The Access Frontier for Health Insurance

This presentation examines the South African health-insurance market, focusing specifically on the role of ‘FinMark Trust’ in this area.

The presentation states that:

• Access to financial services for the poor provides them with a path out of poverty and is also a political and social priority;
• The poor deal with adverse events by “own mitigation” or with government assistance;
• Households face risks that include loss of job/death/illness of the main wage-earner, destruction of property, etc;
• Living with AIDS is also a challenge in South Africa.

It examines the access frontier in South Africa and states that:

• Affordability, physical proximity and appropriate features comprise the three dimensions of access;
• Its main features are: segmentation of providers, extensive regulation and lack of access to lower-income people;
• Developing the frontier will include:
  • Tapping the lower-income market with formal insurance;
  • Making choices regarding price discrimination, lumpiness of the market and scale of production and distribution.

The presentation poses the following three alternative scenarios that would involve making choices about which model to use for expanding access and whether to use open or closed architecture in financial services.

• “Big Squeeze” - closed architecture and investors paying;
• “Solo Act” - closed architecture with taxpayers paying;
• “Winds of Change” - open architecture and shared costs.

It concludes by describing the role of FinMark Trust in partnering with innovators to open sustainable market access.