receiving donor assistance (for example, from the SANRU project or Sante Pour Tous Kinshasa), the quality of care at the facilities studied was about equal. Compared to non-donor assisted zones, however, quality was much higher.

Studies elsewhere in Africa, such as Rwanda, have demon3trated that the population is willing to pay substantially for the availability of drugs [24]. If drugs are absent, patients lack confidence in the facility and few will use it. Before trying to develop health insurance, it would be important to assure that patients have confidence in the provider(s) covered under the insurance.

If a health facility had poor quality due to inadequate resources, it seems unlikely that creation of health insurance alone could break the cycle. However, if some external assistance (funding, qualified personnel, donated supplies, or technical assistance) could raise quality and confidence for a period of time, then insurance could help make those improvements sustainable.

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# 2. Voluntary Schemes Have Found It Important to Sensitize **the** Population

To obtain widespread enrollment, a voluntary insurance system needs to sensitize the population to its value. In systems organized through a health zone, the workers in that zone can organize this enrollment. In Bwamanda, this awareness campaign functioned well and over 60% of the zone's population was enrolled in both 1988 and 1989. As enrollment occurred at a specific time, village meetings were held at that time to promote the system. Health workers received a commission (3% of the premiums they collected) to reinLorce their enthusiasm.

In Bokoro, on the other hand, workers in health centers received no incentive, did not appear interested in the subscription plan, and enrollment was low. In St. Alphonse, the parish development committee promoted enrollment and conducted a door-to-door campaign, though current enrollment is only about 6.2% of the population of the urban zone. (As this approach probably permitted only a single contact with each potential enrollee, it may not have been that effective.) Because village leaders often command the respect of the population, their endorsement of a new system can be a strong force in sensitizing the population to the value of a new system.

There may be many more opportunities for well functioning voluntary associations to add health insurance to their activities. The Commission mentioned in the introduction to this report identified 562 currently operating associations of all types. A health provider could work in partnership with several mutual associations in its vicinity to offer health insurance. The health provider would offer preferred access to members of the affiliated voluntary associations. The associations would provide some oversight over the quality and charges for services and would market an insurance system to its members. In the United States, many professional associations offer life and health insurance to their members in this way.

# 3. Committed, Decentralized Management Provides Flexibility and Accountability

All of the systems studied were under local control. The one national system, CASOP, delegated financial responsibility to local councils. Decentralization can be important even within an insurance system. In Bokoro, each health center exercised some control over its profits. As only a 25% share was allocated for its immediate use and deficits could be passed on to other health centers, there was little incentive for good financial performance. All of the systems visited in the course of this study were run by health providers. These so called direct insurance systems offer important advantages in efficiency and control over indirect insurance systems, in which the insurer pays some independent provider for care. The indirect systems raise many questions of financial control. The insurer must assure that the member needs the service being requested, that the chosen provider is competent to perform the service, that it actually was performed, that the insured is the actual recipient of the service, and that the fee was appropriate. In a provider based system, many of the inherent conflicts between the insurer and the provider are avoided. Committed administrators contributed to the success of the Bwamanda system. The director of the CDI Medical Service is a Belgian physician who has worked 14 years in Bwamanda. Other personnel, from the insurance plan administrator to the health center nurses, also believed in the system. While nurses welcomed the commission of 3% of the premium income they collected, they also seemed .o appreciate being part of a well functioning system that allowed them to use the locally available resources to provide health care to their population.

# 4. Simple Control Methods Can Rcduce Risks of Error or Fraud

Widespread error or fraud would undermine the financial viability of a health insurance 57
system. Control is required for several steps. The case studies have identified useful approaches for many of them.

(a) Assuring that premium income is received and accounted for for all gersons recorded asD2yin&. The system of printed stamps in Bwamanda provided a useful device. Each health center is issued a specific quantities of two-part enrollment stamps during the enrollment period. Upon payment, a member is given a stamp for each household member. At each supcr' isory visit during enrollment, the zone's financial officer withdraws the cash on hand and verifies that it matches the value of stamps distributed.

(b) Assuring that persons claiming to be insured have paid the current premium. Again, in Bwamnanda one part of each of the above-mentioned stamps was affixed to the back of the family's health card kept at the center; the other to individual cards retained by each person. All stamps are signed to validate them. When a member seeks hospital care, he (or his guardian) must present his health record with the current signed stamp on the back.

(c) Preventing a non-insured person from easily borrowinu the card of an insured individual. In CASOP, members had photo identification cards, a technology that is relatively expensive in Zaire. The cards were feasible for CASOP because they were generally needed only for one household member, the premium was higher (100 Z per month) so that the cards wcre more affordable, and getting photographs made and developed is relatively straightforward in Kinshasa.

In Bwamanda, identification photographs would have cost as much as the insurance. Instead, control relies on identifying information about the insured. First, his health card contains some descriptive data about the person named (age and height) that can be matched against his or her appearance. In addition, the enrollment register contained the names and birth dates of other family members about which the presumed insured can be quizzed.

(d) Assuring that the policy of enrolling all members of the family is enforced. In Bwamanda, as in some other zones, the health centers endeavored to maintain up-to-date cards on all persons in their catchment area. Provided that these cards were up to date, they create a roster for each family at the time of enrollment.

(e) Assuring that patients and insurers are charged appropriately for services through a clcar system of prices. In Bwamanda, hospital care was charged in one of 16 all-inclusive prices per admission. This simplicity reduces the risk that the provider will perform unnecessary services to overcharge the insurer.

## 5. Appropriate Investment Strategies **Can Prescrve the Value of Premium Income over** the Year

Because of the high rates of inflation in Zaire, the operation of insurance poses special challenges. In other countries, premium income could be kept in cash from the beginning of the year, when it is <-llected, until the middle of the year, when it is spent. In Zaire, where the rate of inflation may exceed 100% per year, this approach would be ruinous. Approaches to saving money without major erosion by inflation include investing in a responsible local institution. For example, funds invested with the CDI at Bwamanda earned a compound rate of 2.5 percent per month in 1989 (34.5% effective annual yield). It may also be possible to invest in drug supplies, provided the pharmacy is well run and drugs are safe. As drugs are mostly imported, their value will grow in proportion to the exchange rate with their country of origin.

# 6. **Financial Analysis of the Insurance System Requires Better Accounts**

None of the insurance systems visited by the team had up-to-date financial statements for 58
the system that could be used to assess its financial<sup>health. In CASOP, the financial system</sup> was so incomplete that no financial statement<sup>could be constructed for either the polyclinic</sup> or the insurance system. In Bokoro and St.<sup>Alphonse, financial statements for the health</sup> centers could be constructed, but premium income<sup>and expenses of insured patients could not</sup> be separated from the centers' other financial<sup>transactions. Bwamanda constructed an annual</sup> financial statement for the insurance plan<sup>at the end of each year, but it contained so many</sup> year end journal entries that no meaningful<sup>analysis could be performed mid-year.</sup> Better financial accounts would aid the insurance<sup>systems in setting premiums and controlling</sup> costs, as well as providing better data to<sup>guide future policies.</sup>

# 7. A Financial Guarantor Can Help Build<sup>Confidence in Launching an Insurance System</sup>

When a new insurance system is established,<sup>many factors could precipitate insolvency.</sup> Accumulated health problems could lead<sup>to an initial burst of demand. Inadequate data or</sup> limited information could lead to underestimation<sup>of utilization or prices. An insurance plan</sup> may incur fixed expenses despite low enrollment.<sup>The public will be more likely to enroll in</sup> an insurance system if they are protected against<sup>these outcomes. Many organizations could</sup> serve as a financial guarantor. In Bwamanda,<sup>the CDI served this role. (Fortunately, it was</sup> never required to make good on its guarantee.) In the future in Zaire, this study encourages existing<sup>organizations to serve as guarantor. The</sup> Government of Zaire, with support of PASS, the<sup>SANRU program, Sante Pour Tous, UNICEF,</sup> or a PVO might serve this role. The financial<sup>guarantee need only be given for one year at</sup> a time. If there are losses, the premiums or services<sup>can be revised or, if necessary, the system</sup> can be abandoned to prevent further losses.

# C. **RESOURCE MOBILIZATION**

# **1.** Access and Resource Mobilization Motivated Health<sup>Insurance Schemes</sup>

Health insurance systems were started primarily<sup>to meet two objectives concurrently:</sup> mobilizing resources and increasing access<sup>to services. In the health zones of Bwamanda and</sup> Bokoro, the hospitals had chronic or mounting<sup>deficits. They felt that substantial increases</sup> in user fees would price their services beyond<sup>the ability of the population to pay. With health</sup> insurance, ill persons would be more likely to<sup>seek care. As evidence of the goal of increasing</sup> access to health services, the insurance systems<sup>were promoted by developmental organizations</sup> such as the Center for Integrated Development<sup>in Bwamanda, the Development Committee of</sup> St. Alphonse Parish in Kinshasa, and the social<sup>welfare structure of CASOP. In Bwamanda,</sup> where the most detailed financial statements<sup>were available, the share of the hospital's</sup> operating costs recovered rose from 48% in<sup>1985 to 79% in 1988.</sup>

# D. **UTILIZATION AND ACCESS**

# **1. Evidence** of Adverse Selection and Moral Hazard<sup>was Found, But Plans Minimized</sup> Their Impact

In every plan for which utilization of insured<sup>and uninsured persons could be compared,</sup> insured persons were found to use more services.<sup>In Bwamanda, insured persons were 6.7</sup> times as likely as uninsured to be hospitalized.<sup>At Bekoro health center, plan subscribers had</sup> 5.0 times as many new ambulatory episode as<sup>non-subscribers. In the Kinshasa surveys, insured</sup> respondents reported more previous visits (2.0)<sup>for their current illness episode than uninsured</sup> (1.6). Similarly, utilization data from CASOP<sup>showed more visits per episode among</sup> individuals insured (2.5) than among those uninsured<sup>(2.0).</sup> While comparisons among the diverse insurance<sup>plans require caution, this evidence suggests</sup> 59
that insurance makes a big difference in the likelihood of receiving services at all, but has only a modest impact on the intensity of those services among those receiving some care.

Plans used several approaches to minimize risk of adverse selection. Several required family membership. In Bwamanda, Bokoro, CASOP, SNHR, and now Masisi, if one member of a family joins, then the family must join. In REMEF, St. Alphonse, and formerly in Masisi, there was no such requirement. (Policies for UPM were not known.) This policy seemed to be effective in increasing enrollment overall, and members without special risk specifically. As plans did not graduate premiums by age or prior illness, the risk of adverse selection could otherwise be substantial. Masisi found that in its first six months of operation, enrollment was low and a deficit was incurred and the zone has therefore changed to family enrollment.

Other plans enrolled employee groups. Employee groups constituted 100% of members in Bokoro and 80 percent in REMEF. In CASOP, although the share of company member is unknown, they accounted for 51% of visits in 1989. SNHR is also an employee group and UPM is sponsored by workers' unions. This strategy appears successful in helping to make the insurance plan viable and should be encouraged as one method of recruiting members. It should not, however, be the exclusive method of enrollment, as that policy would exclude the bulk of the rural population. In Bwamanda rural health zone, for example, only 4.6 percent of the population was employees or their family members.

Some plans limited enrollment to a specified time of the year. In Bwamanda, enrollment took place only in March to April, after the second harvest. In St. Alphonse and CASOP, enrollment was allowed at any time of the year, and in CASOP, even when the subscriber was ill. Policies to limit adverse selection are most important when adverse selection would be most severe. This would occur when insured individuals would receive substantial discounts on infrequent, expensive services. Thus, limiting the time of enroliment or restricting enrollment at the time of illness is important in Bwamanda, where the insurance covered inpatient care and chronic illness, and in the CASOP.

# 2. Systems of Utilization and Cost Control Can Help Make Insurance Affordable

Several systems of utilization and cost control have helped to make insurance affordable. Co-payments have been used by all of the systems visited. In Bwamanda, the user generally pays 20%; in Bokoro, 25%. In St. Alphonse and the CASOP, the payment schedules are more complex, but co-payments average about two thirds of the costs. Previously, when CASOP had no co-payments, they found that outpatient costs far exceeded the share of membership fees available to cover them, and the policy was changed.

Plans have also excluded certain services in an effort to control costs. The Bokoro subscription does not pay for ambulatory care of chronic illnesses. The Bwamanda insurance does not cover initial ambulatory consultations directly with the physician.

Bwamanda used another important device to control cost: utilization control, through insistence on the referral system. Before a patient could be hospitalized, the patient had to be referred from a health center and a provider at the hospital had to confirm the need for admission.

## E. **INFORMAL ASSOCIATIONS**

# 1. Informal Associations Financed Health Care Only Through Emergency Loan Funds

There are two types of informal associations. In a likelemba, or rotating savings association, each participant contributes a specified amount at a designated frequency. Among the participants surveyed in this study, the contribution averaged $ 47.91 per month. One member receives the entire pool at each interval. Members used the savings for business investment, 60
purchase of a household durable good, or schooling. None said that they saved for medical expenses.

In a moziki, members not only make periodic savings into a pool, but also contribute regularly into an emergency loan fund. The pool financed loans to members in cases of births, deaths, marriages, or hospitalizations. In a survey of 54 moziki members, 10 had received loans in the past year, of which 4 were related to health (births or hospitalizations). Borrowers repaid loans without interest. In two moziki, members facing extreme difficulties could request a special collection from which the proceeds were given, not loaned, to the member in need.

## F. STRENGTHENING EXISTING INSURANCE SYSTEMS

The existing insurance systems, while vibrant and innovative, could benefit from several steps.

## 1. Training

Training in the basic concepts and administrative aspects of health insurance schemes should be offered at the School of Public Health, University of Kinshasa, at successfully functioning systems such as Bwamanda, and through refresher programs offered by FONAIMES, SANRU and the Sante Pour Tous project. A manual about the management of health insurance plans should be developed for this training. The training should consider both general principles (how to calculate premiums based on actuarial data) and an analysis of the experiences of functioning plans in Zaire.

# 2. Exchange Visits

An intra zone program of staff exchanges or site visits should be established. The existing systems could invite personnel from nearby zones to observe their system and adapt their forms and procedures. For example, under the sponsorship of officials for Equateur Region, the health zones around Bwamanda (e.g. Tandala and Gemena) could be given assistance in adapting and replicating the Bwamanda system.

# 3. Information Systems

Without a standardized information system and monitoring procedures, the costs and benefits of a health insurance system are difficult to evaluate and almost impossible to compare with other plans. To help existing insurance systems and possible future efforts, an appropriate coordinating agency (SANRU, PASS, or the Ministry of Health) should develop guidelines for information collection which would assure that utilization and accounting data are adequate for evaluation purposes (for example, availability of utilization and financial data by major payment categories: insured, employed, uninsured and unemployed).

Data analysis was hindered by the fact that none of the plans appeared to have a unique identifying number for each member. With decentralized enrollment through health centers in Bokoro and Bwamanda, each health center tended to develop its own numbering system. A comprehensive system would be easy to develop, in which the first digits represented the health center, the middle digits the village and the family, and the last digits the individual.

# 4. Technical Assistance

Technical assistance can help each plan tailor the lessons learned from the three areas above to their own site, and to implement new accounting systems or policy changes.

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## G. **ESTABLISHMNT OF ADDITIONAL INSUJRANCE SYSTEMS**

## **1. Rural Health Insurance Systems**

This study suggests that insurance systems have increased access to health services and mobilized resources in rural areas. Thus, a policy goal is to foster the development of additional systems to serve other parts of the country, and to gain more experience as to which approaches work best in which situations. The study suggests that additional rural schemes be established building on the lessons learned. This study suggests initiating varied types of systems: some for inpatient care only (like Bwamanda), some for inpatient and outpatient curative care (like the intention for Bokoro), and others that are comprehensive and include preventive services as well (like REMEF). Th training, site visits, information systems, and technical assistance recommended above to strengthen existing systems should be extended to encturage new rural systems.

A model of particular interest for ambulatory care would be a system of prepayment. A member would prepay for a specified number ot .mbulatory episodes; say, five. He would receive a book of five vouchers. The subscriber % uld be offered a discount compared to the current charge in return for having prepaid the services. The vouchers would be prc.inoted for sale, like insurance, at a time of the year when cash was most available.

# 2. Urban Health Insurance Systems

The Chief of the Commission on the Organization of Mutuals had been invited to submit a recommendation for consideration by the government for an urban hased health insurance system. Any urban based systern is likely to experience high utilization and, perhaps, expectations for high quality.

This study suggests that a hospital-based HMO-type insurance plan should be tested. Civil servants and their families would enroll on a family basis, paying a set premium which would enable them to seek inpatient care in case of need at a specified hospital. A separate organization would manage marketing efforts for the plan, and would turn over a percentage of the premium payment to the hospitals, based on subscribers. The premium would be set high enough to cover the risk of adverse selection. Users would pay a co-payment for each episode of hospital care. Ambulatory care could be controlled either through co-payments or through a voucher system, like that described above.

The potential advantage of this approach is that it includes mechanisms to direct hospital use to a particular facility and to control utilization. Utilization rates should be projected initially based on the experience of other large employers with similar workers; the system should then be refined based on actual experience.

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