Smart cards that top-up health
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Most of Kenya’s population can’t afford the crippling expenses if they fall seriously ill. But help is at their fingertips via their mobile phones.

Zack Oloo and Sam Agutu have been friends since they met at school 43 years ago. They followed similar career paths, working their way up Kenya’s health insurance industry until each ran successful brokerage businesses in the sector. Then, a few years ago, they both quit.

With less than 10% of Kenyans covered by health insurance, whether by private companies or the mandatory national hospital care scheme for those in formal employment, most of the population potentially faces devastating out-of-pocket expenses if they fall seriously ill.

Oloo and Agutu decided there must be a better way. So in 2008 they launched Changamka Microhealth, a company that helps Kenya’s urban poor access and finance healthcare through use of mobile phones, mobile money and smart cards.

While all employers are required by law to enroll their employees into the National Hospital Insurance Fund, membership is voluntary for the 77% of the working population who are self-employed or work in the informal sector. The scheme covers limited hospital care solely, and as of last year, only 800,000 people from the informal sector were enrolled. Other private insurance schemes cost upwards of 50-80,000 KES ($600-900) to cover a family. The average per capita income in Kenya is only $1,800 a year. 

“For self-employed Kenyans [and those in the informal economy]… formal insurance mechanisms do not exist,” says Oloo. And they are the ones who need it the most. Even malaria treatment, which costs as little as half a US dollar can cause financial difficulties for someone making just $2-$3 a day.

Dr. G. Mbugua, who has run a small clinic called Uhuru Prestige in a low-income area of the capital Nairobi for the past seven years, says that most of his patients are uninsured. 

“In Kenya, we have a problem with saving for health care,” he says. “Most of my patients pay out of pocket. They prefer to tackle health care when someone is sick. They’d rather buy food than save for health.”

Christina Synowiec, of the Center for Health Market Innovations in Washington, DC, agrees. “There is lack of sensitisation to insurance, and, as part of that, pre-payment is a hard concept,” says Synowiec. “The notion of paying in advance for access to health services is foreign, but can help in preventing financial catastrophes.”  

Synowiec adds that it can be difficult to identify uninsured individuals and their families, encourage enrollment and collect premiums.

Yet while a culture of saving among the poor is lacking because of low wages, fluid employment, and extended family emergencies, “saving is better understood than insurance,” Oloo says.

So in 2009 Changamka launched a “smart card” that enabled Kenyans to save small amounts over time to cover the costs of outpatient services, drug prescriptions and consultations. Customers could buy Medi-Save cards in shops, and then add money whenever they liked using M-Pesa, the mobile money service that allows the nearly 75% of adult Kenyans who subscribe to it to use their phones to store money and make payments. Medi-Save users could then transfer extra money into an account linked to their card number simply by sending a text message.

When they attended clinics, hospitals and other healthcare providers, their cards were swiped and their accounts charged at point-of-sale terminals. Changamka pre-contracts prices with medical providers, and takes a 10% cut for services charged. Providers are happy to pay, since the system eliminates time consuming and expensive paperwork.

Life saver

Last month, the company introduced new E-cards, which work the same way as the previous system except now providers bill patients via a secure website, meaning they don't need separate point-of-sale devices.

Before the introduction of these cards, says Oloo, many women had no way to securely save for maternity care. “They would put their money under their pillow, but something would go wrong after a few months. For example a boyfriend would come and say there’s an emergency and give me that money.” To help women in this situation, the company launched a separate maternity card, to enable women to save for ante-natal, maternity and post-natal services at set prices. They also have a card for family health care. 

Hellen Osteno, of Komarock, a low-income area on the edge of Nairobi, bought a family card in April. “I chose to get the card because many times I could not save,” she said. “It’s helped me because now I don’t have to go to the bank to deposit money or check my balance. I can check it through my handset, even in the night, if I have an emergency.” She saves “around 100 or 200 KES” ($1-2) daily when she can, she says.

With the new E-card system claims are submitted online, meaning they can be traced and processed more quickly. Changamka is also now able to start digitising the medical records of its clients, as diagnosis and treatment notes are also recorded.

In future doctors and other medical professionals could gain access to patients’ digital medical histories thanks to M-Kadi and other systems like it, although just as similar schemes have provoked debate in some western countries, some Kenyans have expressed fears about privacy and security.

To date, the company has sold 12,000 family health plans, 3,000 maternity plans. However sometimes saving is not enough. “We found catastrophes could not always depend on savings,” says Agutu, “so we designed an insurance product that would service the lower end of the market.” 

Changamka, in collaboration with one of Kenya’s largest insurance companies British American Insurance and telecom provider Safaricom, launched a micro-insurance scheme called Lindi Jamii in November last year. Customers can simply dial *525# on a Safaricom line to sign up. A community health worker then visits to obtain a photo and take down other details such as a national ID number and family information.   

Similar to their other services, customers save money via M-Pesa transfers. Once their account hits 12,000 KES, ($140), they are immediately enrolled in a family insurance scheme, covering two parents and unlimited children for 180 days. Besides covering typical medical expenses, the insurance also covers add on services such as income replacement during hospitalisation, funeral assistance, and dental coverage.

Changamka is doing its best to find new ways to extend coverage and facilitate payments for Kenya’s uninsured, however it is still a long way from profiting from these schemes. Their Linda Jamii micro-insurance only has around 8,000 subscribers so far, and is currently still reliant on funding from NGOs and donor agencies. The company has shown it can use novel technologies to help insure the poor, but to be truly successful, and profitable, it will have to find a way to reach hundreds of thousands, if not millions, of uninsured Kenyans.

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