(March 2006) An estimated 1.3 billion people worldwide lack access to effective, affordable health care, while more than 150 million people in 44 million households worldwide every year face financial ruin as a direct result of large medical bills.1 Yet most policymakers have assumed until recently that poor families in developing countries—whose survival is precarious—would not pay health insurance premiums, even to forestall the costs of future hospitalization.

Today, those assumptions are being overturned by a rapidly growing number of pilot programs in Asia and Africa that provide community-based health insurance (CBHI) for people who cannot afford conventional health insurance. While the programs have small premiums—as little as the equivalent of 50 cents per year—their promoters have large ambitions: to improve access to health care and avert the crushing debt that often accompanies serious illness.

But challenges remain in transforming these piecemeal pilot efforts into large-scale programs that can address the vast populations without health coverage. Many pilot programs are still struggling to reach financial sustainability, mount efficient outreach campaigns, and stem substantial numbers of client dropouts. Management and underwriting also remain thorny issues, with the efforts of NGOs, private insurers, and government health systems often failing to mesh and programs falling deep into the red.

While no one model exists to meet the needs of all situations, India has a number of determined pilot CBHI projects that offer lessons for other programs. As the only nation to require insurance companies to meet quotas for coverage of rural and low-income groups, India has spurred cooperation on CBHI initiatives among corporate insurers, NGOs, private hospitals, government officials, and community grassroots organizations.2 And analysts are encouraged by these efforts.

“I am absolutely convinced that the solution to extend social protection in health will be found in India,” says Marc Socquet, senior specialist for social protection and informal economy at the International Labour Organization (ILO) office in New Delhi.

CBHI Programs Growing Globally in Number and Diversity

CBHI initiatives are proliferating rapidly. In West Africa, for example, the number of CBHI programs grew from 199 in 2000 to 585 that covered 1.5 million people in 2003.3 The numbers are even more robust in Asia, where the ILO estimates that 7.5 million Indians benefit from about 40 CBHI programs, followed by 2.5 million people in Bangladesh, 1.2 million in the Philippines, and 40,000 in Nepal.4

Despite their disparate locations and sometimes grassroots origins, CBHI initiatives have three common features:

  • They are voluntary and build on local traditions of collective action.
  • They aim to reach families with virtually no financial protection.
  • They rely on prepayments to motivate individuals to seek treatment for their medical problems instead of ignoring them.5

But the organization, management, delivery, client range, and funding of CBHI programs varies enormously. In many cases, NGOs play the role of intermediary between the community and the insurance company, doing everything from marketing to premium collecting to paperwork. In others, insurance companies have launched their own low-cost products in the hopes of replicating the developing-world success of microcredit lending and its collective nature. Many programs also depend on a variety of outside funds—from governments, nonprofits, or multinational donors—to partly subsidize individual premiums.

In addition, while some pilot CBHI programs are linked to government-run hospitals and clinics, others focus on outpatient coverage or care provided by nonprofit institutions. In the Mysore district of Karnataka state in India, one unique insurance pilot even compensates hospitalized patients 50 rupees a day for wage losses—an amount that helps take care of the young and elderly at home while a breadwinner is receiving treatment.

“Otherwise, the poorest of the poor do not come to a public-sector hospital because they do not have food at home,” explains Dr. H. Sudarshan, president of Karuna Trust, an NGO that spearheaded this CBHI initiative.

India as a CBHI Laboratory

India has emerged as one of the most dynamic arenas for progress and innovation in CBHI initiatives. The needs there are particularly acute: Only 11 percent of India ‘s population is covered by any form of health insurance.6

While India’s government health services are by law free for the poor, patients in reality are often forced to pay for drugs as well as pay bribes to get sustained treatment. More than 40 percent of hospitalized patients in India borrow money or sell assets to meet their medical costs. A staggering 24 percent become impoverished due to a medical crisis, with many falling into the permanent grip of moneylenders in villages or urban slums.7

Yet India also has a vast array of community activists and a vital storehouse of corporate brainpower to apply to the development of CBHI programs. Last year, a Community Health Insurance Network was even established online to foster interaction on CBHI initiative among the government, the private sector, NGOs, and communities.8 Still, challenges remain in India, including marketing, subsidizing premium payments, controlling claims ratios, choosing between government and private health facilities, and seeking treatment.

The Marketing Challenge

Successful marketing of CBHI programs generally requires a preexisting network of grassroots beneficiaries and persistent teams of outreach workers with deep knowledge of local traditions. For instance, such community ties helped a CBHI initiative in Dharmasthala, a town about 300 kilometers west of Bangalore, attract 77,000 families as participants within just two years. The initiative was begun by the Shri Kshetra Dharmasthala Rural Development Project (SKDRDP), a local NGO that had launched thousands of grassroots self-help groups in 1982.

Merely announcing the availability of CBHI benefits has proven an insufficient marketing strategy. Outreach workers who have personal relationships with poor families have found it much easier to convey the novel concepts and details of health insurance programs to these potential clients. But insurance is a much tougher sell than microcredit programs. The idea of paying money now for medical services that may not be necessary in future can be difficult to accept for those with little cash to spare.

Several tools of persuasion have proven useful, such as multiple recruiting sessions and success stories as recruiting tools. Outreach workers also try to highlight the relative costs of joining versus other daily expenditures. In the Nilgiris, an isolated mountainous region bordering India’s Kerala and Karnataka states, cash-poor tribal families learned that it would be far cheaper to pay the insurance premium than sustain a daily habit of chewing betel nut, according to leaders of the Adivasi Munnetra Sangam, a federation of village collectives initially formed to advocate land rights. And the Nilgiris initiative also found it helpful to collect premiums gradually after launching in 1992. First villagers contributed two rupees per year, then four, then eight. By 2003, volunteers were able to collect 22 rupees a year.

Handling Subsidies With Care

Indian proponents of CBHI argue that the poor should not be forced to assume the entire cost of their health care. Governments, multinational donors, and nonprofits all have a role to play in subsidizing health insurance premiums. But as India proceeds with its trial-and-error approach, it has become clear that available subsidies should not displace the need for sustained marketing. Otherwise, client enrollments may drop sharply when the subsidies are discontinued or reduced.

Such was the case in Karnataka, where the United Nations Development Programme (UNDP) decided to assume the cost of insurance premiums for three years in the CBHI initiative launched by Karuna Trust. Outreach workers initially signed up 82,000 participants, and UNDP paid the entire 30-rupee premium for participants who belonged to low castes or tribes and 15 rupees for other families living below the poverty line.

But when the beneficiaries were asked in the program’s fourth year to pay the premium by themselves, enrollment plunged to 25,000. “Sustainability is a very important aspect right now,” says project coordinator G. Achutha Rao, who is advocating more door-to-door interaction with potential beneficiaries.

Controlling The Claims Ratio

One of the most difficult tasks in managing CBHI programs in India has been predicting claims ratios. In some cases, few claims were initially filed because families failed to understand the package of benefits available; claims sharply increased as benefits became more widely known. Some providers eventually reduced coverage of common procedures (such as tubectomy) in order to lower claims to manageable levels.

In Dharmasthala, L.H. Manjunath, executive director of SKDRDP, suspected hospitals of billing for questionable practices after the claims ratio rose in the first year to 200 percent. The initial insurance company involved refused to reimburse for some claims, and the NGO swallowed losses of 3.5 million rupees.

The solution: increased professionalism. In April 2005, after ICICI Lombard General Insurance became a partner in the Dharmasthala initiative, the company slashed the number of participating hospitals from 80 to 35—focusing on the most reliable facilities—and launched a preauthorization scheme for planned surgeries. While it remains to be seen how effective these measures will be, the program has unquestionably cushioned the blow of hospitalization costs—which in Dharmastala can range on average from 8,000 to 15,000 rupees, rivaling the per capita income of Karnataka (18,324 rupees).9

Opting For Public Or Private Facilities

Some CBHI programs in India have focused on private-sector health providers. One reason is that many poor Indian families prefer to borrow heavily for treatment at private hospitals rather than resort to government facilities, which often have inferior equipment, staffing, and hygiene. Private hospitals are offering discounts on doctor fees and treatment costs for poor patients covered by CBHI in return for higher occupancy and a higher profile in the community.10

Still, some CBHI programs such as the Karuna Trust initiative have opted to engage with India ‘s government health care services. “In the long run, the way to do this is to strengthen the government’s own system,” says Dr. Shreelata Rao Seshadri, a social development specialist and World Bank consultant.

Seshadri visited the Mysore pilot, which placed a claims office inside government hospitals—enabling field workers to regularly interact with patients, their families, and hospital administrators. A November 2004 study by the Center for Population Dynamics, a think-tank based in Bangalore, indicates that the program has reduced bribery and improved hygiene at the hospitals since its launch in 2002.11 At present, the government of Karnataka is negotiating with the World Bank to create similar programs in four other districts.

Seeking Treatment

One of the main goals of CBHI is encouraging poor families to seek treatment when sick rather than wait until a health emergency threatens their livelihoods or their lives. India ‘s experience thus far proves that families are motivated to do just that.

At the Gudalur Adivasi Hospital, the locus for CBHI-sponsored care in the Nilgiris, the waiting room is full of insured patients. The tribes are staffing the hospital with nurses from their own villages—even though less than one-half of the CBHI target group of 13,070 people are actually paying the 22-rupee annual premium.

“In terms of providing social protection for a previously disenfranchised population who were completely cut off from formal health services, [these] activities have been a resounding success,” concludes British economist Saliya Kanathigoda, who wrote a case study on the Nilgiris CBHI initiative for the ILO.12

Looking Ahead

Both the World Bank and the World Health Organization are calling for more research to examine the strengths and weaknesses of these innovative CBHI programs. And the initial signs are encouraging. As long as governments do not lose sight of their bedrock responsibility to provide adequate health care for the poor, there is plenty of room for collaboration with the corporate sector and community groups seeking to mitigate the costs of serious illness.

Margot Cohen is a freelance writer based in Bangalore, India.


  1. “Recommendations for Action,” International Conference on Social Insurance in Developing Countries, Berlin, Dec. 5-7, 2005, accessed online at www.shi-conference.de, on March 6, 2006.
  2. Rajeev Ahuja, “Health Insurance for the Poor,” Economic and Political Weekly 39, no. 37 (2004): 4501.
  3. Sara Bennett, Allison Gamble Kelley, and Brant Silvers, 21 Questions on CBHF: An Overview of Community Based Health Financing (Bethesda, MD: Partners for Health Reform Plus, 2004).
  4. Personal interview with Marc Socquet on Nov. 19, 2005.
  5. Guy Carrin, “Community Based Health Insurance Schemes in Developing Countries: Facts, Problems and Perspectives,” Discussion Paper No. 1, 2003 (Geneva: World Health Organization, 2003); Bennett, Kelly, and Silvers, 21 Questions on CBHF; and Alexander S. Preker and Guy Carrin (eds.), Health Financing for Poor People: Resource Mobilization and Risk Sharing (Washington, DC: The International Bank for Reconstruction and Development/The World Bank, 2004).
  6. Karuna Trust, United Nations Development Programme, and India Ministry of Health, Report on National Conference on Community Health Insurance (Mysore: India Ministry of Health, 2003).
  7. P.H. Peters et al., Better Health Systems for India ‘s Poor: Findings, Analysis and Options (Washington, DC: World Bank, 2002).
  8. For more on the Community Health Insurance Network, see www.comhealthins.org.
  9. Directorate of Economics and Statistics, “Economic Survey of Karnataka, 2002-2003,” accessed online at http://des.kar.nic.in/indexie.html, on March 6, 2006.
  10. Personal interview with Dr. Gopalakrishna Kairanda, November 2005.
  11. Center for Population Dynamics, Evaluation Report (Bangalore: Center for Population Dynamics, 2004).
  12. Saliya Kanathigoda, Community-Based Schemes: Ashwini Case Study (Geneva: International Labour Organization, 2005).