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Community-based Health Insurance
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Subject Area="Health financing." Objective="Mobilising community participation."
Details for Reform Option "Community-based Health Insurance"

Community-based health insurance (CBHI) schemes facilitate the pooling of financial resources in order to cover the costs of future health problems. In such a scheme it is the community that decides on the level of contribution, the collecting mechanisms and the content of the benefit package, as opposed to national social insurance schemes where these are determined by the insurance company or the government. India has many such schemes that vary in terms of their design and sizes. There are three patterns of schemes that emerge: (i) Provider-owned schemes where the NGO running the scheme is also the healthcare provider. An example is the Voluntary Health Services scheme in Chennai. (ii) The NGO-owned setup where the NGO is the insurer but does not provide healthcare e.g. Raigarh and Ambikapur Health Association (RAHA) in Chhattisgarh. (iii) The NGO acts as an intermediary between the population and one of the General Insurance Corporation subsidiaries e.g. SEWA in Gujarat. While in many of these schemes the NGOs are women’s self-help groups, SEWA being the best known example, there are also some milk cooperatives such as the Mallur Milk Co-operative.

Place Various schemes across the country but mainly concentrated in west and south India.
Time Frame Between one and 5 years.

Protection: From getting into debt due to ill health. Such a scheme would also ensure that people are more likely to seek care when needed. Empowerment: Strengthens the process of dialogue within the community and provides an opportunity to discuss health issues. For instance, people enrolled in such a scheme in Gudalur, south India, were unhappy that they were not receiving any injections. The scheme gave them the opportunity to discuss why injections were not necessary for treatment.


Low coverage: The poorest of the poor are often not included in these schemes. Requires high participation: Schemes with low membership can be financially vulnerable. Lack of quality: The quality of healthcare services has not been taken into consideration. Unless this is taken care of, there will be few takers for CBHI. Requires good management: The reviewing of premiums, benefits etc. can be quite complex. Close monitoring necessary: To prevent the problem of moral hazard effects i.e some individuals using more care than required.


An understanding of the benefits of risk sharing by the community is an essential prerequisite for the success of any such scheme. Good management capacity, in most cases this is being provided by NGOs.

Who needs to be consulted

Community heads and the general population to be served, the health providers, the insurance company. In some cases NGOs that play an intermediary role or help in providing technical support and training.



It is a small scheme. It can be made viable, provided the scheme is integrated into and complements other community empowerment efforts.

Chances of Replication

Each community would have its own set of requirements so no scheme can be replicated entirely. It would have to be modified to suit the needs of the population to be served.


Even within a state, there are a variety of schemes with differences in terms of their designs and target population. Hence while designing any scheme, one should take into account people’s preferences, needs, ability to pay, the disease burden of the community etc.


Submitted By

Dr Mathew Jowett, Former ECTA Programme Advisor, New Delhi. September 2003.

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