By Melvin Obadha, Andrew Seal, Tim Colbourn
Mobile money spurs savings, thus increasing healthcare access, write Melvin Obadha, Andrew Seal and Tim Colbourn.
Evidence from Kenya
In Kenya, only 40 per cent of the population seek services from primary level public health facilities where it’s free. Instead 60 per cent of the population opt to go to private or higher levels of public healthcare where they must pay.
This is because primary-level public facilities tend to lack equipment, staff, medicine and good quality of care. Furthermore, health insurance coverage is low as 82 per cent of women and 79 per cent of men do not have it.
Households are forced to make out-of-pocket payments to cater for the direct and indirect costs of healthcare such as consultation, medicines, diagnostic tests, hospitalisation costs, transportation to a health facility, time off work of the ill family member and associated loss of income. In coping with the costs of healthcare, households will first use available income and savings.
Then they resort to borrowing from informal and formal financial institutions, rely on remittances from family and friends (social networks), cut back on non-health expenses such as food and education, delay investment, shift labour tasks between family members and hire external labour to cater for the ill family member.
They might incur catastrophic expenditures, which in turn pushes them into poverty. Annually, 1.6 per cent of Kenyans are pushed into poverty due to healthcare costs.
Poor households have tight budgets, small incomes, little savings and no assets. If they do have assets, they are usually locked in informal financial groups and are difficult to convert into cash immediately. Moreover, because they have no financial alternatives financial institutions and insurance companies are afraid to extend services to this ‘high risk’ segment. Thus, the poor might forgo needed healthcare or risk being pushed deeper into poverty by medical expenses.
A year-long study of the financial habits of 298 Kenyan households found that 38 per cent of them had to delay or forgo needed medical care because of high costs.
To solve cash flow problems, the poor need financial instruments that build on the existing social networks, provide loans and savings with minimal requirements when faced with health problems and extend health insurance. These instruments include mobile money.
Source: Africa Health IT News