Community health insurance can save rural households from poverty trap

Farmers work in a maize garden. Uganda’s investment in agriculture is set to play a major role in regional economies. PHOTO by Stephen Otage.

The Ministry of Finance recently released the Poverty Status Report 2012 which shows a nationally positive trend in poverty reduction in the last two decades.

The proportion of the population that is absolutely poor has reduced from 56.4 per cent to 24.5 per cent—which surpasses the targets for the 2015 1st Millennium Development Goal (the target goal is 28 per cent).




Most of the people who have graduated from absolute poverty have either moved to “insecure non-poor segment” or to the middle class.

Indeed, the proportion of the insecure non-poor class has increased from 33.4 per cent to 42.9 per cent in the same period while the middle class has increased three-fold.

 

Majority of the population classified as insecure and not poor dwell in rural areas with highly volatile incomes—56 per cent of them depend on subsistence farming as a primary source of income and have large household sizes. They are highly vulnerable to falling back into absolute poverty.

A variety of external and household-level shocks threaten the income stability of the insecure non-poor population segment, and these include ill-health, death of a family member, changes in weather patterns—such as drought or floods, and price fluctuations—such as the recent inflationary food prices.




The average rural household expenditure on health care is 6 per cent but this could climb to as high as 40 per cent if a family member, particularly the household head has a chronic illness. These illnesses involve catastrophic household expenditure with the sale of land and other property, which are not recoverable or replaceable in the longer term.

Community Health Insurance schemes in regions where they have existed aim to protect households from catastrophic expenditures, thereby saving many rural households from vulnerability to poverty.



 The rising number of insecure non-poor population segments should take advantage of community health insurance schemes to effectively protect themselves from falling back into poverty.

A small portion of the household expenditure on healthcare would be saved by the payment of annual premiums to cater for seasonal changes of the rural incomes. The schemes then cover treatment costs of the members at the contracted health service providers.

 

The Uganda National Household Survey 2009/10 reported that one on five persons (23 per cent) will not seek medical attention because of the costly healthcare services. This delay poses risks and complications to the person, and will subsequently triple the costs of care which could result in the sale of land or other property. However, studies in wouth western Uganda where community health insurance schemes exist have shown that scheme members tend to seek early treatment for illnesses.

The government, through its relevant sectors like Ministry of Health and the ministry responsible for social protection should support and strengthen Community Health Insurance schemes. This could as well as to facilitate those below the poverty line recover from cyclic poverty.

Dr Ronald M. Kasyaba, Medical Superintendent,
Nyakibale Hospital- Rukungiri