Low Insurance Micro-Insurance Uptake in Developing Countries - Essay Example

Low health micro-insurance uptake in developing countries Introduction The discussion will focus on the reasons behind the low uptake of health micro-insurance in the developing countries. The discussion will be based on a study conducted in Senegal, which have cited economic factors, ignorance, and issues of trust to be the main reasons behind the low insurance uptake. The lack of adequate information about health insurance has been the major challenge, not only in African counties, but also in China and India. The economic question still remain controversial, with study indicating that despite government offering insurance subsidies to rural population China, the uptake still remains relatively low. There is a general lack of trust about the insurance sector, with many people being under perception that the funds are either misappropriated or used for personal gains. Lack of essential insurance cover, such as that of health has led to challenge of addressing health of the population, especially in Africa. The paper will also provide some recommendation of what needs to be done to increase the uptake of health micro insurance in developing countries. Background information Studies by the World Health Organization (WHO) indicates that the uptake of health insurance in many developing countries, especially in Africa, remains low (Ahuja & Jütting, 2004). The situation remains a major concern owing to the fact out-of-pocket payment of health services is extremely expensive to majority of people. This means that most of them will not seek healthcare services from the formal health organizations. In counties such as Senegal, the traditional healers also play a role in treating patients. The use of traditional herbal medicine is also common, as it is perceived to be the cheapest means of treatment. The uptake of insurance is also associated with economic, ignorance, and lack of trust. The misappropriation of health funds has discouraged most people from taking insurance. With the insurance cost remaining high in most African countries, the uptake is common in the employed population. This owes to the fact that the employers is under obligations, in many African countries, to deduct health insurance from the gross salary. Lack of information about health insurance, coupled by negative attitude towards the system has also been blamed for the low intake (Dercon, & De Weerdt, 2006). For instance, most of those living in the rural areas are found to lack in health insurance. The number of health facilities in these areas are also few, and miles away from the people. One of the Millennium Development Goals (MDGs) was to provide affordable healthcare through allocating at least 15% of the GDP in the health sector (Diop, 2005). However, with the realization of this goal remaining a dream for most countries in Africa, the government hospitals remain underfunded, understaffed, and lacking in medicine and other necessary equipment. As a result, the healthcare has become expensive, and affordable to many. To address the issue of the shortage of medicine, lack of efficiency and effectiveness in the health sector, there has been an increase in the number of privately owned organization. However, only professionally trained, skilled and experienced medical practitioners operate a few of them. Despite the entry of the private health facilities, they only remain accessible by the rich people in the society. They are expensive, hence unaffordable, especially by the majority of those still earning less than $2 a day. Apart from health, a majority of the people are also not taking advantage of various micro insurance, such as that covering the agricultural sector. Ignorance A study to conduct by Bonan et al. (2011), to establish the reasons behind the low uptake of health insurance in Senegal established that ignorance was one of the major reasons. From the study, close to 70% of the respondents cited the lack of information as the contributing factor towards low insurance uptake in Senegal. The information is confined, mostly in the urban centers, where a majority of people have access to information media. In the remote and rural areas, the population lack access to information. People rarely read newspaper, or have access to television, and other forms of social media. In many rural areas, it has also been found that many families do not understand how the health insurance cover operates (Gine at al., 2007). In many developing countries, the government has done little to sensitize and mobilize people about the importance of taking health insurances. This explains why, even in countries where health insurance has been subsidized, such as in China, the uptake remains low (Cai, et al., 2009). There is an information gap, with most of the people remaining ignorant of what the insurance product is all about. The ignorance about many issues affecting the society has also been attributed to high level of illiteracy, amongst the population living in the rural areas. The farmers, in countries such as Malawi, Ethiopia, China and India, have also not taken advantage of the micro insurance offered by the government to cover them against losses. In all cases, ignorance has been cited as the main reason, hence affecting the uptake. In this case, therefore, the government needs to increase awareness to foster the high intake of micro insurance. Economic constraints In most developing countries, especially in Africa, many people are poor. For instance, in Nigeria, despite the country being the richest in Africa, close to 50% of the population are considered poor. The scenario is runs across many developing countries, where a majority of the poor people subsist in less than $2 a day. Lack of employment opportunities, professional skills and misappropriation of developmental funds have been the main causes of poverty, especially in the young generation. In the rural population, there are few or no institutions of higher learning. Even when they exist, the institutions of higher learning remain inaccessible and unaffordable by a majority of the people due to cost. While the study by Bonan et al. (2011), indicated that only 16% of respondents cited the economic factors as the main hindrance the uptake of micro insurance, it remains a major challenge. However, contemporary ones conducted in China and India can support the study findings. For instance, in China, the government has been able to subsidize the cost of micro insurance, but the uptake remains low (Cai, et al., 2009). The same scenario remains in a number of developing countries. Nevertheless, the financial factor cannot be taken for granted. For instance, the health insurance premiums are contributed monthly in many developing countries. This mainly targets those who are employed, and the businesspersons. In some countries, such premiums are high for the poor people in the region to afford. The economic reasons have also been cited as the main reasons why people, such as in Senegal, would prefer the alternative medicine. For instance, the research findings indicated that close to 45% of the Senegalese population prefer to use the traditional medicine as a treatment for their ailments. The traditional healers play an imperative role in the medical field. However, it is imperative to note that a majority of the healers are expensive compared to the conventional treatment in the formal institutions such as hospitals. There is still a perception that the traditional healers offer the best treatment, hence people do not find the impetus to visit hospitals. This, to some extent, may also explain why the uptake of micro insurances, especially in health remains low. Further, people are still using herbal medicine in ma many countries, as it is cheaper compared to treatment in hospitals. Many developing countries, especially in Africa, are yet to achieve the millennium development goals (MDGs), and in particular the section addressing the health issues. One of the main goals was to ensure that the funds allocated towards the health sector in each country were at least 15% of the GDP (Diop, 2005). This would ensure that the government of developing countries would be able to increase the number of health centers, and make health more affordable. This would see the government respond to issues of maternal deaths, which are still high in most African countries, and tackle the challenge of malaria in Senegal and other sub-Saharan countries. With the goal still not achieved, the cost of health has remains high in many developing countries. Even the health micro-insurance are not able to adequately address the cost of health, as it does not cover for all diseases. Most of the public hospitals, which are considered affordable, remain understaffed and underfunded. As a result, the hospitals do not have the right equipment and enough medical practitioners to provide health services. Generally, the most of the public government hospitals do not offer quality health, and experience challenges of efficiency and effectiveness. As a result, many people, especially those who are employed prefer to visit the private health facilities. For this reason, such people do not see the reason of taking the health micro-insurance, which are commonly used when accessing health services in public hospitals. Lack of trust While the study by Bonan et al. (2011) in Senegal indicated that the issue of trust was not very significant in the uptake of health micro insurance, the situation is different elsewhere. For instance, in Kenya, there have been allegations that the health insurance funds are being misappropriated, hence not meeting the primary goal of providing quality health. Issues of corruption in the management of health funds have also been cited, hence increasing the level of distrust (Patt, Suarez & Hess, 2010). As mentioned before, most of the health facilities especially those run by the government. This coupled by the lack of cover for most serious ailments increases the level of distrust of the health micro-insurance. People do not trust that the health insurance will ensure that they access affordable health, and instead try to find other alternative means. The out-of-pocket (OOP) has become a major alternative means of acquiring health by most people. While close to 70% of the rural population, especially in Senegal are unable to access health as a result, this is a demonstration that the health micro-insurance remains uptake remains a challenge. Lack of trust has also been attributed by the information gap about health insurance. Recommendations The low uptake of health insurance in many developing countries affects provision of quality health. It also makes it impossible for many to afford health services owing to the high cost. As a result, it has become imperative that the issue is addressed to ensure that challenges, such as maternal health can be adequately addressed. The following are some of the recommendations that will see the situation challenge addressed: Sensitization and mobilization strategies If the government is serious about addressing the challenge of health to the population, then it will allocate more resources towards information dissemination. This will assist in addressing the information gap that has led to low uptake of the health insurance. The sensitization program should be one of the policies by the ministries of health in the developing countries. This can be done using many media outlets, such as radio, which is commonly used in the rural areas, TV and the social media. This will ensure that all the members, regardless of their geographical locations, will be able to afford the affordable health. The government can also take the opportunity to address myths surrounding the health insurance, which have increased level of distrust. Dispelling the fears and negative attitudes through the campaign will assist in addressing the challenge. General improvement of public health sector The uptake of health micro-insurance will remain low unless certain problems are addressed. More allocation of funds is needed in the healthcare facilities. This should be used to increase the number of medical practitioners, equip hospitals with drugs, and increase the efficiency and effectiveness through technology. These developments will increase the attractiveness of the public health facilities, hence the high uptake of the health insurance. It is also imperative that the government ensure the health funds are not misappropriated, but instead used to improve the general public health. In conclusion, the developing countries ought to realize the millennium development goal on health, to address the current problem. The healthcare resources should be equitably distributed to all the regions, especially to rural areas where people travel long distances in search of health services. References Ahuja, R .and J. Jütting (2004), ‘Are the poor too poor to demand health insurance?’ Journal of Microfinance, Vol. 6(1): 1-21. Bonan, J. (2011), ‘Senegalese Evidence on the Willingness of Household Heads to Pay Community-based Health Insurance Premiums’, mimeo University Milan-Bicocca. Cai, H., Y. Chen, H. Fang and L. Zhou (2009), ‘Microinsurance, Trust and Economic Development: Evidence from a Randomized Natural Field Experiment’, NBER Working Paper No. 15396. Dercon, S. and J. De Weerdt ‘Risk-sharing networks and insurance against illness’, Journal of Development Economics, (2006), vol. 81(2), 337-356. Diop, F. (2005), ‘Determinants of Financial Stability of Mutual Health Organizations in the Thies Region of Senegal: Household Survey Component’, Bethesda, Abt Associates Inc. Diop, F., S. Sulzbach and S. 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