The Financial Impact of Formal Health Insurance Schemes: Evidence from Uganda

This study investigates the effects if Microcare's health insurance scheme in rural and urban households in Uganda.The paper first provides a background of the status of poverty and vulnerability in country. It then describes a theoretical framework on which the study is based, outlining the following:

• Health care financing,
• Informal risk sharing schemes,
• Formal health insurance schemes,
• Health risks and health care financing in Uganda.

The study is based on household surveys in two districts - Kisiizi and Kampala. It tests the following hypotheses as part of the research through a detailed data collection exercise, estimation strategy and descriptive analysis:

• Households having health insurance have, on an average, a lower out of pocket expenditure on health care.
• Insurance decreases the likelihood that the out of pocket expenses become catastrophic.
• Insured households rely less often on other coping strategies than households with health insurance.
• Households having health insurance feel more secure about the future.

The paper concludes that:

• Health insurance had a pronounced effect on the financial status of the low-income segment, but other effects too showed an impact.

Finally, the paper presents two issues questioning the sustainability of the health insurance to low income segment:

• Can protection against critical health risks, such as malaria, be achieved by premiums well above the ability to pay of this segment?
• Is the product being offered complementary, substitutes microfinance or will be rejected by many, because it is not better than the existing mechanisms?