Payment mechanisms and healthcare

The Microinsurance Network and ILO's Microinsurance Innovation Facility and STEPprogramme are conducting a survey on Third-Party Payment Mechanisms in Health Microinsurance in Developing Countries

Payment mechanisms form an integral component of insurance schemes because they not only affect the financial flexibility available to customers, but also afect the quality of care delivered by the health provider.      

Payment mechanisms can be structured as fee for service, case-based, per diem based, or capitation.  Each mechanism creates different financial incentives for health providers and affects the type and amount of treatment they choose to administer. 

Say the provider is treating a patient with a broken arm.  In the fee for service model the provider is paid for each treatment ($40 for consultation, $25 per x-ray, and $35 for cast) while in the case-based model the provider is paid a flat fee for the illness ($100 to fix a broken arm).  It is easy to imagine how the two models might create different incentives in terms of the quantity, and consequently, the quality of care.  

Testing these incentives is part of the motivation behind a qualitative study on health microinsurance that the Financial Access Initiative and the Micro Insurance Academy are implementing in India. 

The study tests how health insurance affects access to quality care in two distinct ways: first, does health insurance give poor households access to higher-quality providers, and second, does health insurance affect the quality of service of the providers. To measure “quality” we will benchmark actual treatment against treatment protocols and weigh this measure against the client’s perception of the quality of their care.

The study is a first step towards informing our knowledge of the effects of health policy structures in the microinsurance sector.  We plan to supplement this qualitative understanding with experiments that allow us to isolate the impact of different policy components.