Low Cost Health Insurance – Too High a Cost

Originally posted in the Fall 2011 Newsletter

One of the basic tenets of Calcutta Kids is that we are willing to be innovative and take responsible risks, making sure to carefully monitor and evaluate everything that we do. When these innovations work, we scale them up, but when a program or project doesn’t prove cost-effective or in the best interest of the families we serve, we have a responsibility to discontinue it. One such case is our micro health insurance program, which we are ending after many months of careful consideration.

Although the initiative proved inadequately effective, we were able to assist hundreds of families in managing the fees associated with healthcare; and we also worked with some wonderful colleagues who have since turned into friends at the International Labour Organization (ILO), the United India Insurance Company (UIIC) and the Center for Insurance and Risk Management (CIRM).

While many of our Calcutta Kids beneficiaries purchased and benefited from the insurance program, many more did not. We discovered, sadly, that most of the families who purchased the insurance were economically better off than most of the desperately poor slum dwellers; they would have purchased health insurance anyway, and simply found Calcutta Kids’ product less expensive than what’s available on the market.

Another unfortunate discovery was that the micro health insurance program threatened to compromise the trust which the community has had    for Calcutta Kids and which we cherish. The reasons for this are twofold: first, that the door-to-door sales by Calcutta Kids health workers led some beneficiaries to think that Calcutta Kids was now trying to make money from the community; and second, because what had originally been a cashless product had, without our permission, become a reimbursement product with claims often taking more than 3 months to settle. Ultimately, it became clear that Calcutta Kids is neither an insurance company nor an insurance agent and is simply not in a position to run such an operation single handedly.

We had hoped that we could use our comparative advantage as a trusted presence in the slum to educate about, promote, and sell inexpensive health insurance to slum dwellers and then rely on partners – expert organizations in the field of insurance – to manage the office work, including claims. However, those partners were unable to change their systems (created as part of a for-profit industry) to address adequately the needs of the poor. The difficulties we faced with regard to claims management, oversight, and partner cooperation – with the costs heavily outweighing the benefits – simply made it impossible for us to continue running this program.

Calcutta Kids is committed to the proposition that every experience of an organization like ours, positive or negative, needs to be shared with the larger development community. Accordingly, we are most pleased that CIRM, a research group in Chennai, is carrying out an in-­‐depth study of our program and the challenges that made it inadvisable for us to continue its operation. The publication and dissemination of this work will certainly enable other groups to learn from our experience, and, in turn, move forward this important area of international public health.

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