MR Microinsurance_2012_03_29.indd - International Labour ...

68 Emerging issues
Expenditure
Indicators of microinsurance’s impact on policyholders’ expenditure, including
out-of-pocket (OOP) and catastrophic spending, provide key measures for
financial protection. Besides coinsurance and deductibles paid to obtain covered
goods and services, OOP costs encompass charges incurred while accessing these
benefits, including transportation, bribes, and related products and procedures,
such as drugs and laboratory testing that are not insured. OOP costs exclude the
value of opportunities (like paid labour) forgone while accessing insurance cover
because they constitute direct monetary outlays. Similarly, they are calculated
after policies are purchased and do not include premiums.
OOP expenditure becomes catastrophic when it absorbs a considerable
amount of annual household income (often defined as 10 per cent). 7 While frequently
used in the context of expensive hospitalization, this measure is applicable
to all insurable risks, including death, disability, theft and disasters. When
microinsurance absorbs the costs of these events, it reduces or avoids the incidence
and depth of the resulting outlays and accompanying descent of households
into (deeper) poverty.
Twelve of the reviewed studies examined the effects of microinsurance on
OOP spending: of these, six, three and three found unambiguously positive,
mixed positive and insignificant, and completely insignificant results, respectively.
In the positive category, for example, Jütting (2004) detected a 45 to 51 per cent
decrease in OOP spending among the policyholders of four Senegalese community-based
health insurance organizations (“mutuelles”) in comparison to nonmembers.
Conversely, among the mixed results, Chankova et al. (2008) found
that while Ghana’s Nkoranza scheme and those Senegalese mutuelles which provided
in-patient coverage significantly reduced members’ hospitalization costs,
neither the mutuelles nor four of Mali’s Equity Initiative plans protected clients
against OOP expenditures incurred for outpatient care (the Ghanaian and Malian
policies did not provide outpatient and in-patient care benefits, respectively)
– a result the researchers attributed to coinsurance rates ranging from 25–50 per
cent per visit. Of the wholly insignificant findings, meanwhile, Wagstaff et al.
(2009) determined that China’s New Cooperative Medical Scheme (NCMS) had
no statistically significant effect on average household OOP expenditures – a
result confirmed by each of Lei and Lin’s (2009) five estimation strategies and
attributed by Wagstaff’s team to “narrow cover and high coinsurance rates”.
7 There is some debate on what parameters most accurately capture catastrophic expenditure: researchers
for the World Health Organization, for example, define catastrophic costs as exceeding 40 per cent of a
household’s “capacity to pay”, which in turn constitutes total household income minus subsistence
expenditure (Xu et al., 2003).