Can Micro Health Insurance Improve the Health of Microcredit Members? A Study in Rural Bangladesh

Abstract

Introduction: A Micro Health Insurance (MHI) scheme, a risk pooling and card based prepaid insurance mechanism, was added as a complement to microcredit programs by some Micro Finance Institutions (MFIs) in the late 1990s and early 2000s in order to protect their clients from health risk. Under MHI scheme, some organizations, (e.g., Grameen Kalyan of the Grameen Bank group), provide both preventive and curative care. To date there is little evidence whether MHI raises either the heath awareness or health status of the microcredit members.

Objective: This paper examines the impact of MHI on the health awareness and health status of microcredit members in the rural areas in Bangladesh.

Methodology: The paper is based on primary data collected from three areas of Grameen Bank: (I) where MHI has been operated for at least five years, (II) where MHI has been placed recently, (III) where MHI has not yet been placed, but will be placed soon; and two areas of the Society for Social Services (SSS): (I) an area with MHI and (II) an area with no MHI. Two villages were randomly selected from each area and all the current female microcredit members (microentrepreneurs) of the selected villages were surveyed using a set of structured questionnaires. A total of 329 female microentrepreneurs were interviewed from Grameen Bank areas (136, 85 and 108 from area I, II, and III respectively) and 136 from SSS (70 and 66 from area I and II respectively). The overall response rate was 74 percent.

Health awareness was measured on the basis of knowledge about some general health issues (i.e., treatment of diarrhoea, signs of pneumonia, and sources of vitamin A). An index was constructed to measure the health awareness score of the microentrepreneurs giving the same weight to each of the three questions and the same weight for each of the answers to each question. Health status was measured based on self-reported health on a 5-point scale (excellent, good, fair, poor, and very poor) asking how good your health was compared to people of your own age. Appropriate regression techniques were applied to analyse health status and health awareness using a broad set of conditioning variables and focusing on the role of MHI.

Findings: The mean difference in health awareness score between area I and area II, and area I and area III was found to be positive and significant in Grameen Bank. Between area II and area III it was found positive, but not significant. The regression results for the Grameen Bank confirm that MHI had a significant positive impact on health awareness as well as health status. But the results were not as clear in the case of SSS.

Conclusion: MHI scheme of Grameen Kalyan has the significant influence on raising the health awareness and health status of the microentrepreneurs.

Keywords: Microcredit, Micro Health Insurance, Health awareness, Health status