Health and microfinance: Why we need to do more
Published Sep 12, 2022 12:05 am
FROM THE MARGINS
We need to brace for a health crisis not only due to the lingering effects of the pandemic, but because of worsening poverty. The PSA says almost 20 million Filipinos live below the poverty line. Around 1.04 million families do not earn enough to meet even just their basic food needs. This is worrisome because poverty and poor health are inextricably linked.
People living in poverty usually suffer from poor health, as they hardly earn enough for basic necessities. Illness can be catastrophic for low-income households: Hospitalization and medical expenses can push the vulnerable non-poor into poverty, and the already poor into becoming poorer. It is a vicious cycle that traps people in poverty.
Poor health access
Disparities in healthcare access and health outcomes between poor and rich households persist despite the passage of the Universal Health Care Law. Covid-19 not only placed pressure on the national health care system; it also hampered plans to expand health insurance coverage thru Philhealth. Without access to insurance, more than half of a household’s health spending comes from out-of-pocket payments. This discourages poor families from going to hospitals or seeking medical help.
The majority of our workforce are minimum wage earners or informal sector workers. And for a family of five, ₱8,379 monthly (the PSA poverty threshold) barely covers basic food needs and leaves nothing for health or medical-related expenses. Unfortunately, availment of PhilHealth is not easy for the poorest of the poor. Even the free medical consultation in health centers is useless for poor families if they have no money to buy medicines.
Microfinance and microinsurance
To serve poor families, some microfinance institutions (MFIs) banded together under the “MFIs for Health” Program, which synergizes the provision of health services to poor communities. It was implemented by 18 MFIs in 2013, and 21 MFIs in 2015. The sharing of resources helped the MFIs provide health services to more than four million clients across the country.
The program’s impact is dramatic: The MFIs have now integrated health in their microfinance programs, providing millions of clients with much-needed health services. Apart from their regular health programs, these MFIs sponsor medical missions in many communities. They are also using social media, primarily Facebook, to provide medical advice to clients. These health services are very useful, especially in view of the pandemic.
Nowadays, an increasing number of MFIs offer health-related services, such as health education, clinical care, and health financing. They also establish linkages to public and private health providers to facilitate their clients’ access to health care.
Insurance mobilization is also crucial to social protection. Poor families need insurance because they are vulnerable and have limited resources to cope with shocks. Health insurance under PhilHealth, while very helpful, remains inadequate because of its limited coverage and benefits. Most of the mainstream insurance companies are not serving the poor. Only a few, like CLIMBS, CMPI, CARD-MBA, Cebuana Lhuiller, Cocolife and Country Bankers Insurance, among others, cater to the low-income market segment.
It is good that MFIs also offer microinsurance for the poor. The Insurance Commission reported that a record-high of 53.7 million Filipinos were covered by microinsurance in 2021. About 31.9 million were covered by microinsurance mutual benefit associations (MBAs), which are member-owned providers that offer insurance using the social distribution network of their partner MFIs.
Empowerment
The issue of poverty cannot be separated from disempowerment. Development organizations, especially MFIs, should facilitate not just the poor’s access to basic services like finance, health, and education. They should give poor people a chance to co-own their programs and facilities — clinics, laboratories, hospitals, and pharmacies — to ensure their access to quality and affordable health care.
Many MFIs which have converted into regulated private stock companies recognize the importance of giving ownership to the poor. Their clients have become part-owners; involved in decision-making and in determining products and services. The success of these institutions and social enterprises should be emulated and replicated.
We can also improve on microinsurance. While many MFIs have partnered with private insurance companies, these firms sometimes take time in paying insurance claims. As they are intended for emergencies, insurance claims should be processed fast, like withdrawing from one’s savings account. Microinsurance providers should also work with hospitals to enable their clients to pay hospital bills from insurance. If the insurance proceeds are not enough, their MFI partners should provide health loans with reasonable interest rates. Maybe someday, there will even be a hospital owned and managed by microfinance clients, where the poor will never be treated as second class citizens.
Poverty is both a cause and a consequence of poor health. Health services are a natural extension of MFIs’ mission to provide financial security and social protection for the poor. Health programs are also a must for MFIs because healthier clients better serve their goals of growth and long-term viability.
“The microfinance sector offers an underutilized opportunity for delivery of health-related services to many hard-to-reach populations.” – Sheila Leatherman
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically disadvantaged Filipinos and insure more than 27 million nationwide.)
We need to brace for a health crisis not only due to the lingering effects of the pandemic, but because of worsening poverty. The PSA says almost 20 million Filipinos live below the poverty line. Around 1.04 million families do not earn enough to meet even just their basic food needs. This is worrisome because poverty and poor health are inextricably linked.
People living in poverty usually suffer from poor health, as they hardly earn enough for basic necessities. Illness can be catastrophic for low-income households: Hospitalization and medical expenses can push the vulnerable non-poor into poverty, and the already poor into becoming poorer. It is a vicious cycle that traps people in poverty.
Poor health access
Disparities in healthcare access and health outcomes between poor and rich households persist despite the passage of the Universal Health Care Law. Covid-19 not only placed pressure on the national health care system; it also hampered plans to expand health insurance coverage thru Philhealth. Without access to insurance, more than half of a household’s health spending comes from out-of-pocket payments. This discourages poor families from going to hospitals or seeking medical help.
The majority of our workforce are minimum wage earners or informal sector workers. And for a family of five, ₱8,379 monthly (the PSA poverty threshold) barely covers basic food needs and leaves nothing for health or medical-related expenses. Unfortunately, availment of PhilHealth is not easy for the poorest of the poor. Even the free medical consultation in health centers is useless for poor families if they have no money to buy medicines.
Microfinance and microinsurance
To serve poor families, some microfinance institutions (MFIs) banded together under the “MFIs for Health” Program, which synergizes the provision of health services to poor communities. It was implemented by 18 MFIs in 2013, and 21 MFIs in 2015. The sharing of resources helped the MFIs provide health services to more than four million clients across the country.
The program’s impact is dramatic: The MFIs have now integrated health in their microfinance programs, providing millions of clients with much-needed health services. Apart from their regular health programs, these MFIs sponsor medical missions in many communities. They are also using social media, primarily Facebook, to provide medical advice to clients. These health services are very useful, especially in view of the pandemic.
Nowadays, an increasing number of MFIs offer health-related services, such as health education, clinical care, and health financing. They also establish linkages to public and private health providers to facilitate their clients’ access to health care.
Insurance mobilization is also crucial to social protection. Poor families need insurance because they are vulnerable and have limited resources to cope with shocks. Health insurance under PhilHealth, while very helpful, remains inadequate because of its limited coverage and benefits. Most of the mainstream insurance companies are not serving the poor. Only a few, like CLIMBS, CMPI, CARD-MBA, Cebuana Lhuiller, Cocolife and Country Bankers Insurance, among others, cater to the low-income market segment.
It is good that MFIs also offer microinsurance for the poor. The Insurance Commission reported that a record-high of 53.7 million Filipinos were covered by microinsurance in 2021. About 31.9 million were covered by microinsurance mutual benefit associations (MBAs), which are member-owned providers that offer insurance using the social distribution network of their partner MFIs.
Empowerment
The issue of poverty cannot be separated from disempowerment. Development organizations, especially MFIs, should facilitate not just the poor’s access to basic services like finance, health, and education. They should give poor people a chance to co-own their programs and facilities — clinics, laboratories, hospitals, and pharmacies — to ensure their access to quality and affordable health care.
Many MFIs which have converted into regulated private stock companies recognize the importance of giving ownership to the poor. Their clients have become part-owners; involved in decision-making and in determining products and services. The success of these institutions and social enterprises should be emulated and replicated.
We can also improve on microinsurance. While many MFIs have partnered with private insurance companies, these firms sometimes take time in paying insurance claims. As they are intended for emergencies, insurance claims should be processed fast, like withdrawing from one’s savings account. Microinsurance providers should also work with hospitals to enable their clients to pay hospital bills from insurance. If the insurance proceeds are not enough, their MFI partners should provide health loans with reasonable interest rates. Maybe someday, there will even be a hospital owned and managed by microfinance clients, where the poor will never be treated as second class citizens.
Poverty is both a cause and a consequence of poor health. Health services are a natural extension of MFIs’ mission to provide financial security and social protection for the poor. Health programs are also a must for MFIs because healthier clients better serve their goals of growth and long-term viability.
“The microfinance sector offers an underutilized opportunity for delivery of health-related services to many hard-to-reach populations.” – Sheila Leatherman
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically disadvantaged Filipinos and insure more than 27 million nationwide.)