Sustainability and Risk of Community-Based Health Insurance in Ethiopia

Forschungsarbeit, 2018

33 Seiten, Note: B+


Table of content






Conclusion and recommendation


Chapter One: Introduction
1.1. Background
1.2. Statement of the problem
1.2.1. CBHI Scheme (Purchaser
1.2.2. Healthcare Provider: -
1.2.3. Members factors;- 3
1.3. Significance of study

Chapter two: Literature review
2.1 CBHI scheme (purchaser):-
2.2. Healthcare provider:-

Chapter 3; Objectives
3.1. General Objective
3.2 Specific Objectives

Chapter 4: Methods and materials
4.1 study area and period
4.2. Study design Study design is a descriptive cross sectional survey, by collecting claim data of health facility.
4.3. Population
4.3.1. Source population
4.3.2. Study population
4.4. Sample size and Sampling technique
4.5. Data collection tools and procedures
4.6. Data analysis procedures
4.7. Ethical consideration
4.8. Limitation of the study
4.9. Operational definitions
4.9.1. Sustainability :
4.9.2. Members:
4.9.3. Beneficiaries: - Members and family of members who have potential to use health service under CBHI benefit package.

5.1 Concurrent Result
5.2. Prospective Result
5.3. Summary of Result
5.4. Discussion
5.5. Conclusions and Recommendation



Background: Health Insurance is one of the strategies to overcome financial challenges through prepaying and pooling fund. It is objected to protect catastrophic health expenditure at the time of health care need. Community Based Health insurance is one of health insurance type that consists members of informal sectors (communities who are engaged in informal sectors). The sustainability of it could be affected by the three components of health Insurance (provider, purchaser and member factors).

Objective: -To assess sustainability of Community Based Health Insurance in Ethiopia.

Methods: Study design is a descriptive cross sectional survey, by collecting claim data of health facility. Data mining technique, predictive model and SPSS version 21 was deployed for analysis.

Result: - 293,562 CBHI beneficiaries’ (134,842 females) and 759 health facilities’ data was analyzed. Concurrent cost is: - The mean of most expensive cluster for overall variables is $ 15.29, while mean cost for inpatient $ 17.14, for outpatient $ 16.11, per hospital $ 4.46 and the most expansive mean age is 64.29 year with mean cost $ 3.9. The Predicted cost is, mean cost for overall variables is $ 9.96, for inpatient $ 11.4, for outpatient $ 9.27, for hospital $ 4.49 and the most expansive mean age is 64.32 with mean cost of $ 3.82.

Conclusion and recommendation

Hospital service, males’ consumers, and aged group are costly and risk for sustainability of CBHI. The top three cost drivers are drugs, admission, and laboratory respectively. Per capita health care cost of concurrent and prospective is $ 3.09 and $ 3.1 respectively. CBHI would sustain if current market condition, benefit package and other unseen concerns are persisted same way to now day. Otherwise, from our finding of, 80% of health service cost is consumed by 16% beneficiaries, and from per capita cost of $ 17.14 (expensive group), sustainability will be in trouble.

The status of adverse selection, referral by pass, moral hazard and fraud from both beneficiaries and health care provider should be studied.


My Acknowledgement goes to Jimma University for their input and informative lecture and for support they gave me in the moment of my project/ thesis. Thanks to my advisers Mr. Fikru Tafese and Mr .Mamo Nigatu for advising me on my project and thesis too. My appreciation goes to MOH medical service, EHIA provider directorate staff and health facilities for their information at the study.


Table 1 Assessed health facility in four regions

Table 2: Frequency table of study participant (CBHI beneficiaries) in Ethiopia by 2016/17

Table3 Beneficiary distribution found by running all variables of concurrent, evaluated per total cost of CBHI

Table 4 CBHI beneficiaries’ Mean cost and mean age clusters per health Services Cost

Table5 Cost per cluster, by running all variables and total health cost as evaluator

Table 7 gender proportion verses CBHI beneficiaries' total health service cost

Table 8 CBHI beneficiaries’ Mean cost and mean age clusters per health Services Cost in USD$

Table 9 CBHI beneficiary distribution, found by running all variables of predicted

Table 10:- beneficiaries and predicted cost per cluster

Table 11 sex ratio versus cost cluster of CBHI beneficiaries

Table 12 comparison of predicted and concurrent health service cost


Figure 2 cluster created by running ten variables evaluated per total health care cost (in birr, 27 birr equivalent to 1 USD$)

Figure3 CBHI’s overall health service cost, for the most expensive cluster (cluster2) by service type in USD $

Figure 4 age cluster, evaluated per total health service cost

Figure 5 result of two step-clustering of CBHI beneficiaries for per predicted value in birr (27 birr equivalent to 1 USD$)

Figure 6 overall service cost of the most expensive cluster (2nd cluster)


Abbildung in dieser Leseprobe nicht enthalten

Chapter One: Introduction

1.1. Background

Ethiopia with a population size of 94.1 million (in 2015), is the second biggest country in Sub-Saharan Africa. The pyramidal age structure of the Ethiopia population has remained predominately young with 44.9% under the age of 15 years, and over half (52%) of the population in the age group of 15 and 65 years. The population in the age group of over 65 years accounts for only 3% of the total population(1).

Ethiopia adopted a comprehensive health care financing strategy (In 1998) aiming to increase funding for health, enhancing efficiency in the use of available resource, improving health service quality and coverage of health services. The first generation of reforms included fee waivers for the poor and exempted some identified health services. The second wave of reforms is health insurance.

Health Insurance is one of the strategies to finance the health sectors and protect catastrophic health expenditure though prepaying (pooling funds) to utilize health service at the time of need without financial hardship. Today, the system relies on 2 pillars:

The Social Health Insurance (SHI): Is a risk-pooling approach which addresses the formal sector and civil servants with their families (covers 11% of the population). It will be funded by an equal contribution from employers and employees. The list of benefits (including reimbursed medicines) has been defined and the project shall be launched near future. Despite of proclamation was endorsed before seven years; the service is not beginning yet.

The Community Based Health Insurance (CBHI): is one of risk-pooling approach that tries to spread health costs across households with different health profiles to prevent catastrophic expenditures coming with unexpected health events or chronic diseases, and enables cross-subsidies between have and non-have, sick and non-sick, young and old population. The scheme has been designed for the rural and informal sector (communities not engaged in formal sector or not payroll based). By now participation is voluntary basis and enrolment is at the household level. It was born in 13 districts with the design of premium 75% from members and 25% subsidy of federal government. However, currently only 10% is subsidized by Federal Government and the remaining from members. On top of this, 100% premium of indigent (10%) population) is covered by woreda/ district and regional government. It has been pilot tested in 13 districts since 2011 and because of its success, Government decided to expand it to the entire country and by now CBHI expanded to about 350 districts and covered about18 million population (2)

The development and management of these two schemes is under the responsibility of the Ethiopian Health Insurance Agency. The Ethiopian Health Insurance Agency (EHIA) was established by the Council of Ministers regulation number 271/2005 EC to implement and lead Ethiopian health insurance. The governance structure of the EHIA includes headquarter and 24 Branch offices located in different parts of the country. The headquarters and branch offices are staffed with the prerequisite human resources, budget and tools necessary to provide the services. After prolonged preparations, the National Health Insurance (NHI) scheme is expected to be launched. As EHIA is a new organization without any experience in management, no strengthened regulation, weak system/program management, in particular the financial management and even the structure of the agency is not finalized yet, is facing traits of sustainability

Through the two scheme, Ethiopia planned to 2020 establishing community based health insurance (CBHI) schemes in 80% of woredas and enroll at least 80% of households, reduce out-of-pocket health expenditure to less than 15%, increase general government expenditure on health (GGHE) as a share of total general government expenditure (GGE) from 6% to 10% (3)

1.2. Statement of the problem

Ethiopia health care is characterized by low health service utilization 0.34 (which is far behind WHO recommendation of 2 to 3), under financing, could be evidenced by per capita health spending expenditure USD $21 (WHO recommendation is USD $60), high OOP (34%), highly based on external fund (50%) and low health service quality, inequity, troubled sustainability of health care delivery. Even though, government increasing budget allocation, the proportion of non-salary shows declining from 2007 to 2011(4), (5).

To solve the above challenges, for an effective health care delivery system and for achieving UHC Strong financial base is a prerequisite. To have strong financial base and effective health care delivery system, countries including Ethiopia are introducing strategies. Of these strategies, Ethiopia adopted domestic health care financing (CBHI and SHI) assuming the schemes are powerful in improving challenges seen in health care delivery system and to achieve UHC. It is believed that, the schemes are important for increasing Health service utilization (HSU), improving health sector financing, reduce OOP, minimize or enable to be independent of external donation, improve quality of health care delivery, assure equity, and enable to be confident enough for sustainability of health care delivery.

Despite the success, there are challenges confronting the health insurance program. Evidences show that CBHI is not the best initiative to solve health financial challenges to achieve UHC, even could be the more catastrophic. In general sustainability of CBHI could be affected by the three components of health Insurance (provider, purchaser and member factors).

1.2.1. CBHI Scheme (Purchaser ):- As EHIA and CBHI schemes are new, with low experience, low knowledge, and low skill, low financial discipline in particular financial management, inefficiency, lack of clear legislation, feeble design, and weak prediction capacity, high overhead costs are key operational challenges that threaten sustainability of CBHI. For example, as a result of not introducing get keeper system, beneficiaries are free to obtain medical services they need. so that, high chance of health service utilization, due to voluntary design high opportunity of adverse selection (Characteristic of voluntary CBHI), causing high expenditure (6). On top of these, generous benefits package design, cost escalation, high public spending, a narrow base of financial contributors, , fragmented pool (weak cross subsidies) and possible political interference, end up with unnecessary expenditures, then trouble sustainability of CBHI(7).

1.2.2. Healthcare Provider: - low quality of health service complemented by voluntarism of the scheme will lead to low enrolment rate, then law fund pool. Since, no get keeper or no other monitoring system, there is high chance of increased health service utilization and higher health expenditure from small fund pool. Unavailability of supply at health facility, enforce the beneficiaries to double burden of OOP. Besides, countries like Ethiopia, which are fresh to CBHI, with low clinical audit and weak claim management system, will be affected by high moral hazard and fraud (from both members and provider) and ending up with crisis.

1.2.3. Members factors;- Large family size (since member is by household), aged, beneficiaries with chronic case, high level of understanding and education (the more educated/understand, the more risk for advisers selection), more likely to be enrolled (adverse selection) (3). Adversely engaged members will utilize health service more and would be high consumer of CBHI budget. Study in United States complemented that, a top 20% of population consume 80% of all total health expenditure(8), (9).

Above said, without any scientific evidence, the premium of CBHI was escalated from USD $6.67 USD $8.89 per household, while in contrary, government subsidy abridged from 25% to 10%, since 2016. Anecdotal evidence from many woredas shows that there is a bankruptcy (eg. Amhara Region-Fogora, Oromia Region- Limmu genet, SNNP Region- yirgalem etc). Astonishingly, despite woredas achieved 100% enrolment rate, bankrupted.

To avert these, to generate evidence of where to focus, how to act is noteworthy. In addition, to be effective, efficient, early warning, early intervention, and maximize return, there is a need to have scientific evidence. Though studying CBHI is a corner stone for evidence based decision, among other functions in Ethiopia, is less researched. Therefore, the purpose of this study is to inform the sustainability of CBHI program in Ethiopia and will answer:-

- What is the sustainability potential of CBHI?
- What factors is risky for CBHI sustainability?
- What drive the cost of CBHI program?

1.3. Significance of study

The study will improve insights elicited as a basis for ministry of health, Health Insurance agency, health service providers, policymakers, health plans, researchers, and vendors on the implementation and evaluation of health insurance system (follow-up activities) and monitoring of progress toward achieving CBHI goals, especially on sustainability of community based health insurance. It renders the venders and EHIA to think off and develop risk adjustment model that will be the backbone of the system for to be effective, efficient, early warning, early intervention, and maximize return.

The study will serve as reference or base for farther study conducted on health insurance. As the topic is new to our country, while doing this research it enables us (the student and adviser) to build practical skill of conducting research on the area of health insurance and sustainability.

Chapter two: Literature review

Health financing of most developing countries is high Out of pocket (OOP) which could lead to catastrophic expenditure. Similarly Ethiopia Health care is characterized by low Health service utilization (0.34 which is by far law from WHO 2 to 3), under financing, could be evidenced by per capita health spending US$21 again which is very far from WHO recommendation of US$60), high OOP (34%), based on external fund (50%) and problem of the quality, equity, sustainability of health care delivery. Though the government seems increasing budget allocation, the proportion of non-salary shows declining from 2007 to 2011(4)(10). To overcome this challenge countries have been doing their best by adopting policies, developing strategies and different initiatives. Example, From WHO constitution in 2005, the member states of WHO endorsed UHC as a central goal and stated that health systems must “be further developed in order to guarantee access to necessary services while providing protection against financial risk.”(11)

Comprehensive computerised empirical studies, focussing on the impact or evaluation of publicly sponsored health insurance schemes was conducted. The study was objected to see the impact of publicly financed health insurance schemes on health service utilization, out-of-pocket (OOP) expenditure, financial risk protection and health status. The finding shows that, nevertheless health service utilization was increased among members; there is no clear evidence of reduced OOP expenditures or higher financial risk protection. So that, publicly financed health insurance schemes are not the only method to achieve UHC in India. Rather, the scheme should aligned strengthening health care system and health insurance could be used as opportunity to strengthen and invest in health service (16).

As Health care financing Ethiopia developed the initiative of community based health insurance (CBHI) schemes and planned to cover 80% of Woredas or at least 80% of households enrolment in CBHI, reduce out-of-pocket health expenditure to less than 15%, increase general government expenditure on health (GGHE) as a share of total general government expenditure (GGE) from 6% to 10% till 2020 (3). Despite CBHI is one of strategies to achieve UHC, there are evidences that shows the gaps, the limitations, controversies, even could be the contrary to its objective. On top of this, threat of financial and operational sustainability could be caused by cost escalation, possible political interference, inadequate technical capacity, broad benefits package, large exemption groups, inadequate client education, and limited community engagement etc. (12). So that, implementing CBHI is not the end goal of achieving financial protection which needs evidence based decision, especially financial management. To be focused we can use evidence from components of CBHI (healthcare provider, member of CBHI and CBHI scheme.) and financial management system.

2.1 CBHI scheme (purchaser):-Systemic review done in Africa and Asia on health insurance reported that, the schemes in countries such as Rwanda and Uganda showed weak financial sustainability because of low renewal rates, high claims-to-revenue ratios and high operational costs (13). This could be attributed to inability of early planning and budgeting, and weak cost management system, and weak expenditure management system of CBHI scheme. CBHI risk pooling or fund pooling is promising design for sustainability. If pooling is between many, the chance of sustainability will be high. Effective social protection (e.g. CBHI) will require national health insurance (14).

Systemic review conducted provider payment method (PPM) reported that, payment methods are a key determinant of CBHI performance and sustainability, provider participation, satisfaction and retention in CBHI; the quantity and quality of services provided to CBI patients; patient demand of CBHI services; and population enrollment and renewal, risk pooling and financial sustainability of CBI(15). This means that PPM can affect healthcare provider and intern health service quality would affect the CBHI member. If PPM adopted by CBHI schemes is not conformable provider the quality would be compromised and compromised quality dissatisfaction of members and end up low enrollment especially for voluntary like Ethiopia CBHI (Vicious-cyclic). To increase pooling and enrolment, targeted information and complain for promotion is one of the important strategy for the success and sustainability of CBHI(16). Not only aforementioned, but also, strengthening the capacity of CBHI scheme at claim management, robust claim review and prediction of cost are other strategies to sustain CBHI, especially when supported by technology (electronic based claim review).The electronic-based review adjusted significantly higher claims cost than the paper-based claims review (17). In Croatia the implementation reform and strengthening of IT system improved, after long crisis caused by high public spending, a narrow base of financial contributors, generous benefits, and system inefficiencies(7).

2.2. Healthcare provider:-Evaluation RégimenSubsidiado (RS) of Colombia by using “fuzzy” regression discontinuity design find that the program has shielded the poor from some financial risk while increasing the use of traditionally under-utilized preventive services – with measurable health gains”. And recommended that “high powered supply-side incentives and the possibility that enrollees receive care from higher quality private sector facilities” (6). As quality of health service is improved there would be a chance of enrollee and renewal increment. As Adam Wagstaff, and resent study conducted in china, India, Colombia found that, it is supply side intervention (treatment protocol, drug list, etc.) have had more success in improving financial protection than expanding health insurance(18).

Many believe that health insurance schemes, through increased utilization patterns and subsequent income generation, can improve the quality of care, and that this, in turn, can lead to higher enrolment of health insurance, but in contrary, as health service utilization increased there would be a chance of higher health expenditure of CBHI scheme and health workers discrimination against card holders and provided preferential treatment to patients paying in cash ( Burundi)(13). Since health service quality affect the decision of enrollment and utilization there is a need to explore quality of healthcare among different dimension(6).

2.3. Members: - Money studies show that, though member enrollment is the back bone and low enrollment is persistent limitation for sustainability CBHI, still there is a lack of systemic evaluation of their effect, especially in sub-Saharan Africa (SSA). Low enrollment is attributed to willingness and inability to pay, poor quality of service, mistrust of the scheme and benefit package, un affordability of design to attract and sustain beneficiaries, lack of awareness the program system, volunteerism which expose to advise selection(20). Other factors in voluntary CBHI are awareness and experience of advantage of claim, chronic case, and awareness of the presence of quality of health service and accessible forces the engagement to CBHI. So that voluntary CBHI is risk for adverse selection, moral hazard and sustainability(21). A large proportion of medical resources are consumed by a small percentage of the total population. The top 20% of population consumes about 80% of all healthcare expenditures in the United States(6). Consequently these extra ordinary need to be focused and intervened by early detection before bankruptcy. For early detection we need predictive model which enables as to predict high consumer/risk.

Chapter 3; Objectives

3.1. General Objective: -To assess risk and sustainability of Community Based Health Insurance in Ethiopia

3.2 Specific Objectives

1. To assess capacity of CBHI program sustainability in both current and future, in Ethiopia, by using claim data
2. To identify the top cost driver or risk of CBHI program
3. To determine future healthcare cost of CBHI program

Chapter 4: Methods and materials

4.1 study area and period

The study was conducted in nationwide of Ethiopia (Oromia, Amhara, SNNP and Tigray region) which are implementing CBHI (see below table). The survey was conducted on public health facilities (hospital and Health centers) those are contracted with CBHI scheme. Study period was from June, 2017 to February, 2018.

4.2. Study design

Study design is a descriptive cross sectional survey, by collecting claim data of health facility.

4.3. Population

4.3.1. Source population: - All beneficiaries of CBHI. That means, peoples who are enrolled in CBHI program (both members and their families) or including both who visited health facilities or not. By now active beneficiaries are about 11,550,446 (2,510,967 and 9,039,479 members and families respectively),(2).

4.3.2. Study population:-Beneficiaries of CBHI who were visiting health facilities from July1, 2016 to June 30, 2017. That means, of 11,550,446 CBHI beneficiaries, about 3,494,010 CBHI were visited health facilities from July 2016 to Jun, 2017(2). And Health facilities those are contracted with CBHI scheme for serving beneficiaries (see below table).

4.4. Sample size and Sampling technique

We collected data from all hospitals contracted with CBHI scheme before July1 2016; while health centers were selected proportionally, centering active CBHI woredas, found within the selected four regions. Based on this, from 759 health facilities (47 hospitals and 712 health centers) data was collected.

Table 1 Assessed health facility in four regions

Abbildung in dieser Leseprobe nicht enthalten

Data of 301,014 CBHI beneficiaries was collected. Of these, the data of 293,562 beneficiaries were satisfied the eligibility criteria and analyzed. To be eligible, CBHI beneficiaries must have or been:

- Enrolled in program before May 30, 2016 and continued as active to July30, 2017
- Visited health facilities within July1, 2016 to June 30, 2017.
- Complete information that questioner demanding (see annex1).

The Eligible sample was equally dividend in to three by random as follow:

1. Learning sample (97692),
2. Validating sample (97934) and
3. Testing sample (97936).

The learning sample is used to build prediction model, whereas validating sample is used for performance evaluation of model and testing sample is used to do report at the very end.


Ende der Leseprobe aus 33 Seiten


Sustainability and Risk of Community-Based Health Insurance in Ethiopia
Jimma University College of Agriculture and Veterinary Medicine
Health care
ISBN (eBook)
sustainability, risk, community-based, health, insurance, ethiopia
Arbeit zitieren
Dereje Tolosa (Autor:in), 2018, Sustainability and Risk of Community-Based Health Insurance in Ethiopia, München, GRIN Verlag,


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