When Markets Fail: How the Health Insurance Fund Works in Africa

When markets fail: the case of the Health Insurance Fund Health systems in Africa are stuck in a vicious circle: a lack of supply of quality healthcare is accompanied by a low demand for such care and low willingness to pre-pay for health services, fuelling again the lack of investments in healthcare supply. While governments have difficulty providing quality healthcare services for all, half of the health spending is out of pocket. It is increasingly realized that the private sector can play an important role in improving healthcare in Africa. In 2007, the PharmAccess Foundation established the Health Insurance Fund (HIF), to set up community-based voluntary health insurance schemes for low income groups in partnership with local healthcare insurers and providers. The initiative was funded with a 100 M Euro grant from the Dutch government. The first HIF program started in Nigeria in partnership with Hygeia, the largest health maintenance organization (HMO) in the country. Since the inception of the program, insurance schemes have been set up in Lagos and Kwara State in Nigeria. Over 90,000 low income people have joined the voluntary health insurance schemes and have access to quality basic health services. The quality of healthcare provision has measurably improved and actuarial data have become available. The program was joined by other donors, including the World Bank and USAID, and the government of Kwara State. Along with the HIF, the partnership instigated the Investment Fund for Health in Africa, IFHA, to provide the necessary equity to the HMO. This has attracted further private investments into the system. The case study of the Health Insurance Fund partnership illustrates that carefully designed public-private partnerships can lever donor funding with private sector expertise and investment in social infrastructure, while building up local institutions and increasing trust.