Learn How SKS Microfinance Rolls out Health Insurance

In India, 98% of poor households turn to "out-of-pocket" expenditures for health care because they lack other alternatives (Ruchismita, Ahmed and Raj 2007). Paying out of pocket for serious health problems is 1) One of the more threatening economic shocks low-income households face; and 2) incentivizes finding the cheapest healthcare provider in the local area (who are often unqualified, especially for treating larger illnesses).

In an attempt to address this important problem, SKS, one of the largest microfinance providers in India with about 2 million clients, has recently designed and rolled out a new health insurance products. Over 200,000 microfinance clients currently use this product, and this number will likely double by the end of 2008.

The Centre for Micro Finance (CMF), led by authors Theresa Chen, Alison Comfort and Natalie Bau, recently published a toolkit which details how SKS has rolled out its health insurance product (toolkit here). CMF is evaluating the impact of this health insurance product, and given its early success, wanted to help other practitioners and players in microfinance understand product features and implementation challenges. The toolkit details several specific components of the SKS health insurance product, including:

• Product description
• The Pilot
• Branch rollout
• Key challenges going forward
• Direct cost estimates for the pilot and expansion to other branches

Personally, I find the discussion of key changes made after the product pilot (pages 8-9) very interesting as it helps elucidate some of the key product components. The pilot took place in one branch in Northern Karnataka from February - May 2007, and SKS made three key changes to the product following this test run, namely:

1. Shifted trigger for enrollment from SKS membership to taking a new loan: This made the job easier for loan officers on the ground. There are a lot of SKS clients, and starting the health insurance process with a new loan reduces time spent tracking down clients.
2. Moving from weekly installments to an upfront premium payments: Paying premiums upfront reduced complexity and price to the clients (no more interest!).
3. Clients, rather than staff, nominate network hospital: Clients know which hospitals have better care/reputation, and SKS leveraged the clients' knowledge by making this change.

There is a ton of information packed into this toolkit that can help microfinance practitioners, insurance providers, and other interested parties learn how health insurance can work on the ground. I could go on, but if you are still reading at this point, I suggest checking out the toolkit!