Abstract

This study is set to determine the effects of health insurance schemes on health status of the population in the Buea health district. The study adopted a survey research design with the researcher going to the field. The target population of the study consists of population of the Buea health district from which three hospitals; Mount Mary hospital, Buea Regional Hospital, and Muea Integrated Health Center were purposively selected with sample size of 250 respondents. Simple random sampling techniques was used to collect primary data by use of a structured questionnaire.

F-ratio and P-value were used to validate the significant level of the results. From the analysis, the insurance coverage increased access to public facility services, with the insured having better health status and better protection from large financial burden due to health expenditures than the uninsured.

As far as gender is concern, the findings show that sex negatively and insignificantly affects health status of individuals. Furthermore, the results show that individuals who are single are healthier than married persons while those widowed are somehow less healthy than their actively married peers and the value was insignificant.

Findings also indicate that health status increases with educational attainment. Also income is positive at all levels but only comparatively higher and significant at higher levels of income. The study recommends that the state should subsidize the cost associated with registering for health insurance schemes and create more public health centers especially in interior villages so that many Cameroonians can belong to at least a health insurance scheme and that more attention needs to be paid to expanding insurance coverage and setting an appropriate benefit.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Households across the developing world are vulnerable to poverty due to various forms of uninsured risks, (Gertler and Gruber 2002, Derconet al. 2005, Wagstaff 2007, Hoddinot 2006, Sparrow et al. 2014). One of these sources of uninsured risk is ill-health, which involves financial risk due to the direct and indirect costs of medical care and forgone income (Islam and Maitra 2012).

The welfare implication of these adverse events is often examined by assessing the extent to which a particular risk affects the ability of households to maintain consumption levels, often referred to as a test of consumption insurance (e.g. Gertler and Gruber 2002, Asfaw and Von Braun 2004, De Weerdt and Dercon 2006, Wagstaff 2007, Gertleret al. 2009, Davies 2010). Justifications for introducing social insurance schemes and setting policy priorities often rely on tests of consumption insurance (e.g. Morduch 1995, Gertler and Gruber 2002, Asfaw and Von Braun 2004). As a result, policy emphasis has been on designing schemes to deal with covariate risks as compared to health risks.

Also, the economic, social and political circumstances of most developing countries have made them not able to fulfil health care needs of their poor population. These circumstances are characterised by; shrinking budgetary support for health care services, inefficiency in public health provision, an unacceptable low quality of public health and the resultant imposition of user charges reflecting their inability to meet health care needs of the poor – which is a majority of their population (World Bank, 1993).

Neither the state nor the natural forces of demand and supply (normal market conditions) has been effective in providing health insurance to low income class earners in rural and informal sectors. The few formal health institutions that seek to provide such services are often at an informational disadvantage and face high transaction costs, thereby reducing the extent to which their objectives are attained to reach out to the masses.

Given the prevailing challenges, health insurance schemes rooted in local organisation potentially score better than alternate health insurance arrangements. In most rural and informal sectors where supply of health services is expected to be weak, both the financial aspect and the service provision aspects need to be tackled simultaneously if the health care goals are to be attained.

Most of the Health Micro Insurance (HMI) schemes have either been initiated by the health providers (missionary hospitals) or tend to be set up by the providers themselves (Atim, 1998: Musau 1999). Thus the potential benefit of the schemes is seen not just in terms of mobilisation of resources but also in the improvement and organisation of health care services (Jutting, 2003).

Proponents argue that health insurance schemes are a potential instrument of protection from the impoverishing effects of health expenditures for low income populations. It is argued that HMI schemes are effective in reaching a large number of poor people who would otherwise have no financial protection against the cost of illness (Dror&Jacquier, 1999).

In some situations, community structures have been used as alternatives but they may not necessary reflect the views of the wider population, critical decisions may not take into account the interest of the poorest, and they may be excluded from decision making (Gilson et al, 2000). It is further argued that the risk pool is often too small, that adverse selection problems arise and the schemes are heavily dependent on subsidies that financial and managerial difficulties arise and that the overall sustainability, seems not to be assured (Atim, 1998, Bennett, Creese and Monash, 1998: Criel, 1998). More than half of health expenditure in poor countries is covered by Out-Of-Pocket (OOP) payments incurred by households (Aregawi,2012).

Increased expenditure caused by the need to cope with injury and illness has been identified as one of the main factors responsible for driving vulnerable households further into a more critical poverty state (Aregawi, 2012, WHO, 2000).

Due to the limited ability of public health systems in developing countries to provide adequate access to health care and the shortcoming of informal coping strategies to provide financial protection against health shocks, a large number of health financing schemes have been established in several low and middle income countries (Aregawi,2012).

Generally, HMI schemes are non-profit initiatives built upon the principles of “social solidarity” and designed to provide financial protection against the impoverishing effects of health expenditure for households in the informal sector particularly the low income communities. Matching the roll-out of these schemes, theoretical and especially empirical studies which examine their impact on outcomes such as utilisation of health care, financial protection, resource mobilisation and social exclusion have flourished. (Aregawi, 2012)

Community Based Health Insurance Schemes (CBHIS) is one of the numerous alternatives designed in least developed countries since 1990s to improve health care service utilisation through sharing the financial burden of cost of illness. The health insurance becomes new findings and concepts, which address health care challenges faced particularly by the poor (WHO, 2000).

This health security is deliberately being recognised as integral and mechanical tool to any poverty reduction strategy and it has been argued that these schemes are effective in reaching a large number of poor people who would otherwise have no financial protection against the cost of health care services (WHO, 2000).

Given the fact that people may be willing to spend more money on security access to health care than they can actually pay as user fees at the time of illness and that the healthy carry the financial burden of illness together with the sick via the insurance scheme. Additional resources may be mobilised for health care provision, and consequently, utilisation of health facilities will probably increase desirable effect given the prevailing underutilization in developing countries (Jutting, 2003: Muller, Cham, Jaffar, and Greenwood, 1990).

These Insurance schemes can be an important tool for protecting low income populations from falling in to poverty as a result of their health expenditure and by so doing, effectively reaching poorer households who would otherwise have no way to cope with this risk. Though these schemes have come to address some health issues, the HMI schemes do have some disadvantages compared with traditional insurance mechanisms.

The peculiar issues are associated to their small size, limited technical and managerial skills and the quality and accessibility of service providers. Their small risk pools and dependence on subsidies also cause some concern for their sustainability (WHO, 2000).

Certainly, the occurrence of illness is unpredictable. But individuals are not only uncertain about the timing of their future health care consumption, they are also uncertain about the form and consequently the cost of that consumption. Such uncertainties lead to welfare losses and therefore individuals seek Insurance to mitigate or avoid such uncertainties. Welfare is then improved given that the risk associated to health is spread.

It has also been argued that insurance may increase welfare by releasing the consumer from concerns over health care prices and income constraints at the time of consumption. The fact that the costs is directly associated with decision making, even without such considerations, the cost will still be high in many cases (Fuchs, 1979).

In considering the welfare losses associated with risk bearing Arrow (1963) shows that risk adverse individuals will demand full coverage if insurance is available at actuarially fair prices. In fact, he goes further by arguing that even if the insurer is risk averse and loads the premium to cover his risk, (i.e. the premium is set at a higher rate than the actuarially fair value) the insurance will still be purchased, provided that the loading is not perceived by the individual to be too unfair.

Arrow (1963) further discusses the conditions under which an individual will prefer a deductible or coinsurance scheme. The former is better suited to cover high loading and the latter to coverage of any uncertainty associated with the risk insured against (Henderson, 1987).

1.2. Statement of the Problem

The problem addressed in this research is the health challenges that many households suffer. Despite all the measures put in place by both the state agents and private sector, health operators to promote accessibility and affordability of health care services in order to improve health outcomes, it has been observed that many households and individuals still suffer so many health challenges to the extent that some still die at home without any medical care while some report their health needs at a devastating phase. Enrolment, awareness and utilisation of health care services are major problems identified by this research. The problem here is low rate of enrolment and awareness of health insurance schemes

Access to health care is an important determinant in assessing equity in health-care delivery. In developing countries, health-care utilisation and delivery are influenced not only by demand constraints but also by supply constraints. In some instances, such utilisation is determined solely by the ability to pay rather than the need for care.

This situation can impose heavy financial burdens on individuals as well as households and in certain instances can impoverish them or lead to financial catastrophe leading to worse health outcomes. Also, inequities in health service utilisation have been documented; those who need health-care services are not receiving what might be considered a fair share of the benefits.

As individuals, it is not possible to state precisely and with certainty what our health status will be in ten years’ time, next year, or even next week. Various actions can be taken as a response to the uncertainty regarding future health status and so the probability of future ill-health may be reduced through adopting a particular pattern of lifestyle (regular physical exercise, balanced diet, refraining from smoking, moderating drinking, etc.) although the extent of the contribution of these to “improved health status” in future is also uncertain.

Such actions, in so far as they are effective, will reduce both ill- health and thereby the costs of health care in the future. Thus the individual can be involved in the production side as well as the consumption side (Henderson, 1987).

A major alternative to these actions (regular physical exercise, balanced diet, refraining from smoking, moderating drinking, etc.) is by “buying an insurance contract”, whereby some of the costs of ill health can be pooled across a group of individuals. In practice it is important to note that it is only those aspects for which money is able to compensate that can be deemed truly insurable. There is here an important consideration in the chain of health, health care and health insurance.

Health insurance like health care is tradable while, health is not. But further, ill-health per se cannot be insured against except in so far as it is possible to compensate an individual financially for a loss of health status. There are limits to the extent that this is possible. Thus, for example, individuals cannot insure themselves for the loss of utility associated with losing their life since they cannot be financially compensated for their own death (Henderson, 1987).

Given that Insurance arises largely as a result of the unpredictability of ill-health, rather than the unpredictability of the effectiveness of health care, or irregularity of consumption, Insurance normally covers the financial costs of care regardless of its effectiveness – except in circumstances where ineffectiveness is a function of negligence. In effect, this means that uncertainty regarding the effectiveness of treatment is not normally covered by insurance (Henderson, 1987).

Providing health care for poor people who work in informal sector or live in rural areas is considered as one of the most difficult challenges that many developing countries are facing (Preker&Carrin 2004). Despite remarkable efforts in controlling these challenges by many social institutions and states, they remain a severe barrier to economic growth (Saches & WHO, 2001) since illness does not only affect the welfare but also increases risks of impoverishment.

This is because of high cost associated with health problems, especially in the absence of any form of health insurance, and consequently, households may decide to leave illness untreated or opt for use of poor quality health care or even self-administered medication (Atagubaet al. 2008)

In order to address this unfulfilled demand side problems and increase health care service utilisation and consequently good health outcomes through sharing the financial burden of health care provision, Cameroon government has allowed for the creation of health insurance scheme by non-state agents.

These are health insurance schemes catering for both formal and informal sector workers through a voluntary acquisition of membership through premium payments. This HMI is an emerging and promising concept, which can address health care challenges faced in particular by the poor. Insured members no longer have to search or find for credit or sell assets.

In Cameroon, therefore, health micro insurance schemes do exist and membership is voluntary and is opened to every interested individual and even to their dependants. Each scheme offers a number of alternative benefit options that includes the prescribed minimum benefits (PMBs) and a combination of other services.

All schemes are required to cover the PMB package that includes some hospital-based interventions and certain chronic diseases. Scheme members‟ contributions are related to the benefit option selected as such contributions are the same for each member for that benefit option.

However, a few “closed” schemes, whose membership is restricted to a specific company or industry, exist differentiating contributions by benefit option and income level. These schemes provide cover to only those who enrol and mainly for services provided by the healthcare service providers in partnership with them. Scheme members may utilise public sector services, which are expected to be paid for by their insurance company.

1.3 Research Questions

1.3.1 Main Question

To what extent does Health Insurance Schemes affect the health status of the population in Buea health district?

1.3.2 Specific Questions

1. To what extent is the population of the Buea Health District aware of the existence of Various Health Insurance Schemes?
2. How enrolment in Health Insurance Schemes does influences Health status?
3. Is there any difference in Health status between the insured and non-insured persons in the Buea Health District?
4. Do socio-economic characteristics of individuals in the Buea Health District such as age, marital status, religion, level of education and income) influence their health status?
5. What are the fundamental challenges associated with the use of these insurance schemes by the insured in the Buea Health District?