Karuna Trust, Karnataka - India

This case study has been written by a whole host of people: Ralf Radermacher, Olga van Putten-Rademaker, Verena Muller, Natasha Wig and David Dror. It is a unique case that deserves careful consideration because it provides a different benefit package.

Although associated with health risks, instead of covering health care costs - which are free or nominal amounts at public facilities - this product provides benefits to address other barriers that inhibit low-income households from accessing free health care:

• Daily rate compensation when in hospital:
  • Since informal workers do not get sick days, one reason they do not access care is because they cannot afford to be away from work; an additional lump sum for 10 days is also paid to policyholders who undergo surgery to encourage them to rest and recover instead of going back to work right away;
• Drugs:
  • Although basic drugs are provided by the health centres, if additional drugs are required, they are covered by the insurance;
• Emergency transport:
  • Another barrier to access is actually getting to the health care facility, so this transportation is covered by the insurance product if needed on an emergency basis.

These benefits are designed to fill gaps in the existing health care infrastructure and increase the likelihood that the poor will seek health care services early on. The scheme is structured along the lines of a partner-agent model, with Karuna Trust, an NGO, fulfilling the distribution function; and National Insurance Corporation, a state-owned insurer, covering the risks. Unique features about this relationship:

• The insurer has agreed to accept a claims to premium ratio of 150%, so it is approaching this from a social rather than commercial perspective;
• UNDP (along with the Karnataka Health Ministry) was instrumental in creating this partnership because it agreed to pay for the premiums for the first two years of the scheme, to give policyholders a chance to appreciate the benefits of insurance before asking them to pay for it.

According to the authors, this may not have been the best approach, since there was a huge dropout problem in the third year when people were asked to start paying the premiums, but without donor support, the scheme no longer had a marketing budget to persuade them to pay.