Community Health Mutual funds offer real time bottoms- up approach by helping to sustain community solidarity and individual responsibility through an inclusive risk pooling mechanism.

Health is the most interesting risk to work on because of its strong attachment to human behaviors if not decisions. When insuring a life or a catastrophe, the statement is clear, and the reason is generally accepted as  fate, or an act of God where man’s hand has not much immediate power. As far as health is concerned, the fact that most of the insurance companies propose only hospitalization products and not primary health care or maternity is due to the fact that they lack the control of these contingencies in the system- known as Moral Hazard in insurance parlance.

The question is what will prevent an insurance client, who has paid a premium, from misusing the system and making its insurance utility systematically positive?

Insurance companies’ answer: rules and exclusions.

Mutual funds answer: Other clients.

Insurance companies , so far, have neglected   the risk pooling factor in their system whereby  they can  invite communities to take a share in their own risk management and decrease exclusions through en bloc enrollment. Why is it so? Probably because profit sharing clauses are not yet popular and also because of competition.

In the paradigm of developmental work, the rhetoric of ‘community’ has so often been used in letters but not in spirit that it has now become a cliché and inappropriate in today’s emerging market based economy where free market conditions are suppose to deliver the best results.

The Mutuals system is an effort to bring people at the centre of their own development and establish a democratic governance mechanism operated upon professionally and built up on solidarity as well as individual responsibility in securing protection for all. Presented here is the story of how all it began and where is it headed today…

 In 2002, a group of women from Annapurna (Pune) faced the shock of a heart operation that one of them had to cope with. They decided to react and looked for solutions. When an insurer presented a product matching their capacity to pay (50Rs per head per year at that time), the immediate question was: “Can we get the money back if we are not sick?” On receiving a negative answer from the insurer they concluded that they had no incentive to be healthy in joining this plan. They understood very well the insurance pooling concept, not its management.

So they decided to setup 6 “Arogya Nidhis” and chose to contribute 50 rs per person per year, which was enough to bear a hospital cover of Rs. 5000 Rs per person in case of hospitalization (revised to 100rs /person and hospitalization benefit of 15000 Rs max per person per year)

These “Arogya Nidhis” idea flowed to Parvati Swayamrojgar (MFI in Pune) and Swayam Shikshan Prayog (Marathwada)- so that, today around 80000 people are pooling their risk in their 21 health mutual funds. These ArogyaNidhis are physically situated in bank accounts with communities and facilitating organisations being the joint signatories.

The organisations facilitating this Arogya Nidhi ,against many odds, decided to setup a federal organization, that would become the milestone, for developing people- led, professionally managed, social security systems by the name of UpLift which today houses resources, skills and competences that are commonly shared : professionals, a network of 142 health care providers, encoders and statistical unit, software development and testing, call centre and actuarial skills. Thus a professionally managed system today is controlled via communities.

Evolving in a context where so much professionalism is expected, starting from bottom, expecting decisions to be understood is often felt as more complex than just “selling the product”. The whole effort has been in UpLift to keep the job simple and professional.

One systematic critic given to mutual is that it has no safety net in case of (rarest) epidemics or other catastrophes. In UpLift, communities have made the choice clear- preferring starting from bottom and building layers of coverage. Today, when there is a problem in one health mutual fund, others contribute. That is just simple enough to be understood by everyone. Yesterday they were not pooling the risk at all; today risks are pooled over a few districts. While that is already a major step, members of the mutuals are conscious that the risk should be pooled further on a larger platform.

Such simplicity has its impact when talking about health: the community’s incentive in keeping the fund balance positive- triggers numerous discussions (the claim committee meetings) pushing people to be more health conscious. The role of the field organizations/ facilitators is to smoothen while ensuring a transparent health mutual fund management. The election of community representatives, they being the signatories of the physical fund, they validating all policy decisions and voting on accounts, they taking the final decision on claims paid- are just some of the features of Uplift’s vision of a democratic governance system where community representatives (among the members) are being systematically trained to take over the Board management in days to come.

A steadily increasing membership-a positively controlled claim ratio- an ascending renewal ratio and healthy reserves are promising snapshots of a slum dwellers-villagers controlled scheme who manage to bargain good concessions from the health care providers on the strength of their numbers.

To conclude on the mutual concept, while the system is similar to the insurance industry, here the risks are not “transferred” to an insurer, but “shared” under the community’s responsibility.