Assessment of Health Microinsurance Outcomes in the Northern Areas, Pakistan - Baseline Report

The Health Microinsurance (HMI) is a voluntary private insurance product developed by the Aga Khan Agency for Microfinance (AKAM) with support from the Bill & Melinda Gates Foundation (BMGF). The HMI Outcomes Assessment examines whether the HMI product helps reduce out-of-pocket health-care costs and leads to positive change in health-seeking behavior and health outcomes. Findings from this baseline study demonstrate a multitude of serious health issues for the Ghizar population. When formal care is needed, hospitals in the Aga Khan network are preferred, but out-of-pocket costs can run quite high. At present, people most often borrow to cover the expense, even though options for obtaining loans are limited, especially for the middle and lower classes. Although the HMI can effectively protect families from most direct costs for a week of hospitalization at an AKHSP hospital or a much longer stay at a government hospital, a baseline view of enrollment suggests that relatively few people are buying the insurance. The main reason is upfront cost, particularly for those living in large or joint households. Summing up on value proposition, the program does indeed offer considerable value to the residents of this area, but the value is unevenly distributed across the population—the middle class and those living close to major hospitals benefit disproportionately. Lessons applicable to AKAM/FMIA and the industry include rethinking the plan’s market strategies, which employed existing community organizations to reduce costs but may have dragged down enrollment in the end due to inconsistent efforts.