ILO Health Insurance

Health Micro-Insurance Schemes:
Feasibility Study Guide

Volume 1: Procedure
The Strategies and Tools against social Exclusion and Poverty global programme (STEP) of
the International Labour Organization (ILO) is active in two interdependent thematic areas: the
extension of social protection to the excluded and integrated approaches to social inclusion.
STEP supports the design and dissemination of innovative systems intended to extend social
protection to excluded populations, particularly in the informal economy. It focuses in particular
on systems based on the participation and organization of the excluded. STEP also contributes
to strengthening links between these systems and other social protection mechanisms. In this
way, STEP supports the establishment of coherent national social protection systems, based on
the values of efficiency, equity and solidarity.
STEPs action in the field of social protection is placed in the broader framework of combating poverty and social exclusion. It gives special emphasis to improving understanding of the
phenomena of social exclusion and to consolidating integrated approaches at the methodological level which endeavour to reduce this problem. STEP pays special attention to the relationship between the local and national levels, while at the same contributing to international
activities and agenda.
STEP combines different types of activities: studies and research; the development of methodological tools and reference documents, training, the execution of field projects, technical
assistance for the definition and implementation of policies and the development of networking
between the various actors.
The programmes activities are carried out within the Social Security Department of the ILO,
and particularly its Global Campaign on Social Security and Coverage for All.
STEP Programme
Social Security Department
International Labour Office
4, route des Morillons
CH-1211 Geneva 22
Switzerland
Tel: (+41 22) 799 6544
Fax: (+41 22) 799 6644
Email: [email protected]
http://www.ilo.org/step

Volume 1: Procedure
International Labour Office Geneva
Copyright International Labour Organization 2005

First published 2005
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ILO / STEP
Health Micro-Insurance Schemes: Feasibility Study Guide
Geneva, International Labour Office, Strategies and Tools against social Exclusion and Poverty (STEP) Programme, 2005
ISBN Volume 1: 92-2-116571-X (print)
ISBN Volume 2: 92-2-116572-8 (print)
ISBN Volume 1 and 2: 92-2-116573-6 (print)
ISBN Volume 1: 92-2-117469-7 (web pdf)
ISBN Volume 1 and 2: 92-2-117471-9 (web pdf)
Guide, health insurance, mutual benefit society, management, evaluation. 02.03.2
Also available in French: Guide pour ltude de faisabilit de systmes de micro-assurance sant
(ISBN volume 1: 92-2-216571-3, ISBN volume 2: 92-2-216572-1, ISBN volumes 1 and 2: 92-2-216573-X), Geneva, 2005
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Visit our website: www.ilo.org/publns
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Acknowledgements
This Guide was produced by the Strategies and Tools against social Exclusion and Poverty
(STEP) Programme of the Social Protection Sector of the International Labour Organization. It
is based on the work of national programme experts and the collaboration of numerous actors
involved in the development of health micro-insurance schemes. The STEP Programme warmly
acknowledges their support and contributions.
If you wish to do any comments, observations, to share the findings of your research works,
or to obtain further information, please contact:
ILO/STEP
CH-1211 Geneva 22, Switzerland
Phone (41 22) 799 65 44
Fax (41 22) 799 66 44
E-mail: [email protected]
Internet: www.ilo.org/step
VOLUME 1
VII
TABLE OF CONTENTS
Table of contents
List of acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
XI
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How did the Guide come about? . . . . . . . . . . . . . . . . . . . . . . . . . . . .
What are the objective and scope of the Guide? . . . . . . . . . . . . . . . . . . . .
What are the limitations of the Guide? . . . . . . . . . . . . . . . . . . . . . . . . . .
How is the Guide structured? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Structure of Volume 1: Procedure . . . . . . . . . . . . . . . . . . . . . . . . . .
Structure of Volume 2: Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4
5
To whom is the Guide addressed and how should it be used? . . . . . . . . . . . . .
1. Characteristics and role of the feasibility study . . . . . . . . . .
What is a feasibility study? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Who conducts the feasibility study? . . . . . . . . . . . . . . . . . . . . . . . . . .

The skills required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The role of the promoter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The role of the target population . . . . . . . . . . . . . . . . . . . . . . . . .
Carrying out a feasibility study also requires the participation of other actors
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When should the feasibility study be carried out? . . . . . . . . . . . . . . . . . . . .

A feasibility study should be carried out before the start-up of a new scheme . . .
A feasibility study should be carried out before each new phase of activity . . . .
11
11
12
2. Initial phase to prepare for and plan the feasibility study . . . .
13
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Objective of the initial phase . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
13
13
Action 1: Verify that the preconditions have been met . . . . . . . . . . . . . . .

Precondition 1: A priority need exists for protection against the financial risk
associated with sickness and maternity . . . . . . . . . . . . . . . . . . . .
Precondition 2: Health services of acceptable quality are available . . . . .
Precondition 3: The target population has confidence in the promoters
of the scheme and in the other persons involved . . . . . . . . . . . . . . .
Precondition 4: Traditions of mutual aid exist within the target population . .
Precondition 5: A trend of socio-economic development exists . . . . . . . .
Precondition 6: The potential number of covered persons is sufficiently high
as from the first year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Action 2: Confirm the possibility of establishing a health micro-insurance scheme

and begin the feasibility study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
VIII
HEALTH MICRO-INSURANCE SCHEMES: FEASIBILITY STUDY GUIDE
ILO / STEP
Action 3: Set up the steering committee . . . . . . . . . . . . . . . . . . . . . . . . .

Step 1: Set up the steering committee . . . . . . . . . . . . . . . . . . . . . . . .
Step 2: Assess the need for training and provide training for the members
of the steering committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
20
Action 4: Plan the feasibility study . . . . . . . . . . . . . . . . . . . . . . . . .

Step 1: Identify the various phases, activities and tasks of the feasibility study
Step 2: Estimate the length of time needed for each activity and each task .
Step 3: Organize the activities and tasks in a timetable . . . . . . . . . . .
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Action 5: Prepare the budget estimate for the feasibility study . . . . . . . . . . . . . .
26
Ongoing action: Enter into dialogue with the target population and the other
actors concerning problems related to health and access to health care . . . . . . . .
27
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3. Data-collection and analysis phase . . . . . . . . . . . . . . . . . 29

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Objective of the data-collection and analysis phase . . . . . . . . . . . . . . . .
29
29
29
Step 1: Define the data-collection procedure . . . . . . . . . . . . . . . . . . . . . .

Action 1: Complete the strategy chart . . . . . . . . . . . . . . . . . . . . . . . .
Action 2: Complete the implementation chart . . . . . . . . . . . . . . . . . . . .
30
31
37
Step 2: Develop the data-collection materials . . . . . . . . . . . . . . . . . . . . . .

Case No. 1: The data-collection medium is a data-entry form . . . . . . . . . . .
Case No. 2: The data-collection medium is an interview form
or a survey questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
39
Step 3: Prepare for and carry out the data collection . . . . . . . . . . . . . . . . . .

Prepare for the data collection . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carry out the data collection . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Step 4: Process the collected data to produce usable information . . . . . . . . . . .
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4. Scheme design phase . . . . . . . . . . . . . . . . . . . . . . . . . 43

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Objective of the scheme design phase . . . . . . . . . . . . . . . . . . . . . . .
43
43
44
Step 1: Select, or confirm the selection of, the target population . . . . . . . . . . . .
45
Step 2: Pre-select the health services to be taken into account

in the various benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Action 1: Pre-select the health services to be covered . . . . . . . . . . . . .
Action 2: Define one or more benefit plans and the services included in each .
Action 3: Take into account the method of invoicing used
by health care providers . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
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46
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48
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48
Step 3: Select the partner health care providers . . . . . . . . . . . . . . . . . . . . .

Select health care providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
50
Step 4: Select the services and health care providers to include

in a third-party payment mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . .
Choose the services to be provided through the mechanism of third-party payment
51
51
VOLUME 1
IX
TABLE OF CONTENTS
Step 5: Select the benefit plans and calculate the corresponding premiums . . . . .
Action 1: Define several scenarios . . . . . . . . . . . . . . . . . . . . . . . .
Action 2: Calculate the premium levels that correspond to the various scenarios
Action 3: Take into account the level of the target populations willingness to pay
Action 4: Choose the benefit/premium combination(s) . . . . . . . . . . . . . .
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Step 6: Prepare negotiations or agreements with partner organizations,

particularly with health care providers . . . . . . . . . . . . . . . . . . . . . . . . . .
Action 1: Define standards of quality and treatment protocols,
and reach an agreement on fees . . . . . . . . . . . . . . . . . . . . . . . . . .
Action 2: Choose the methods to be used to pay providers for health services . .
52
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59
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Step 7: Define the schemes organization . . . . . . . . . . . . . . . . . .

Action 1: Define the relationship of the scheme to the other activities
of the responsible organization . . . . . . . . . . . . . . . . . . . . .
Action 2: Determine the legal status of the scheme . . . . . . . . . . .
Action 3: Define the schemes organization: internal bodies and actors
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67
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69
Step 8: Define the schemes methods of operation . . . . . . . . . . . .

Action 1: Define the main operating rules . . . . . . . . . . . . . . .
Action 2: Define the principal management procedures . . . . . . .
Action 3: Define the monitoring procedures . . . . . . . . . . . . . .
Cross-cutting action: Ensure that the operating rules make it possible
to limit the schemes exposure to insurance-related risks . . . . . . . .
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Step 9: Prepare the schemes budget estimate . . . . . . . . . . . . . . . . . . . . . .
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5. Phase to prepare for setting up the scheme . . . . . . . . . . . . 85

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Objectives of the phase to prepare for setting up the scheme . . . . . . . . . . .
85
85
85
The feasibility study report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
The action plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
The statutes and the organizational chart . . . . . . . . . . . . . . . . . . . . . . . .
87
The internal rules or the insurance contract . . . . . . . . . . . . . . . . . . . . . . . .

The internal rules (in the case of a mutual organization) . . . . . . . . . . . . . .
The insurance contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89
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Management tools and documents . . . . . . . . . . . . . . . .

Tools and documents pertaining to membership management
Tools and documents pertaining to premiums management . .
Tools and documents pertaining to claims management . . .
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The procedures manual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
Agreements with health care providers . . . . . . . . . . . . . . . . . . . . . . . . . .
94
Index of Volumes 1 & 2 . . . . . . . . . . . . . . . . . . . . . . . . . .
95
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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VOLUME 1
LIST OF ACRONYMS
List of acronyms
CIDR
Centre International de Dveloppement et de Recherche
DTP1
1st dose of diphtheria-tetanus-whooping cough vaccine
HMIS
Health micro-insurance scheme
ILO
ILO
International Labour Organization
INN
International non-proprietary name
MU
Monetary unit
NFCP
National Federation of Coffee Producers
NGO
Non-governmental organization
NPMC
Non-profit-making Corporation
PNC
Prenatal consultation
STEP
Strategies and Tools against social Exclusion and Poverty
XI
VOLUME 1
INTRODUCTION
Introduction
How did the Guide come about?
The vast majority of the population in developing countries and countries in transition do not
enjoy any form of social protection, which means, in particular, that they have no financial
coverage in the event of sickness, accident or death. The lack of social protection in health
care affects nearly 80 per cent of the population in most countries of Sub-Saharan Africa and
Southern Asia, and nearly half the population of Latin America and the rest of Asia.
Persons excluded from social protection systems consist, for the most part, of informal economy workers and their families. Existing social security systems are hard pressed to provide
coverage for such persons. Efforts to extend social protection to them are usually carried out
through new and specially adapted mechanisms.
These mechanisms are most often based on initiatives taken by the people themselves
and by various civil society actors, including non-governmental organizations (NGOs), trade
unions, microfinance institutions, hospitals and health centres. Among the initiatives to provide
coverage in the event of sickness are health micro-insurance schemes, which have grown
considerably in number.
The term health micro-insurance encompasses a wide variety of schemes. These include:
mutual health organizations, which are autonomous associations based on the solidarity and
democratic participation of their members; insurance schemes, which are organized and
managed by health care providers (a health centre or a hospital may offer its users a reduction in health expenses or access free-of-charge to certain health care services in exchange for
the payment of a premium); health insurance schemes set up by other actors, such as NGOs,
microfinance institutions, cooperatives or trade unions.
What all health micro-insurance schemes have in common is that they operate on the basis
of the insurance mechanism, which relies on the prior payment of premiums, the sharing of
risks and the notion of a guarantee. The premiums of insured persons are pooled and used to
cover the expenses of only those persons affected by the occurrence of a certain number of
specifically defined risks. In exchange for their premiums, insured persons receive the insurers
guarantee to provide this financial compensation. They renounce ownership of the premiums
they pay in and can therefore no longer lay claim to them.
In spite of their dynamic nature, health micro-insurance schemes, in general, are quite fragile.
As a recent development in an environment in which such initiatives are still rare, these schemes
do not possess the hindsight and experience needed for an accurate determination of the
financial risks they face. The financial safeguards of such schemes reserves, reinsurance and
their promoters level of competence in the area of insurance are presently still limited.
Given such a context, the foundations of health micro-insurance schemes that is, the
assumptions upon which they are based must be particularly firm. A scheme will have greater
chances of surviving, and subsequently of developing, if it is well designed from the outset.
Therefore, conducting a feasibility study prior to setting up a scheme or to undertaking a new
phase in its development appears to be essential.
The impetus for producing this Guide grew out of two observations:
in order to ensure the sustainability and viability of a health micro-insurance scheme, it is
important to define its characteristics in terms of its particular context. The feasibility study
is a key contributing factor though not the only one to the success of a health microinsurance scheme;
ILO / STEP
the promoters involved must have a coherent set of methods and tools at their disposal in
order to carry out this type of study.
(STEP) programme of the Social Protection Sector of the International Labour Organization
(ILO). For several years, STEP has been involved in efforts to strengthen the technical capacity
of promoters and managers of health micro-insurance schemes and their support structures.
What are the objective and scope of the Guide?

The main objective of the Guide is to encourage and support efforts to conduct a systematic
feasibility study prior to the establishment or further development of a health micro-insurance
scheme. To that end, the Guide provides a set of instructions for conducting a feasibility study
that consists of a step-by-step procedure in Volume 1 and methods and tools in Volume 2.
The Health Micro-Insurance Schemes: Feasibility Study Guide is part of a structured series
of guides produced by STEP; the other guides therefore pick up where this one leaves off. In
particular, the Guide neither deals with the relevance of setting up a health micro-insurance
scheme, nor provides a precise and systematic explanation of how health micro-insurance
functions. These two aspects are dealt with in the (soon to be published) guide to setting up
health micro-insurance schemes. The Health Micro-Insurance Schemes: Feasibility Study Guide
enables actors to design a health micro-insurance scheme and, consequently, to determine
its organization and operating rules. It does not, however, provide a detailed explanation of
the day-to-day management of the scheme, which is the subject of the Guide de gestion des
mutuelles de sant en Afrique (ILO-STEP, 2003) (Management guide for mutual health organizations in Africa). For their part, the tasks of monitoring and evaluation are examined in detail
in the Guide de suivi et dvaluation des systmes de micro-assurance sant (ILO/STEP and
CIDR, 2001) (Health micro-insurance schemes: monitoring and evaluation guide). The following diagram illustrates the delineation of the respective scope of each Guide.
Decision to set up
a health micro-insurance scheme
Guide to setting up schemes
NO
YES
Design the scheme
Feasibility study guide
Start-up
Manage operations on a daily basis
and over the long term
Management guide for

mutual health insurance organizations
Monitor operations
Monitoring and evaluation guide
Evaluate the scheme
VOLUME 1
INTRODUCTION
What are the limitations of the Guide?

This Guide is designed primarily for local organizations that manage a health insurance
scheme. It distinguishes between schemes based on the members active participation
in management and those that do not provide for such participation. The first type of
scheme includes, in particular, mutual health organizations. The second type includes,
among others, schemes managed by health care providers and microfinance institutions.
This distinction makes it possible to recommend methods and tools that are adapted to the
main types of schemes; however, it does not allow for taking into account all the particularities of existing schemes.
The Guide deals exclusively with the establishment or the further development of a health
insurance activity. It does not address the feasibility of other activities, such as health savings
and health credit, nor the establishment and management of a health centre or pharmacy,
which may also be set up by health micro-insurance schemes or local organizations.
The Guide is aimed at the promoters of local schemes, regardless of their geographical
location: Africa, Southeast Asia, the Indian subcontinent, Latin America. Nevertheless, the
methods and tools presented in the Guide are, to a large extent, based on the experiences
of the STEP programme in West Africa since 1998.
The Health Micro-Insurance Schemes: Feasibility Study Guide provides step-by-step instructions and useful tools for designing a health micro-insurance scheme, but is not sufficient for
conducting the various operations of a scheme once it has been set up. Readers are therefore
invited to refer to other guides published by ILO/STEP, in particular the Guide de gestion
des mutuelles de sant en Afrique (ILO/STEP, 2003) (Management guide for mutual health
insurance organizations in Africa) and the Guide de suivi et dvaluation des systmes de
micro-assurance sant (ILO/STEP and CIDR, 2001) (Health micro-insurance schemes: monitoring and evaluation guide). Moreover, plans must be made to provide additional training
or support concurrent with the start-up of operations, particularly in the areas of management,
accounting and financial analysis.
The Guide does not offer a magic formula for successfully conducting a feasibility study.
Feasibility studies depend, above all, on the creativity of the promoters of the health microinsurance scheme. Rather, the Guide is intended to provide a basis for reflection and a toolbox
that may be used to define and implement a procedure that is adapted to the particular context
or situation in question.
How is the Guide structured?

The Guide consists of two volumes:
Volume 1
Volume 2
Procedure
for conducting
a feasibility study
made up of several
phases and steps
Tools providing
concrete support
for each step
of the procedure
ILO / STEP
Volume 1 provides step-by-step instructions for carrying out a feasibility study and assists
actors in organizing the process of conducting the study.
Volume 2 provides examples of supporting materials, tools, practical examples and methods of analysis and calculation, which offer concrete support for each step of the procedure. It facilitates the performance of certain technical tasks carried out during the feasibility
study, such as drafting a questionnaire, utilizing the results of a survey, calculating premiums
or drafting contracts or agreements.
Structure of Volume 1: Procedure

Volume 1 contains five chapters:
Chapter 1
Characteristics and role of the feasibility study provides a general description

of the feasibility study, the actors involved and the role and importance of the
study in terms of the viability of a health micro-insurance scheme.
Chapter 2
Initial phase to prepare for and plan the feasibility study describes the
recommended procedure to follow prior to undertaking a feasibility study. It
is advisable, rst of all, to verify the relevance of the study, and subsequently,
to prepare for the start-up of the study in terms of appointing a team, planning
activities, etc.
Chapter 3
Data-collection and analysis phase proposes a method for conducting a

coherent and rigorous data collection. The proposed data-collection method
consists of several steps: dening the data-collection procedure (step 1),
developing the data-collection materials (step 2), preparing for and carrying
out the data collection (step 3), processing the collected data to produce usable
information (step 4).
Chapter 4
Scheme design phase offers a step-by-step procedure for designing the

scheme. This procedure consists of several steps, each of which involves the
design of one aspect of the scheme: selecting health care providers, selecting the
benet/premium combination(s), determining the organization of the scheme,
etc. For certain steps, the chapter suggests adopting a participatory procedure
that associates various actors in the decision-making process.
Chapter 5
Phase to prepare for setting up the scheme briey describes the feasibility
study report, as well as the reference documents and tools that should be
produced upon completion of the study in order to conrm all the decisions made
during the scheme design phase and in order to start up operations.
VOLUME 1
INTRODUCTION
Structure of Volume 2: Tools

Volume 2 consists, first of all, of a technical glossary, which defines the terms used throughout
the Guide, and four subsequent chapters (Chapters 2 to 5). These correlate to Chapters 2 to
5 of Volume 1 and provide tools that are designed to be used during the various phases and
steps of the feasibility study.
Chapter 1
Technical glossary denes the technical terms whose initial appearance in the
text is followed by the symbol *.
Chapter 2
Tools used to prepare for and plan the feasibility study offers guidelines for
organizing discussion sessions with the target population and preparing for the
feasibility study: planning, budget estimate.
Chapter 3
Tools used to carry out the data collection and analysis offers practical
suggestions for dening the data-collection procedure, developing datacollection materials, calculating the size of a representative sample and
transforming collected data into information that may be used during the scheme
design phase.
Chapter 4
Tools used to design the health micro-insurance scheme provides datapresentation materials, materials to facilitate the decision-making process,
denitions and diagrams illustrating or explaining certain mechanisms,
calculation formulas and practical examples.
Chapter 5
Tools used to prepare for setting up the scheme presents document

frameworks and outlines, as well as sample documents: contract, agreement, etc.
Volume 1
Volume 2
1. Characteristics and role
1. Glossary
2. Initial phase
2. Tools used to prepare for

and plan the study
3. Data-collection
and analysis phase
3. Tools used to carry out the

data collection and analysis
4. Scheme design phase
4. Tools used to design

the scheme
5. Preparation phase
5. Tools used to prepare

for setting up the scheme
Chapters 2, 3, 4 and 5 of Volume 2 serve as support for the corresponding chapters of

Volume 1.
ILO / STEP
To whom is the Guide addressed and how should it be used?

The Guide is addressed to persons wishing to know what constitutes a feasibility study for a
health micro-insurance scheme. Such persons may be satisfied with reading Volume 1 of the
Guide, which focuses on the procedure for conducting a feasibility study.
The Guide is also aimed at persons wishing actively to conduct a feasibility study for a
health micro-insurance scheme, whether for the purpose of designing and setting up an initial
scheme, or preparing for a new phase of development in an existing scheme through the
introduction of new benefits, the re-definition of management procedures, the extension of
geographic coverage, etc. Such persons are advised to use Volumes 1 and 2 simultaneously.
Volume 1 helps readers to understand what needs to be done and why; it also contains numerous references to specific sections of Volume 2. Volume 2 may be seen as a large toolbox; it
is not meant to be read in a linear fashion (from beginning to end), but rather to be referred
to as needed in order to support certain sections of Volume 1, as indicated by the references
contained in Volume 1.
Conducting a feasibility study presupposes a set of skills, all of which are rarely found
in a single person. For this reason, the teams set up to conduct this type of study are often
multi-disciplinary in nature and may, in addition, call upon external resources, particularly for
completing certain technical tasks such as organizing a data-collection, analysing the collection results, calculating contributions or drafting legal instruments. Hence, it is difficult for a single
person to follow all the recommendations contained in the Guide. Users will find it more useful
to retrieve from the Guide the instructions and tools they need to conduct the step or steps of
the study for which they are responsible.
Lastly, this Guide may be used outside the context of a feasibility study as a reference tool.
Readers can refer to it when they need to check a formula, draw inspiration from a sample
questionnaire or contract, re-utilize a method, such as the role table, or check a line of reasoning or a definition. In such cases, users may consult the tables of contents or the index in order
quickly to find the information they are looking for.
Understand
Conduct
Vol. 1
Vol. 1
Volume 1 may be
read in a linear
fashion.
Verify
Vol. 2
Vol. 1
Vol. 2
Tables
of
contents,
Index
Volume 2 supports Volume 1,

either by complementing it
or by illustrating it.

The tables of contents and index enable readers

quickly to nd information they are looking for.
VOLUME 1
1. CHARACTERISTICS AND ROLE OF THE FEASIBILITY STUDY
1.
Characteristics and role

of the feasibility study
What is a feasibility study?

A feasibility study * is the first step in any project aimed at setting up or further developing a
health micro-insurance scheme*. Its objectives are to:
test the relevance of the future health micro-insurance scheme; that is, ensure that it
offers a suitable response to the problems raised, while taking into account the context
in question;
determine the characteristics of the future scheme that will encourage its development and
sustain its viability;
describe an initial situation to serve as a reference for the subsequent evaluation of the
schemes impact on the health context and on access to health care *.
Note: In certain cases, setting up a health micro-insurance scheme may not be the best
solution. For example, in a context in which there are no health care facilities* of acceptable quality, it might make more sense to improve the quality of existing health structures
(or even create new ones) before setting up a health micro-insurance scheme. Likewise, in
order to meet certain needs for the coverage of minor risks*, other methods of financing
(prepayment*, health savings* and health credit*) may rival the effectiveness of insurance*.
For these reasons, a feasibility study should be approached with an open mind and without
any preconceived notions as to what type of scheme to create or what type of benefits * to
provide. Indiscriminate copying of other schemes should be avoided. The fact that a health
micro-insurance scheme is operating in the country, the region or even in the next village, does
not mean that it is well-suited to the needs and characteristics of the target population * or to
the context of the particular micro-insurance scheme under consideration.
In particular, a feasibility study makes it possible to:
highlight the problems requiring attention: difficulty experienced by the target population in
meeting health expenses; problems related to the quality of existing health facilities; etc.;
identify the causes of such problems: seasonal variations in income; inadequate income
to meet certain health expenses, such as hospitalization; lack of motivation on the part of
health care staff, etc.;
validate the idea of setting up a health micro-insurance scheme;
collect the data needed to make relevant choices and to design a sound health microinsurance scheme;
design the health micro-insurance scheme: services covered and levels of coverage *,
organization of the scheme, operating rules, etc.;
prepare for setting up or further developing the scheme: develop a strategy and a plan
for setting up the scheme; prepare reference documents and the supporting materials and
tools needed to start up operations;
prepare for the official establishment of the scheme.
ILO / STEP
For the sake of simplicity, the feasibility study may be broken down into the following four phases:
Initial phase to prepare for and plan the feasibility study (Chapter 2)
Data-collection and analysis phase (Chapter 3)
Scheme design phase (Chapter 4)
Phase to prepare for setting up the scheme (Chapter 5)

In practice, feasibility studies are usually carried out in a more fluid fashion, alternating back
and forth between analyzing the situation (based on the collection and analysis of data) and
designing the scheme.
Data
collection
Analysis
Start
of design
Additional
data collection
Analysis
Continued
design
Who conducts the feasibility study?

The skills required
Conducting a feasibility study requires a particular set of skills and knowledge.
Skills and knowledge required
Initial
phase
General knowledge of health insurance and project management

Analytical skills
Ability to conduct meetings, listen to others and engage in dialogue
Datacollection
and
analysis
phase
Familiarity with context and available sources of information

General knowledge of health insurance
Ability to conduct interviews, process survey questionnaires
Computer skills needed for data entry
Mathematical aptitude: calculation of indicators, interpretation of results
Scheme
design
phase
Ability to conduct meetings, listen to others and engage in dialogue

Technical competence in health insurance, especially as concerns the calculation of
premiums * and the organization and operation of a scheme (rules and procedures)
General knowledge of accounting and finance for establishing a budget estimate
Phase to Ability to synthesize ideas in order to draft the feasibility study report
Writing skills in order to draft legal documents and prepare management * tools,
prepare
such as the procedures manual
for setting
up the
Computer skills needed to install management software, if applicable
scheme
VOLUME 1
The role of the promoter

It is usually the promoter of a health micro-insurance scheme who makes the decision to
conduct a feasibility study. A promoter is an entity wishing to establish or further develop
a health micro-insurance scheme. The promoter may be a local organization (such as an
association *, non-governmental organization (NGO), cooperative *, microfinance institution,
etc.); a health care provider * (such as a hospital); or a development agency (such as an
international NGO, cooperation project, etc.), possibly working in partnership with one or
more local organizations.
In some cases, the promoter can provide in-house all the skills required to carry out a feasibility study and can therefore assume responsibility for organizing and conducting it from the
data-collection to the scheme design phase. When the promoter cannot provide all the skills
required, it may delegate all or part of the responsibility for conducting the study to a technical
support organization. For those aspects of the study for which the promoter is responsible, it
supervises and guides the other actors in performing the tasks delegated to them.
The role of the target population

The target population refers to all the persons the future scheme intends to cover. It includes
all potential members * and their dependents *. The target population may be defined on a
geographical basis: persons residing within the radius of a health facility, the inhabitants of a
rural or urban district, etc. It may also be defined on a socio-economic or socio-occupational
basis: for example, the members of a trade union or cooperative, the employees of an enterprise, the members of a womens association, etc. The target population is not necessarily
homogeneous. Particular importance should be given to certain sub-groups such as women,
young persons, ethnic minorities, foreigners, etc. who may account for a large share of the
target population.
The target population is directly affected by the establishment of a health micro-insurance
scheme, given that the scheme will, a priori, modify its access to care.
Important. Within the target population, women usually play a predominant
role in questions relating to health *, especially as concerns reproductive health,
maternity care and family health. When identifying the needs of the target population
and designing the scheme, it is important to encourage women to express themselves
and share their opinions. Women are often in the best position to identify their own
needs, and those of children, in terms of access to health care. Failure to give women
a say can lead to the development of a scheme that does not meet the needs of a
majority of the population.
Carrying out a feasibility study also requires

the participation of other actors
These may include health care providers, health authorities *, local authorities or technical
support organizations. The involvement of the actors most frequently participating in feasibility
studies is described below.
10
ILO / STEP
Health care providers

These are the established public and private health care providers in the area in which the
health micro-insurance scheme operates. They include hospitals, health centres, clinics, dispensaries, pharmacies, private physicians, etc.
Health care providers are directly affected by the establishment or further development of
a health micro-insurance scheme, since the scheme partially changes the context in which they
operate. Schemes may, for example, improve the solvency of the demand for care, introduce
new standards of quality or alter the mechanisms used to pay for health services *.
As long as health care providers are not themselves promoters of the scheme, it is advisable for them to participate in certain phases of the feasibility study, as this will facilitate the
schemes subsequent relations with them. During the data-collection phase, health providers
may, for example, provide information on the services available, the medical care consumption
of the target population, etc.
However, when promoters plan to select one or more health care providers with which to
conclude partnership agreements, care must be taken not to allow existing providers to become
too closely involved before this selection is made.
Health authorities
These are the regulatory bodies and, in some cases, the real decision-makers of the health
facilities. The health authorities include provincial, regional and national health departments.
The establishment of a health micro-insurance scheme may produce changes in the way
in which health facilities function: new methods of payment, new standards of quality, new
fees, etc. Generally speaking, such operational changes may be undertaken only with the
authorization of the health authorities.
Local authorities
These refer to local administrative, religious and traditional authorities, as well as all local leaders. Among others, they include provincial administrators, district mayors, leaders of established
religious communities, traditional chiefs, etc.
The establishment of a health micro-insurance scheme produces a change in the health and
social context. Such changes may be facilitated by the approval and support of local authorities. In addition, the support offered by certain traditional or religious authorities can facilitate
the enrolment of the target population in the scheme.
Local authorities must therefore be informed of the fact that a study is being conducted, as
well as of the purpose of both the study and the future health micro-insurance scheme. Local
authorities may provide useful information for understanding the socio-economic context or
identifying other key stakeholders, such as active civil society organizations.
Support organizations
These are local, regional, national or international bodies capable of offering methodological
and technical support to the schemes promoters. Technical assistance may be provided by
the decentralized departments of the State, private organizations (NGOs, consultancy firms),
bilateral or multilateral technical cooperation programmes, unions* or federations * of health
micro-insurance schemes, cooperatives, etc.
The promoters of health micro-insurance schemes do not always have the capacity to carry
out all the necessary elements of a feasibility study. That presupposes technical know-how
VOLUME 1
11
and the use of specialized tools and methods. Technical support organizations may, within
the framework of the feasibility study:
provide methodological support: know-how for project management, facilitation, data
collection, etc.;
provide technical support: transfer of skills, methods and tools for data collection and
analysis, statistical calculation, use of tailored softwares, etc.;
provide financial support: financing for training programmes or for equipment, funds for the
start-up of operations (reserve fund *, short- or long-term premium subsidies, etc.).
As stressed in Chapter 2, Initial phase to prepare for and plan the feasibility study, it is advisable for the participation of all actors in the feasibility study to be coordinated by a steering
committee *.
When should the feasibility study be carried out?

A feasibility study should be carried out
before the start-up of a new scheme
The establishment of a new health micro-insurance scheme is based on the conclusions of the
feasibility study, and particularly on the selection of:
the benefit/premium combination(s) *;
the schemes organizational framework;
a set of operating rules.
These conclusions may be adjusted following the first few accounting periods *. In this respect,
monitoring and evaluation play a crucial role by enabling adjustments to be made to the initial
scheme design on the basis of experience.
In any case, feasibility studies permit schemes to get off to a good start and to avoid being
confronted later on with regular upheavals that could discourage new members and eventually
lead to the schemes failure.
The following diagram illustrates the role of the feasibility study in defining the initial objectives and assumptions of the scheme, and the role of monitoring and evaluation in their ongoing
readjustment.
Evaluation
Evaluation
Evaluation
Monitoring
Monitoring
Monitoring
Feasibility study
Scheme establishment
Objectives
and initial
assumptions
Year 1
Year 2
Monitoring, evaluation and readjustment

of initial objectives and assumptions
Year 3
12
ILO / STEP
A feasibility study must be carried out

before each new phase of activity
The development of a health micro-insurance scheme over the years usually consists of several
phases. A set of objectives corresponds to each phase. When the objectives of a particular
phase have been reached, the scheme may either maintain its cruising speed or begin a
new phase of development in its operations: widen the scope of persons covered, offer new
benefits, introduce new services, conclude agreements with new health providers, etc. Prior to
the start of a new phase, it is important to carry out a new feasibility study.
It is also possible that, during a new phase of development, changes may occur in the data
corresponding to the schemes context, thus requiring certain features to be re-designed. It is
important to carry out a new feasibility study in such cases as well.
Example: Following the enrolment of members of a large trade union, whose needs
differ from those of the original target population, a scheme may decide to offer a new
benefit plan * that is better suited to the needs of the new members.
These new feasibility studies enable promoters to verify the relevance of the developments or
changes contemplated, and to define precisely the characteristics or activities of the scheme,
while ensuring that they do not jeopardize the schemes efficiency or viability.
The following diagram illustrates the recurring role of the feasibility study in determining
the objectives and assumptions of each new phase of activity of a health micro-insurance
scheme.
Development
Monitoring/
Evaluation
Year 5
Year 4
Monitoring/
Evaluation
Year 3
Year 2
Feasibility
study
Change in context
or
Start of new phase of development
Year 1
Feasibility
study
Time
VOLUME 1
2. INITIAL PHASE TO PREPARE FOR AND PLAN THE FEASIBILITY STUDY
2.
Initial phase to prepare for

and plan the feasibility study
13
Introduction
Objective of the initial phase
The objective of the initial phase is to prepare for the feasibility study, in particular to:
ensure that the preconditions for establishing a health micro-insurance scheme or further
developing an existing scheme have been met, and to confirm the start of the feasibility study;
set up a steering committee to be charged with conducting the feasibility study;
plan the execution of the feasibility study and prepare its budget estimate.
Note: If certain preconditions have not been met, other solutions to the problems identified besides a health micro-insurance scheme may be envisaged. Conversely, the
fact that all preconditions have been met does not guarantee the success of a health
micro-insurance scheme. At this point, it is important to bear in mind that starting or further
developing a health micro-insurance scheme is not necessarily the best response to the
needs identified in a particular context.
The initial phase also marks the start of a process of information, education and communication with the target population and the other actors: health care providers, civil society organizations, health authorities, local authorities, etc. This process will be continued throughout the
existence of the scheme.
Chapter contents
Chapter 2 offers an approach to implementing the initial phase that consists of the following actions:
Verify that the preconditions have been met (action 1);
Confirm the possibility of establishing a health micro-insurance scheme and begin the
feasibility study (action 2);
Set up the steering committee (action 3);
Plan the feasibility study (action 4);
Prepare the budget estimate for the feasibility study (action 5);
Enter into dialogue with the target population and the other actors concerning problems
related to health and access to health care (ongoing action).
The order of these actions is provided for information purposes. In practice, some of the actions
may overlap, be repeated or be carried out in a different order.
14
ILO / STEP
For information on how to implement these actions, please consult the tools provided in Volume
2, Chapter 2:
u Useful tools
2.1 Discussion sessions (page 27).
2.2 Planning the feasibility study (page 31).
2.3 Preparing the budget estimate for the feasibility study (page 33).
Action 1: Verify that the preconditions have been met

Prior to beginning a feasibility study, it is important to verify that setting up a micro-insurance
scheme will address the problems identified and that a certain number of factors for success
are present. These preliminary verifications are all the more necessary given that conducting
a feasibility study sometimes entails a considerable commitment of resources.
Note: This is not the time to question whether the establishment of a health micro-insurance scheme is the best solution to the problems encountered in a particular context.
The question of the pertinence and selection of a particular solution from among several
options (expanding formal social security* schemes, setting up social assistance schemes
or establishing community-based social protection* schemes) will be dealt with in the guide
to setting up micro-insurance schemes.
u Guide to setting up micro-insurance schemes, soon to be published by ILO-STEP.
At this point, an effort should be made to check whether the following preconditions have
been met:
Precondition 1
A priority need exists for protection against the financial risk * associated with sickness and maternity
Precondition 2
Health services of acceptable quality are available
Precondition 3
The target population has confidence in the promoters of the scheme

and in the other persons involved
Precondition 4
Traditions of mutual aid exist within the target population
Precondition 5
A trend of socio-economic development exists
And for schemes designed to cover major risks *:

Precondition 6
The potential number of covered persons * is sufficiently high as from

the first year
VOLUME 1
15
The first four preconditions are indispensable. If one of these is not met, the process of setting
up a health micro-insurance scheme may be halted, or reoriented towards another project,
such as setting up a health care facility, a prepayment scheme, etc. The fifth precondition is
important, but not indispensable.
The sixth precondition is introduced, particularly when the scheme plans to cover major
risks that is, risks that are particularly costly and unpredictable, such as hospitalization, surgical operations, caesarean deliveries, etc. In all cases, it is in the schemes best interest to cover
a relatively large number of beneficiaries * in order to reduce the burden of its fixed expenses.
Preconditions
Priority need
Large
number of covered
persons*
Quality
health
services
OK
Trend
of economic
development
Confidence
Mutual aid
* For schemes designed

to cover major risks
Indispensable precondition
Important precondition
The analysis of the preconditions is based primarily on information gathered during exchanges
with the various actors. This includes information concerning the risk of sickness, the quality of
health services, the strength of the local economy, traditions of risk management * and mutual
aid, and the success or failure of past projects to pool resources. The analysis of the preconditions may also be based on documents relating to the health situation in the region, the strength
of community-based efforts, etc.
For examples of topics of discussion, please refer to:
u 2.1 Discussion sessions, Sample topics of discussion, Volume 2, Chapter 2,
page 28.
16
ILO / STEP
Precondition 1: A priority need exists for protection against

the financial risk associated with sickness and maternity
A health micro-insurance scheme makes it possible to meet the expenses associated with an
episode of illness * or maternity. These include medical expenses, related expenses such as
transport to the hospital, accommodations for accompanying persons, food for the hospitalized patient * and lost earnings, if the patient or the persons accompanying the patient must
stop working.
Setting up a health micro-insurance scheme is worthwhile only if the financial risk associated
with sickness and maternity is, in addition to being real, perceived by the target population
as considerable, if not of priority concern. Although the need for protection in a context of
free health care is certainly less significant than in a fee-based context, other health-related
expenses, such as transport charges for travel to health facilities, may pose a problem for the
population. If health care is fee-based, but the population has other needs such as food
or housing that it considers more important, the establishment of a health micro-insurance
scheme may not be perceived as a priority need.
THE REPERCUSSIONS OF THE FINANCIAL RISK ASSOCIATED WITH SICKNESS

Impact on health status
The fear of not being able to meet health expenses, or of having to interrupt an income
generating activity during a course of treatment, sometimes compels individuals to postpone
obtaining care at the risk of aggravating the state of their health.
Families must employ a variety of strategies in order to meet certain elevated health expenses
and indirect costs. These include liquidating their savings, selling their possessions, requesting assistance from relatives, applying for credit, etc. This search for money takes time and
is another factor that delays access to treatment.
When the amounts collected are not enough to pay for the quality of care that patients
need, their complete recovery may be compromised.
Impact on standard of living
Among the strategies employed by families is that of liquidating their assets. Such a strategy
can lead to the familys long-term impoverishment if it sells off its means of production. It can
also increase the familys vulnerability if the family has no savings left to cover other major
contingencies that may arise in the future.
A sick persons interruption of work leads to a loss of earnings and may be accompanied
by unsound decisions as far as the future is concerned, such as taking children out of school
and placing them in the job market.
When patients receive specialist treatment *, the expenses they incur may be considerable. The
contingencies involved in this case are referred to as major risks. Conversely, when patients
utilize primary health care *, the contingencies involved are referred to as minor risks.
VOLUME 1
17
Precondition 2: Health services of acceptable quality are available

The function of a health micro-insurance scheme is to assume total or partial responsibility for
the expenses incurred in connection with the utilization of health services delivered by health
centres, hospitals, private health professionals, pharmacies, etc.
No consideration can be given to establishing such a system unless a range of health
services is available to respond to the principal needs of the target population, and unless the
target population actually wishes to use those services. If the latter are of poor quality or are
perceived to be inferior, the prospect of a health micro-insurance scheme will seem less attractive.
The existing health services must therefore be able to meet the principal health needs of
the target population, be available nearby, present an acceptable level of quality and be
well-regarded by the target population.
When the health care supply * does not meet these criteria, three solutions may be
envisaged:
the project to establish a health micro-insurance scheme may be abandoned;
within the context of the project, a component aimed at improving the quality and availability of health services may be introduced. The quality of health services may be improved or
the range of services offered may be expanded through agreements concluded between
the scheme and the health care providers;
an additional health care supply structure (health centre, for example) may be established.
This is a relatively heavy task. Since it does not fall within the category of insurance, it will
not be covered in this Guide.
When health care facilities are of acceptable quality, the establishment of a health microinsurance scheme may by improving the solvency of demand increase the frequentation*
of such facilities. This, in turn, may overburden health facilities and give rise to waiting lines,
overworked staff, and medicine stock shortages. Thus, it is possible for a scheme to contribute
to deteriorating the quality of care offered. For this reason, it may be useful, along with the
establishment of a scheme, to encourage an optimum utilization of existing health facilities.
This may include using compulsory referral mechanisms * to transfer patients from one level* of
the health pyramid * to the next, or helping to increase the patient capacity of health facilities
whose services are covered by the scheme.
Precondition 3: The target population has confidence in the promoters

of the scheme and in the other persons involved
The existence of a health micro-insurance scheme presupposes the regular payment of premiums, which are then pooled to pay for the health care expenses of covered persons who
require medical treatment.
The target population cannot easily be persuaded to pool its premiums when it lacks full
confidence in the promoters and the other persons involved in the project. Its relationships with
these parties must therefore be taken into account. The attitude of the local authorities is also
important because their support is interpreted as an endorsement of the promoters and the
other persons involved in the project.
Nor can the target population easily be persuaded to pool its resources when its experience with collective projects (service cooperatives, savings and credit funds, etc.) consists
of projects that ended in failure. These experiences must also be taken into account when
assessing the possibility of establishing a health micro-insurance scheme.
18
ILO / STEP
Precondition 4: Traditions of mutual aid exist

within the target population
It is sometimes difficult for people to agree to the regular payment of a premium because
its benefits are intangible so long as members and their dependents remain in good health.
They may have the impression that they are paying premiums for the benefit of others who
succumb to illness.
Understanding and acceptance of the insurance mechanism is facilitated when traditions of
mutual aid exist within the target population. This spirit of mutual aid may arise from a number of
situations: the fact of being residents of the same village or neighbourhood, co-workers of an
enterprise, members of a social movement*, etc.
When such traditions do not exist, other mechanisms may be used to finance health
expenses such as prepayment, health savings or health credit which are not based on
resource pooling, but rather on individual financing. Since these mechanisms do not fall within
the category of insurance, they will not be dealt with in this Guide.
Precondition 5: A trend of socio-economic development exists

It is difficult for households to make regular premium payments when they have other priority
needs that strain their budgets, such as the need for food or housing. It is also difficult in a
context of sluggish monetary circulation. Conversely, it is easier to agree to regular premium
payments when a trend of socio-economic development exists.
This is an important precondition. Nevertheless, even if family incomes are low and do not
always permit families, individually, to meet health care expenses, the pooling of premiums makes
it easier, collectively, to meet the expenses of persons requiring medical treatment. This is what
is known as risk pooling* or the sharing of risks among sick persons and those in good health.
Precondition 6: The potential number of covered persons

is sufficiently high as from the first year
This precondition is particularly applicable to schemes designed to cover major risks. Major
risks are rare contingencies that entail considerable expense, such as hospitalizations, dystocic
deliveries, surgical operations, evacuations to other countries, etc.
Premiums provide coverage * for the health expenses of persons protected by the scheme.
The calculation of premiums is usually based on estimates of the target populations average expected consumption of health care. When real consumption is greater than average
consumption expected, the financial equilibrium of the scheme may be jeopardized.
Example: A survey of a sample of 350 households reveals that, on average, the risk
of hospitalization per year for this sample is four out of every 100 persons. In the case
of a health micro-insurance scheme that plans to cover hospitalizations, it may happen
that the number of persons actually hospitalized in the first year is equal to the forecasted
figure, that is, four out of 100 persons. It may also happen and this is more likely that
the number of persons actually hospitalized is either lower or higher than the forecasted
figure. If the scheme based its calculation of premiums on an average figure, the fact that
the actual figure is higher than the forecasted figure may pose difficulties for the scheme.
VOLUME 1
19
According to the theory of probability*, deviations from the average are higher if the protected
population is small and the covered risk is rare. Conversely, as the population increases in size
and covered risks become more common, these deviations tend to decrease.
Small number
of covered persons
Large number
of covered persons
Infrequent risk
(ex: hospitalizations)
Deviation +++
Deviation +
Frequent risk
(ex: consultations)
Deviation +
Deviation ~
=0
A number of techniques may be used to take the impact of these deviations into account in
calculating premiums; these techniques will be explained in the section on calculating premiums. However, when the number of covered persons is too small, it is difficult effectively to
protect the scheme against the financial consequences of deviations from the average.
Consequently, when the target population is small (for example, the population of a village
of 1,500 inhabitants) this usually results in a relatively low number of covered persons in the
first year, making it unwise to set up a health micro-insurance scheme that covers major risks.
Action 2: Conrm the possibility of establishing a health

micro-insurance scheme and begin the feasibility study
If the preconditions have been met, then the establishment of a health micro-insurance scheme
may be considered a possible solution to the problems of access to health care encountered by the target population. At that point, the officials of the organization promoting the
scheme may decide to begin a feasibility study. The launching of the feasibility study may
be announced in the course of discussions with the target population, managers of health
facilities and local authorities.
Action 3: Set up the steering committee

The steering committee is the team charged with conducting the feasibility study. It is usually
comprised of between five and 10 persons, but may be bigger, especially when the study is
being carried out simultaneously in several geographic areas. If there are too many members,
the committee may not be able to function properly. Conversely, if there are too few members,
the committee may not be representative of the target population and the main actors. The
functions of the steering committee begin with the preparation of the feasibility study and end
with the official establishment of the health micro-insurance scheme.
The steering committee also acts as an interface between the officials of the organization
promoting the scheme and the target population, whose members, for obvious reasons, cannot
all participate in carrying out the study.
20
ILO / STEP
The functions of the steering committee include:

Conducting the study. The steering committee must plan and organize the various phases
of the study. It must direct the study, monitoring the progress of each phase; perform any
necessary adjustments such as collecting data in an additional area; and make necessary
operational decisions such as recruiting a researcher.
Conveying information to the target population and to the other actors; providing information concerning the feasibility study; identifying needs; and gathering opinions, experiences
and advice from the various actors. The steering committee organizes information meetings
and discussion sessions at the start of the study and leads working groups during the scheme
design phase.
Organizing and carrying out specific tasks with the support of external resources, if necessary. The committee may organize and conduct data-collection activities. It may analyze
the data collected, present the results to actors during working group sessions and provide
support for the collective decision-making and scheme design processes. Lastly, it may
develop the strategy and plan for setting up the scheme, and draft the summary reports,
tools and supporting materials needed to start up operations.
Thus, the role of the steering committee is not to decide what type of system to set up but,
by organizing discussion and working group sessions with various actors, to foster a clear
understanding of the problems, assist in finding solutions and promote the gradual emergence
of a design for a health micro-insurance scheme that is adapted to the context and responds
to the needs of the target population.
Setting up a steering committee involves selecting its members, assessing their respective
needs for training and providing them with one or more training courses in order to prepare
them for conducting the feasibility study.
Step 1: Set up the steering committee

The members of the steering committee may be identified in the course of contacts with the
target population and the other actors. One of the objectives of the discussion sessions is
precisely to identify a number of key actors who would be capable of taking an active role in
conducting the feasibility study and possibly serving on the steering committee.
For a list of the objectives of the discussion sessions, please refer to:
u 2.1 Discussion sessions, Objectives of the discussion sessions, Volume 2,
Chapter 2, page 27.
The members of the steering committee must collectively possess a variety of skills: technical
expertise in the area of health micro-insurance; experience in project management; ability to
conduct meetings and interviews; familiarity with processing questionnaires; ability to analyse
data, draft documents, use spreadsheets and management software, etc. The idea is to bring
together members whose skills complement one another.
The members of the steering committee are generally from the organization promoting
the scheme: an NGO, cooperative, trade union, hospital, microfinance institution, etc. When
the promoting organization wishes to provide for the participation of the target population in
setting up or further developing a health micro-insurance scheme (participatory approach),
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the steering committee will also include representatives of the target population: members of
a village association, members of a womens association, etc.
It is very important that, regardless of their affiliation or skills, members of the steering
committee comprise a large percentage of women. Women are often in the best position to
express their needs and those of children as far as access to health care is concerned. Not
to give women a say in such matters may lead to the design of a scheme that fails to meet
the needs of a large segment of the target population.
In certain cases, the managers of the health facilities may serve on the steering committee. This is especially true when the organization promoting the scheme is itself a health
facility, or when a single health facility has a monopoly and meets the criteria for quality
and proximity. On the other hand, when the selection of health facilities is not obvious (such
as when health care is delivered by several competing providers and a selection must be
made), it is preferable not to include the managers of the health facilities in the steering
committee. They may unduly influence the selection process and reduce the schemes
negotiating potential.
When the steering committee does not include any representatives of certain categories
of actors, it is nevertheless important for the committee to consult with the representatives of
such groups at various times during the feasibility study.
Examples: If the steering committee does not include representatives of the target
population (as when a less participatory approach is used), it is essential that the target
population be consulted regularly by means of surveys, interviews and focus groups. This
will help to ensure that the scheme meets the needs of the target population and corresponds to its willingness to pay*.
If the steering committee does not include the managers of the respective health facilities,
the latter must be consulted at various times in the course of the study. During the datacollection and analysis phase, these officials may provide information that helps to increase
understanding of the health context and the problems surrounding access to health care,
to estimate the current utilization of health services by the target population and, ultimately,
to serve as an input in calculating premiums.
When the local authorities and the health authorities are not included in the steering committee,
they may be invited to attend various meetings (particularly the first meeting) as observers or
advisers. In any case, they should be informed of the progress being made.
When the steering committee relies upon outside sources to provide certain skills, the
support organizations in question may without being full-fledged members of the steering
committee participate in its various activities and meetings.
Step 2: Assess the need for training and provide training

for the members of the steering committee
In most cases, some or all of the steering committee members will require training in order to
acquire the knowledge needed to take an active part in carrying out the feasibility study.
The goal is not to transform the members of the steering committee into insurance experts;
the acquisition of such skills is far too long and arduous. It is preferable and less costly to call
upon external services to carry out the more technical aspects of the feasibility study.
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ILO / STEP
The idea is to assess the committee members need for training by taking stock of their skills
and knowledge in order to offer them the appropriate courses. The curricula of such courses
may include basic and advanced theory, followed by a visit to the offices of one or more
health micro-insurance schemes.
Examples of topics covered in training modules:
Basic modules
Principles of health micro-insurance

Benefits provided by health micro-insurance
schemes
Types of schemes and the organization and
functioning of each
Procedure for carrying out a feasibility study
Methods of facilitation
Advanced modules
Data collection (procedure, execution,

analysis of data collected)
Calculation of premiums
Criteria for selecting benefit/premium
combination(s)
Management mechanisms, tools and
documents
Example of La Concertation (Coordination network): In Western and

Central Africa, numerous international organizations and programmes are involved in efforts
to support micro-insurance projects that are currently under way, and organize training
workshops aimed at the promoters of health micro-insurance schemes. Since 1999, these
support organizations and a large number of health micro-insurance schemes, as well as
promoters have joined together to form La Concertation entre les acteurs du dveloppement des mutuelles de sant en Afrique de lOuest et du Centre (Coordination network
between actors involved in the development of mutual health organization* in Western
and Central Africa). Among other activities, the Coordination network maintains a web
site (www.concertation.org) listing support organizations that may be contacted by local
promoters. The site also provides numerous bibliographical references, accounts of experiences and ongoing information on major events in the field of micro-insurance, including
the organization of training courses.
Action 4: Plan the feasibility study

Before beginning the feasibility study, it is advisable to formulate a plan indicating what must
be done and when and how it must be done. This plan may take the form of a reference
document that describes the activities to be carried out and is accompanied by an indicative
timetable for conducting the study.
Planning the feasibility study makes it possible to:
possess, at once, a macro and a micro view of the study and the course of action to be
followed, including a description of each activity and task, its expected duration and the
human and material resources needed to carry it out;
ensure that sufficient time is allotted for carrying out all the activities and tasks in favourable
conditions (or, conversely, that it does not take too long to complete them);
Note: On average, a feasibility study takes between four and 12 months to complete.
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make certain that the feasibility study remains an ongoing process that is not subjected
to major interruptions that could risk discouraging the actors. It is particularly important to
choose the starting date of the feasibility study so that it ends at an opportune time for starting or further developing the scheme and to ensure that the steering committee members
are available throughout the duration of the study.
Planning the feasibility study consists of defining its various phases; breaking down the main
activities of each phase and identifying the tasks to be completed for each activity (step 1);
estimating the duration of each task on the basis of the workload and resources entailed (step
2); and organizing the activities and tasks in a timetable (step 3).
For an example of planning, please refer to:
u 2.2 Planning the feasibility study, Practical example: The National
Federation of Coffee Producers (NFCP), Volume 2, Chapter 2, page 31.
Step 1: Identify the various phases, activities

and tasks of the feasibility study
The various phases of the feasibility study generally include:
a data-collection and analysis phase. This phase usually consists of the following activities
or steps:
Activity 1: Define the procedure to be used for the data collection
Activity 2: Develop the data-collection materials
Activity 3: Prepare for the data collection

(test collection materials, recruit and train researchers, etc.)
Activity 4: Carry out the data collection

(collect data from health facilities, households, etc.)
Activity 5: Transform collected data into usable information

a scheme design phase. This phase usually consists of the following activities:
Activity 1: Summarize the results of the data collection
Activity 2: Prepare materials (tables, diagrams) that will

be used to present the results to the persons participating
in the scheme design process
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ILO / STEP
Activity 3: Carry out the scheme design process
Activity 4: Put together a list of the decisions to be confirmed

when the scheme is officially established
a phase to prepare for setting up the scheme. This phase usually consists of the following
activities:
Activity 1: On the basis of decisions taken during the scheme
design phase, draft all documents and develop the necessary
tools to start up operations
Activity 2: Draft the feasibility study report
Activity 3: Officially establish the scheme

(vote on statutes * at the general assembly * for example)
Start up operations
Once the phases and activities have been identified, each activity is broken down into its
component tasks.
Example: The activity collect data from households is made up of the following tasks:
conduct surveys, monitor the progress of the data collection, input raw data and
control data input.
Step 2: Estimate the length of time needed for each activity

and each task
The duration of each task is estimated on the basis of the workload entailed and the resources
needed to carry it out.
Example: A steering committee plans to carry out a survey of 300 households in a
village. Three researchers will be assigned to the survey, and each researcher will interview
100 households. The time needed to process a questionnaire is estimated at 30 minutes,
and the working day of a researcher is five hours. Consequently, it will take 10 days to
complete the survey, with each researcher conducting 10 interviews per day.
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Step 3: Organize the activities and tasks in a timetable

The next step is to organize the activities and tasks to be completed in a timetable. The best
tool for this is the Gantt chart (work plan), which makes it possible to schedule specific activities
and to monitor their completion as the feasibility study progresses.
Setting up the chart begins with organizing the activities and tasks in logical and chronological order. Next a table with two columns is drawn. The left column contains activities arranged
in logical and chronological order, with a breakdown of the tasks corresponding to each activity. The right column represents the progression of time and is subdivided into months, weeks
and days. For each task, the squares corresponding to the days, weeks or months allotted to
completing the task are shaded in. Thus, for a task that lasts five days, five squares are shaded
in. Determining the starting date of a particular task requires finding the date on which the
preceding task (or tasks) to which it is linked was completed.
Example: Task b begins after the completion of task a, and lasts three days. Task
a ends on Friday of the first week. Thus, task b may begin the following Monday, and
the squares corresponding to Monday, Tuesday and Wednesday of the second week
may be shaded in.
1st column: Activities
and tasks arranged
in logical and
chronological order
2nd column: Progression of time

Week 1
M
Week 2
T
Week 3
T
Week 4
T
Etc.
Activity no. 1:
Task a
Task b
Activity no. 2:
Task c
Task d
Task e
Etc.
The Gantt chart may be used to estimate the overall duration of the feasibility study. It can also
be used to work backwards. Once the most favourable time for starting-up the operations of
the health micro-insurance scheme has been established, it is easy to determine the date by
which the feasibility study must be completed, and by working backwards, its starting date.
Important. Determining the most favourable time to start up the schemes activities must take two factors into account: (1) premium payments must be scheduled
for the time of year when incomes are at their highest, following the sale of the harvest,
for example; (2) the waiting period * must not take place during a period of low liquidity.
Asking families to pay premiums during this period which is particularly difficult from both
the financial and health perspectives without being able to benefit from coverage is
counter-productive and risks discouraging new enrolments.
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ILO / STEP
Action 5: Prepare the budget estimate for the feasibility study

Identifying and planning the activities and tasks of the feasibility study makes it possible to
estimate the resources needed and to draw up the budget estimate for the study. A feasibility
study is not necessarily costly, but it does involve some expenses, such as the remuneration of
researchers, travel expenses, photocopy charges, etc.
The steering committee must ensure that adequate but not excessive resources are
assigned to the feasibility study.
Preparing a budget estimate consists of compiling and evaluating all estimated income
and expenses related to the feasibility study, and verifying that a financial balance has been
struck. Expenses estimate include: payroll costs (remuneration of researchers and, in some
cases, members of the steering committee), training costs, travel expenses, office supplies
(photocopies, supporting materials, etc.), infrastructure costs (for meeting rooms and training
classes). Income estimates are provided primarily by the organization promoting the scheme
and by external organizations (partner NGOs, support organizations, the State, cooperation programmes).
Once the figures for income and expenses have been calculated, they are transferred to a
table with two columns. Expenses are listed in the left column and income on the right. For an
example of a budget estimate, please refer to:
u 2.3 Preparing the budget estimate for the feasibility study, Volume 2,
Chapter 2, page 33.
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Ongoing action: Enter into dialogue with the target population

and the other actors concerning problems related to health
and access to health care
This dialogue is part of a process of information, education and communication that begins during
the initial phase and is continued over the course of the feasibility study. It is then conducted in
an ongoing fashion throughout the existence of the health micro-insurance scheme.
Such a process is crucial for generating interest in the scheme on the part of the target
population and the other actors. It also contributes to the design of a scheme that will meet the
needs of the target population and correspond to its willingness to pay. Ultimately, this process
enables the scheme to evolve by responding to changes in the needs of covered persons or
by identifying the needs of potential new members and dependents, such as the inhabitants
of a new geographic area, other socio-occupational categories, etc.
The initial phase is aimed at eliciting the individual comments and opinions of everyone
regarding the health context, problems associated with access to health care and the need
for protection. It is also aimed at encouraging actors to examine these issues and to take steps
to deal with the problems expressed.
It is important that an attempt be made to gather the opinions of the various actors (target
population, health care providers, civil society organizations, health and local authorities, etc.)
and of all the groups making up the target population. Efforts should be made to give consideration to the views of groups that are usually under-represented in meetings and decisionmaking bodies, such as women, adolescents, migrant workers and members of certain social
or ethnic groups. In some contexts it may be useful to organize meetings according to homogeneous sub-groups. These meetings may be organized in a variety of ways, ranging from
individual interviews to group meetings. For a description of the various ways of organizing
such meetings, please refer to:
u 2.1 Discussion sessions, Organization of discussion sessions, Volume 2,
Chapter 2, page 28.
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3. DATA-COLLECTION AND ANALYSIS PHASE
3.
Data-collection and analysis phase
29
Introduction
Objective of the data-collection and analysis phase
The data-collection consists of gathering the information needed to design the health microinsurance scheme. This information will be used to select the services to be covered, benefit/
premium combination(s), partner health care providers, etc.
The information gathered may also be used to put together a description of the initial
situation, which will serve as a reference for later evaluating the schemes impact on the frequentation of health facilities, the means of treatment sought in response to illness, etc.
Ideally, the data collection will focus on essential information and will cost as little as
possible. The data collection should be conducted systematically, which involves defining and
then following a coherent course of action. This requirement to be systematic helps to keep
a common thread running throughout the process of data-collection and analysis. It does not
preclude collecting data on a repetitive basis with several successive phases of collection
and analysis.
ERRORS TO AVOID DURING THE DATA-COLLECTION PHASE

Error No. 1: Collecting needless or unusable information
Experience has shown that this precaution is often ignored. A great deal of information is
accumulated without being used.
Error No. 2: Producing information that is already available
Prior to launching into interviews or surveys, it is advisable to collect data that are already
available: results of surveys carried out by other organizations, census findings, background
studies, etc.
Error No. 3: Interviewing the same persons repeatedly
It makes more sense to decide ahead of time what information to collect from ones sources
so as not to have to interview the same person several times.
Error No. 4: Implementing a procedure that is too complicated and requires
the input of substantial human and material resources
Chapter contents
Chapter 3 proposes a rigorous and coherent method of data collection, consisting of the
following steps:
Define the data-collection procedure (step 1);
Develop the data-collection materials (step 2);
Prepare for and carry out the data collection (step 3);
Process the collected data to produce usable information (step 4) i.e. information that
may be used in designing the scheme.
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To implement each of these steps, please refer to the tools provided in Volume 2, Chapter 3:
u Useful tools
3.1 Lists of information to be collected by objective (page 35).
3.2 Sample data-collection materials (page 58).
3.3 Size of sample for conducting household surveys (page 73).
3.4 Examples of processing collected data to produce usable information (page 73).
Step 1: Dene the data-collection procedure

The first step in conducting a data-collection is to define the procedure to be used. This involves
specifying the information being sought, its purpose and the sources from which it will be
collected. It also involves preparing for developing the data-collection materials and deciding
upon the eventual use to be made of the collected data in designing the scheme.
To help define the data-collection procedure, two complementary charts may be drawn up:
a chart which may be referred to as the strategy chart;
a chart which may be referred to as the implementation chart.
The strategy chart is used to record the objectives of the data collection, the information sought
for each objective and the sources of information to be consulted. The implementation chart is
used to record the information to be collected from each source and to serve as a reminder
of the use to be made of each item of information sought. These two charts actually contain
the same information; they simply present it in reverse order. They are complementary. Initially,
the strategy chart is used to identify the information sought, while the implementation chart
organizes and categorizes this information for the sake of simplicity and in order to reduce the
cost of the data collection. Efforts should be made to obtain all necessary information from
each source in the fewest possible number of consultations. (For example, efforts should be
made to avoid requesting information from the same person on separate occasions for the
purposes of objective 1, then 2, then 3, etc.)
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Action 1: Complete the strategy chart

The strategy chart contains three columns. The first column is used to record the objectives of
the data collection; the second, to record the information to be collected for each objective;
and the third, to record the sources of information to be consulted.
Strategy chart
Objectives
Information
Sources
First column: The objectives of the data collection

The steering committee can set one or more objectives for itself. These may vary from one
promoter to the next. The principal and most frequently pursued objectives are enumerated
below; however, this list is not exhaustive.
LIST OF PRINCIPAL OBJECTIVES
Objective 1: To understand the context.
Objective 2: To establish a basis for selecting the target population.
Objective 3: To establish a basis for selecting the partner health care providers.
Objective 4: To establish a basis for selecting the health services to be covered.
Objective 5: To establish a basis for determining methods of coverage: direct payment
or third-party payment .*
Objective 6: To establish a basis for calculating premiums based on the health expenses
of the target population.
Objective 7: To establish a basis for calculating premiums based on the operating costs
of health facilities.
Objective 8: To evaluate the target populations willingness to pay.
Objective 9: To establish a basis for negotiating with health care providers, negotiating with transport operators, collaborating with prevention programmes, and obtaining
information on public aid.
Objective 10: To establish a basis for defining the organization and operation of the
scheme.
For more details on the various objectives and, in particular, on the types of promoters that may
be interested by a particular objective, please refer to:
u 3.1 Lists of information to be collected by objective, Volume 2,
Chapter 3, page 35.
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CHOOSING BETWEEN OBJECTIVE 6 AND OBJECTIVE 7

Both objective 6 and 7 deal with establishing a basis for calculating premiums. There are,
in fact, two basic methods of data collection that may be used for this calculation. The
first method is based on the health expenses of the target population and corresponds to
objective 6. The second method is based on the operating costs of health facilities and
corresponds to objective 7.
In what circumstances should objective 6 be pursued? Objective 6 should be pursued
when the scheme plans to cover health services delivered by a variety of health care providers (health centres, public hospitals, private pharmacies, public dispensaries, clinics, etc.).
Example: A scheme plans to assume responsibility for the cost of consultations and
medicines dispensed by integrated health centres, the public hospital and various clinics,
as well as medicines purchased from designated private pharmacies.
In what circumstances should objective 7 be pursued? Objective 7 should be pursued
when the scheme plans to conclude partnership agreements with a limited number of health
facilities and wishes to assume responsibility for the cost of, not only certain specific health
services, but all services delivered by those health facilities (or by one of their branches, such
as the surgical department of a hospital, for example). Objective 7 may also be pursued
when the scheme plans to pay health providers using a global payment * method (a fixed,
global fee per episode of illness or an annual comprehensive fee per covered person,
called a capitation payment *).
Example: A scheme plans to assume responsibility for the cost of the services
provided by a health centre and decides to use a subscription system. It pays the health
centre an annual comprehensive fee per covered person granting the latter entitlement
to unlimited use of the centre.
Once the objectives of the data collection have been determined, the steering committee may
record these in the first column of the strategy chart, as follows:
Completing the strategy chart
Objectives
Information
Sources
To understand the context

To establish a basis for selecting
the health services to be covered
Second column: Information to be collected for each objective

Various items of information may be collected for each objective. Thus, economic, demographic, health-related and political information may be collected for objective 1, which is
To understand the context.
Determining what information to collect obviously depends upon what is available. This can
vary from one country, one region, etc. to the next. Thus, in a country where health facilities
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33
are not regularly inspected, information on the objective quality of the health care supply risks
being unavailable or unreliable.
It is also advisable to sort through the identified information in order to keep only that which
appears to be the most relevant, given the particular context in question.
A summary of the list of information to be collected for each objective is presented below.
For a detailed list, please refer to:
Chapter 3, page 35.
SUMMARY OF THE LISTS OF INFORMATION

TO BE COLLECTED BY OBJECTIVE
Information for objective 1: To understand the context
Demographic, economic, political and legal information; information concerning the health
care supply, the health context, certain social aspects.
Information for objective 2: To establish a basis
for selecting the target population
Information concerning the objective quality of health facilities used by the target population
(it being preferable that the selected target population have access to a health care supply
of acceptable quality); access to health facilities; the trend of socio-economic development
among the target population; certain social aspects; traditions of mutual aid in the event of
illness; means of treatment sought in response to illness; and methods of financing access
to health care.
for selecting the partner health care providers
Information concerning the health care supply; the objective and perceived quality of health
facilities; the frequentation rates of health facilities.
Note: When the health care supply is inadequate, the organization promoting the
scheme or a support organization may consider playing a role in setting up health
services, if the latter correspond to the real or expressed needs of the target population.
Examples include setting up a pharmacy, purchasing an ambulance, etc.
for selecting the health services to be covered
An overview of the available health services; information that may help to determine which
health services are considered priorities in terms of health needs, and which services are
difficult to access for financial reasons; information on the particular needs of certain subgroups of the target population; information that may be used to identify health services
that pose problems of cost recovery* and/or of financing.
Information for objective 5: To establish a basis for determining methods
of coverage: direct payment or third-party payment
Information that may be used to identify the services for which third-party payment is
considered a priority.
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ILO / STEP
SUMMARY OF THE LISTS OF INFORMATION

TO BE COLLECTED BY OBJECTIVE (continued)
Information for objective 6: To establish a basis for calculating premiums
based on the health expenses of the target population
Information that may be used to calculate the premium and, in particular, the pure premium*
for each health service: the probability of using the service, the average quantity covered,
the average unit cost and the frequency* of utilization of the service.
Probability of utilizing the service
Average quantity covered
Useful if applying
the general formula
for calculating
the pure premium
Average unit cost of the service

Frequency of utilization of the service
Useful if applying
the specific formula
Important. The data collected relate to the past utilization of health services
by a population, which, in most cases, does not enjoy any health insurance
coverage. If the data collected are used as is, the value of the pure premium thus
obtained runs the risk of being undervalued. Therefore, when analyzing and processing
the collected data, it is important to attempt to take into account the presumed impact
of insurance coverage on the utilization of health services.
u 3.4.6 Practical examples, Volume 2, Chapter 3, page 90 and page 104.
Information for objective 7: To establish a basis for calculating premiums
based on the operating costs of health facilities
The fixed and variable costs of the health facility; the number of users of the health facility.
Information for objective 8: To evaluate the target populations
willingness to pay
Information on the seasonal nature of peoples willingness to pay and on current premium
or contribution levels, drawn from the experiences of other civil society organizations that
operate on the basis of periodic premiums or contributions.
Information for objective 9: To establish a basis for negotiating with
health care providers, negotiating with transport operators, collaborating
with prevention programmes, and obtaining information on public aid
Information on the existence and content of a legal framework for concluding agreements *
with health providers; identification of partners with whom to conclude future agreements;
information that may be used to establish fees and quality standards to be stipulated in
agreements with these providers; information that may be used to define the most suitable
method of payment * of health providers; information that may be used as a basis for reaching agreements with transport operators; identification of health education and prevention
programmes and the means of collaborating with such programmes; identification of existing sources of public aid and grant conditions.
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Information for objective 10: To establish a basis for defining

the organization and operation of the scheme
Methods of organization and basic rules of management of existing health micro-insurance
schemes; existence and characteristics of the networks *, if any, of such schemes; main indicators: percentage of management costs, population penetration rates, etc.
Important. The frequentation of a health facility (see information for objective 3) is measured with the help of the frequentation rate that is calculated by
dividing the number of new cases by the population size of the health facilities catchment area:
Frequentation rate = 100
Number of new cases

Catchment area population
The new cases are the new episodes of illness or pregnancy seen for the first time. If
during the same episode a patient must return several times for treatment, these new visits
are not counted.
The frequency of utilization of the services (see information for objective 6) is the
number of times the health service is utilized in the course of the year divided by the reference population.
Frequency of utilization
of the health services =
Number of times the service is utilized

in the course of the year
Reference population
The reference population refers to the scope * of a health facility, which can be different
from the health facilities catchment area. The number of times the health service is utilized
integrates the old and the new cases insofar as each utilization must be taken into account
in the calculation of the pure premium.
Next, the steering committee may fill out the second column of the strategy chart by indicating,
for each objective, the data it has decided to collect.
Objectives
Information
Demographic information
Political information
Economic information
Information concerning
the health care supply
To establish a basis for

selecting the health services
to be covered
Overview of health services
Services considered a
priority in terms of health
needs (real/felt)
Sources
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ILO / STEP
Third column: Available and useful sources of information

For each item of information sought, the steering committee can identify one or more sources
of information.
Examples: Information on existing civil society organizations may be obtained from
socio-economic studies conducted by other organizations or from interviews with local
authorities.
Information concerning the needs of households in terms of coverage may be obtained from
health studies (real needs) and/or from household surveys (felt and expressed needs).
Information used to produce the inputs used in calculating premiums (objective 6) may be
collected from various sources: household surveys; health facilities (registers, annual reports,
statistics); the tracking of a sample of patients; and management information pertaining to
other health micro-insurance schemes operating in the area and serving target populations
similar to those of the scheme.
The use of several sources, when the latter exist, to collect a single item of information is
certainly a more reliable method, but risks making the data collection long and costly. It is
therefore important to make a selection from among the sources, retaining only those that are
either the most reliable or indispensable, or for which it is the most simple to organize a data
collection.
To identify useful sources of information, please refer to:
Chapter 3, page 35.
The steering committee may then fill out the third column of the strategy chart by indicating, for
each item of information sought, the sources of information it has chosen to use.
Objectives
Information
Sources
Socio-economic studies
Political information
Interviews with local

authorities
Information concerning
the health care supply
to be covered

Services considered a
priority in terms of health
needs (real/felt)
Fee schedules of health

facilities
Interviews with health care
staff
Household surveys
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Action 2: Complete the implementation chart

The implementation chart is drawn up on the basis of the strategy chart, whose content objectives, information to be collected and sources of information to be used it duplicates, but in a
different order. The selected sources of information are listed in the first column, the information
to be collected from each source is listed in the second column and the purpose, or objective,
of each item of information is indicated in the third column.
Completing the implementation chart
Sources
Information
Purpose/Objective
Interviews with local

authorities
Economic information,
political information, social
aspects
Fee schedules of health

facilities

to be covered
Official rates

negotiating fees with health
care providers
The implementation chart is used to group information according to source. In most cases,
various items of information may be obtained from a single source.
Examples: Socio-economic studies are a source of demographic information, eco nomic information and information on the strength of community-based efforts.
Interviews with local authorities yield economic information, health information on major
pandemics or problems related to access to health care, and information on the strength
of community-based efforts.
This way of grouping the information facilitates the subsequent development of datacollection materials, as well as the collection itself. The development of data-collection
materials is presented in greater detail below under Step 2: Develop the data-collection
materials.
The implementation chart may also be used to group the objectives pursued for each item
of information. Each item of information may, in fact, be used to attain one or more objectives.
Examples: Knowing the size of the population of a health facilitys catchment area
makes it possible to calculate the frequentation rate of the health facility, and thus to achieve
two objectives: to establish a basis for selecting partner health care providers (objective 3)
and to establish a basis for calculating premiums based on the target populations health
expenses (objective 6).
Keeping in mind the purpose of each item of information collected makes it easier to analyze
the results of the data collection. This analysis is described in more detail under Step 4: Process
the collected data to produce usable information.
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ILO / STEP
Step 2: Develop the data-collection materials

Data-collection materials including, in particular, data-entry forms, interview forms and survey
questionnaires, should be developed before starting the data collection.
Data-entry forms may be used for collecting information from documentary sources. These
include: census reports; health coverage plans; socio-economic studies; health status reports;
political framework (legislative texts, decrees, codes *); quality assessment * reports; and the
fee schedules, registers, annual reports, statistics and accounting data of health facilities. Dataentry forms generally consist of two columns: the left column is used to record the type of
information sought and the right column is used to record the information obtained.
Interview forms may be used to collect information from health care staff and managers
of health facilities, health authorities, local authorities, leaders of civil society organizations,
transport operators and officials in charge of prevention programmes. They contain questions
that are often open-ended, which allow respondents to express their views, using examples for
illustration. The responses provided during interviews consist mainly of qualitative data.
Survey questionnaires are used to conduct household and patient surveys. To the extent
possible, they should contain closed questions, such as multiple choice questions with squares
to shade in, which compel respondents to provide precise answers. This makes it possible
subsequently to use the replies as a basis for quantitative calculations, such as averages,
percentages, etc.
Media
Data-entry forms
Purpose
To collect information from

documentary sources
Characteristics
To track a sample of
patients
Data-entry forms often have

two columns: the left column
contains the information
sought and the right column
contains the information
obtained
Interview forms
To collect qualitative
information from individuals
Interview forms often contain

open-ended questions
Survey questionnaires
To conduct household and

patient surveys
To the extent possible, survey

questionnaires should contain
closed questions
In designing data-collection materials, the steering committee may refer to the implementation
chart drawn up in step 1. In fact, the implementation chart lists useful information to be obtained
from each source.
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Case No. 1: The data-collection medium is a data-entry form

The data-entry form may contain two columns. The steering committee lists the information
sought in the left column and the corresponding findings in the right column.
Example of a census data-entry form
Information sought
Findings
National population
Population in area of intervention
Population of provincial capital
Population of urban district
Case No. 2: The data-collection medium is an interview form

or a survey questionnaire
Each question should enable researchers to collect one or more of the items of information
listed in the implementation chart.
Example of a health authorities interview form
1. What are the most frequent illnesses in the region?
2. Are there some periods of the year that are more difcult
than others from the standpoint of health?
3. etc.
For sample data-collection materials (data-entry forms, interview forms, survey questionnaires),
please refer to:
u 3.2 Sample data-collection materials, Volume 2, Chapter 3, page 58.
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ILO / STEP
Step 3: Prepare for and carry out the data collection

Prepare for the data collection
Test data-collection materials

The interview forms and survey questionnaires must be tested on a small sample of persons in
order to ensure that the questions are understandable and that they effectively allow researchers to collect the desired information.
Determine the population sample to be surveyed
Surveys of the target population (households, patients) and the tracking of a sample of patients
must be carried out using representative samples * of the target population. A sample is representative when it has the same structure as the total population: same proportion of men and
women, same proportion of young, elderly, actively employed and unemployed persons, etc.
The representative sample must also conform to minimum requirements, which depend upon
the size of the target population and its homogeneity. In practice, household surveys are most
frequently carried out of 350 heads of family.
For examples of the minimum size of representative samples, please refer to:
u 3.3 Size of sample for conducting household surveys, Volume 2,
Chapter 3, page 73.
Important. In conducting household and patient surveys, it is necessary to
include a large proportion of women. Experience has shown, for example, that
household surveys often question the head of the family, who is usually a man and who,
granted, answers on behalf of the other members of his family. The fact remains, however,
that women play a predominant role in issues relating to health, whether it is reproductive
health, family health or maternity care. For example, they have specific knowledge about
childhood illnesses and childrens needs in terms of protection. As women, they also have
particular health and social protection needs with which men may not be familiar and
which they may not perceive as priority concerns.
If, despite having taken precautions, it appears from the data analysis that the proportion
of women surveyed was too low, it is always possible to organize an additional survey of
an exclusively female sample.
Assign tasks, recruit and train researchers

Depending on the situation, the steering committee may assume responsibility for the entire
data collection, or it may rely upon external resources. Generally speaking, steering committee
members carry out the data collection themselves on the basis of existing documents: studies,
censuses, health coverage plans, quality assessments, etc. They also collect data from local
authorities, health authorities, health facilities and pre-existing health micro-insurance schemes.
The steering committee often relies upon researchers to conduct surveys of the target population. Researchers must have received prior instruction in conducting the surveys and must have
been informed of the content of the questions and the types of replies to be expected.
For the tracking of a sample of patients, the members of the steering committee may request
the assistance of the health care staff in the health facilities concerned to complete the dataentry forms.
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Carry out the data collection
Monitor the progress of the data collection

It is important to ensure that the data collection is carried out in keeping with initial plans,
and that the structure of the population surveyed in terms of geographical location, sociooccupational category, gender, age, etc. conforms to predefined parameters. In the event
of discrepancies, adjustments may be made during the data-collection process. Such adjustments include revising the objectives of the data collection, recruiting additional researchers,
giving priority to certain groups of the population that are under-represented in the population
segment already surveyed, etc.
Enter raw data and control data input

During the course of the data collection, it is advisable to process completed forms and questionnaires regularly (every evening, for example) and, little by little, to input the data using a
computer application that facilitates their utilization (a spreadsheet programme, for example).
Step 4: Process the collected data to produce usable information

Among the data collected, some may be utilized immediately: i.e. they may be used to achieve
one or more objectives without any particular processing.
Example: Demographic information contributes to a better understanding of the context
(objective 1) without being processed in any way.
Other data must be processed before they can be used to achieve the objective in question.
Processing consists of calculating an indicator on the basis of raw data.
Example: The size of the population of the catchment area of a health facility is collected
in order to establish a basis for selecting the partner health care providers (objective 3). In
order for this information to be usable, it must be processed. It will be used to calculate the
frequentation rate, which, in turn, is used as a criterion for selecting partner health facilities.
Thus, data application involves processing (if necessary) the collected data and using them
to achieve the stated objectives.
42
Sources
ILO / STEP
Collection
Information
:
Data usable
without processing
Input
Data requiring
processing
Processing
Immediate use
Application
For methods of processing and utilizing collected data, please refer to:
u 3.4 Examples of processing collected data to produce usable
information, Volume 2, Chapter 3, page 73.
VOLUME 1
4. SCHEME DESIGN PHASE
4.
Scheme design phase
43
Introduction
Objective of the scheme design phase
The scheme design phase consists of using the information gathered during the datacollection phase as a basis for defining the health micro-insurance scheme that will subsequently be implemented.
This involves deciding which health services to cover, selecting partner health care providers
and defining the benefit/premium combination(s). It also involves ensuring that the proposed
scheme is viable from the financial, social, institutional and technical standpoints, and that it
offers a suitable response to the problems identified in terms of access to and utilization of
health services.
SOME SUGGESTIONS FOR DESIGNING THE SCHEME
Following are some suggestions for designing a viable scheme that meets the needs of its
members:
Suggestion No. 1: Consider the context
Consideration should be given to the context at various stages in the development of
a health micro-insurance scheme, including when determining the schemes organization,
establishing its operating rules, deciding which services to cover, selecting partner health
care providers, etc.
Suggestion No. 2: Involve the main partners
Taking into account the needs of the target population, on the one hand, and the interests
of partner health care providers, on the other, is essential to ensuring the proper functioning,
development and viability of the scheme.
The participation of other actors, such as local authorities, health administration officials,
leaders of civil society organizations and representatives of employers and workers organizations may also prove to be useful, particularly for encouraging partnerships between
these organizations and the health micro-insurance scheme.
Suggestion No. 3: Proceed systematically
Designing a health micro-insurance scheme is a complex operation that involves making
numerous decisions, conducting negotiations, developing mechanisms, calculating premiums, etc. So as not to omit certain elements that are essential to the schemes proper functioning, a systematic and rigorous procedure should be adopted.
Suggestion No. 4: Call upon external resources to supply skills not possessed
by members of the steering committee
Designing a health micro-insurance scheme requires specific technical knowledge, in terms of
designing benefits* that are geared to the needs of members; carrying out various premium
simulations for the purposes of selecting the benefit/premium combination(s); designing operating rules that are both simple and effective; and ensuring that the proposed scheme is
structured in such a way as to limit insurance-related risks. These include adverse selection*,
moral hazard*, over-prescription*, fraud, abuse and the occurrence of catastrophic cases.
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ILO / STEP
Chapter contents
This chapter proposes breaking down the process of designing the scheme into several steps,
each of which corresponds to a necessary decision in that process:
Select, or confirm the selection of, the target population (step 1);
Pre-select the health services to be taken into account in the various benefit plans (step 2);
Select the partner health care providers (step 3);
Select the services and health care providers to include in a third-party payment mechanism
(step 4);
Select the benefit plans and calculate the corresponding premiums (step 5);
Prepare negotiations or agreements with partner organizations, particularly with health care
providers (step 6);
Define the schemes organization (step 7);
Define the schemes methods of operation (step 8);
Prepare the schemes budget estimate (step 9).
This breakdown is provided for information purposes; in practice, the design of a scheme is a
more fluid process in which the same step may be repeated several times at various stages,
and in which decisions made during one step may call into question those made previously.
Example: The calculation of premiums and the establishment of the benefit/premium
combination(s) (step 5) may call for modifying the list of health services to be covered,
a preliminary selection of which was made in step 2. Similarly, certain operating rules
established in step 8, such as those concerning membership, may have an impact on the
calculation of premiums (step 5).
Only the steering committee will be able to conduct certain steps such as step 1, which
involves selecting the target population. This chapter suggests that a participatory approach,
whereby the steering committee involves various actors in the decision-making process, should
be used for the other steps. For the most part, these actors are representatives of the target
population and, depending upon the meeting in question, other actors concerned with setting
up the scheme, such as managers of health facilities, local authorities and leaders of civil
society organizations.
Regardless of whether or not a participatory approach to decision-making is adopted, it is
advisable to adopt the following procedure for each step:
1. Summarize the findings of the data collection: analysis of data collected, calculation of
indicators.
2. Prepare materials to facilitate decision-making: comparative tables, graphs, etc. When a
participatory approach to decision-making is used, such materials should enable the data
needed for decision-making to be presented clearly to the persons concerned (these materials may propose a number of options from which decision-makers are requested to choose).
3. Proceed to making decisions. When decision-making is participatory, the steering committee organizes working groups, composed of persons participating in decision-making, and
facilitates working group sessions to that effect.
4. Put together a list of the decisions to be confirmed when the scheme is officially established.
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This chapter proposes a procedure for each step in the scheme design process and describes
the principal decision-making criteria. For details concerning certain methods of premium calculation or samples of data-presentation materials, please refer to Volume 2, Chapter 4:
u Useful tools: One or more tools in Volume 2 corresponds to each step. Thus, tool
4.1 corresponds to step 1, tool 4.2 corresponds to step 2, etc.
WORKING GROUP SESSIONS

The use of a participatory approach to designing the health micro-insurance scheme
allows for:
(1) Continuing the process of information, education and communication began during the
initial phase to prepare for the feasibility study and consisting, in this case, of:
presenting the results of the data collection, which will serve as a basis for decisions
relating to the design of the scheme;
consulting the various stakeholders in the future scheme mainly the target population
and the health care providers by gathering their points of view;
guiding the actors in their deliberations on the various aspects of the scheme design
process;
transmitting knowledge concerning the functioning of insurance.
(2) Involving the various actors in the design and subsequent establishment of the scheme,
thereby promoting the schemes proper functioning and development.
For suggestions on conducting working group sessions, please refer to:
u 4.0 Working group sessions, Volume 2, Chapter 4, page 120.
Step 1: Select, or conrm the selection of, the target population

In many cases, the selection of the target population is determined by the organization promoting the health micro-insurance scheme.
Example: If the promoting organization is a trade union, the target population will consist
primarily of trade union members and their families. Similarly, if it is a microfinance institution, the target population will consist primarily of the institutions clients and their families.
When the health micro-insurance scheme is promoted by a support organization that must
choose in which villages or in conjunction with which civil society organization (trade union,
cooperative, etc.) the scheme will be established, this choice generally takes into account:
the needs of the target populations, giving priority to those whose needs for coverage are
greatest;
the chances for success of the project, choosing to set up the scheme where the most factors
for success are to be found.
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ILO / STEP
In some cases, a compromise must be made, since it is possible for the implications of these
two selection criteria to be contradictory.
The steering committee may proceed in the following manner:
1. Summarize the data collected for the purposes of objective 2 To establish a basis for
selecting the target population.
2. Prepare a comparative table to facilitate the comparison of various candidate target
populations. For a sample comparative table, please refer to:
u 4.1 Selecting the target population, Volume 2, Chapter 4, page 121.
3. Choose the target population that best meets the following criteria in terms of:
Objective quality of health facilities. It is preferable that the selected target population
have access to a health care supply of acceptable quality.
Access to health facilities. The establishment or further development of a health microinsurance scheme could initially be concentrated in areas where the health facility attracts
large numbers of users, i.e. areas with high frequentation rates (criterion used when defining the target population on a geographical basis).
Favourable economic and social characteristics. Factors leading to the success of a
project to set up a health micro-insurance scheme include literacy, economic vigour, the
presence of persons experienced in community-based organization, the presence of
persons capable of managing a scheme, the existence of traditions of mutual aid in the
event of illness, etc.
Number of potential beneficiaries. It is preferable for the scheme to cover a large number
of persons, particularly if the scheme expects to provide coverage for major risks.
Step 2: Pre-select the health services to be taken

into account in the various benet plans
Generally speaking, a health micro-insurance scheme cannot cover all health services at
least not in the first few years of its existence. Step 2 consists of identifying and making a
preliminary selection of the health services to be covered by the future health micro-insurance
scheme. Some of the services included in this preliminary selection may later be called into
question if their corresponding premium levels exceed the target populations willingness to
pay (step 5).
In making a preliminary selection of the health services to cover, the steering committee
may adopt a participatory approach that allows for the involvement of representatives of the
target population. This approach consists of:
1. Summarizing the data collected for the purposes of objective 4 To establish a basis for
selecting the health services to be covered.
2. Preparing the data-presentation and decision-making materials that will be used during the
working group sessions.
Examples of data-presentation materials: A comparative table that may
be used to prioritize the various health services; fee schedules of health facilities that
show how health services are currently being billed.
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3. Convening a working group to:

Action 1: Pre-select the health services to be covered;
Action 2: Define one or more benefit plans and the services included in each;
Action 3: Take into account the method of invoicing used by health care providers.
4. Putting together a list of the decisions to be confirmed when the scheme is officially
established.
Action 1: Pre-select the health services to be covered

The pre-selected health services may be curative, obstetrical or preventive in nature.
Note: It is in the interest of a health micro-insurance scheme to provide coverage for
preventive care as a means of limiting the occurrence of illness. Coverage of prenatal
consultations, for example, is aimed at preventing dystocic deliveries.
This pre-selection may also include the evacuation of patients from one level of the health
pyramid to another, or the purchase of basic medical supplies, such as perfusion equipment,
gloves or syringes, requested by health care staff in the case of hospitalization or obstetrical
delivery.
For the list of health services usually covered by health micro-insurance schemes and a
definition of major and minor risks, please refer to:
u 4.2 Pre-selecting the health services to be taken into account in
the various benefit plans, Volume 2, Chapter 4, pages 122 and 124.
The health services to be covered may be pre-selected on the basis of priority criteria. These
criteria may vary from one type of organization to the next. Civil society organizations or
their support structures often give precedence to services that meet the real health needs of
households and whose utilization may pose financial difficulties. Health care providers often
give precedence to services that entail the most difficulty in terms of cost recovery or financing.
Generally speaking, the main priority criteria used are the following:
The real health needs of the population. Priority is given to services that contribute to
reducing significantly the mortality rate and the morbidity rate of certain illnesses. In this
respect, prevention and health education services may have a major impact on peoples
health while remaining low in cost.
The populations felt and expressed health needs. These are the health services that
people would like for the scheme to cover on a priority basis.
The financial difficulties associated with the utilization of these services. Priority should
be given to services that pose serious problems in terms of financial accessibility. Some
ser vices may, on the other hand, be removed from the list of covered services, i.e. those
that constitute a small financial risk for a large share of the population.
Problems of cost recovery and financing (from the standpoint of health care providers).
Priority services are those that demonstrate the highest rates of outstanding payments or
whose utilization is insufficient (problem relating to the amortization of equipment).
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ILO / STEP
For a sample comparative table of health services from the perspective of these various criteria,
please refer to:
the various benefit plans, Sample comparative table of health services, Volume 2,
Chapter 4, page 125.
Action 2: Define one or more benefit plans

and the services included in each
An assessment of health needs may reveal that among the target population:
certain health services are considered to be a priority by the entire population;
other services are considered to be important, but not a priority;
still others are considered to be a priority, but only by certain sub-groups of the population.
Example: The inhabitants of a village located far from a hospital may consider
patient evacuation to the hospital to be a priority, while persons living in proximity to
the hospital do not consider this to be a necessary service.
Such distinctions may be made by cross-referencing the replies to questions concerning the
target populations felt and expressed needs, on the one hand, with the respondents characteristics, such as age, sex, place of residence and occupation, on the other.
This situation may lead to the proposal of several types of coverage.
Example: A scheme may offer a basic plan that includes priority services and an
extended plan that consists of priority services + important, but not indispensable, services. A scheme may also offer optional benefits, which would be selected only by population groups who considered those services to be indispensable.
Action 3: Take into account the method of invoicing

used by health care providers
Depending upon the case, the proposed benefits may refer to:
individual health services *;
clusters of health services;
Example: A Medical hospitalization service may include the fixed daily rate,
consultations and various examinations administered during the hospital stay.
episodes of illness or maternity.
Example: Care provided for malaria cases may include all health expenses associated with an episode of malaria, regardless of the individual health services utilized in
the patients treatment.
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The point is to ensure that the preliminary selection of covered services is consistent with the
particular terms used by health facilities for invoicing health services.
If health facilities charge patients on a fee-for-service basis, the benefits provided by the
scheme may cover each individual health service, clusters of health services or episodes of illness.
If health facilities charge a fee for a cluster of health services or a global fee for an episode
of illness, the benefits provided by the scheme may not cover each health service separately.
The benefits must either conform to the terms in effect or provide for broader terms.
In order to determine what method of invoicing is currently being used by health facilities,
the steering committee may refer to the fee schedules of health facilities, which were collected
for the purposes of objective 4 To establish a basis for selecting the health services to be
covered.
For a sample benefit plan, please refer to:
the various benefit plans, Sample benefit plan, Volume 2, Chapter 4, page 126.
Step 3: Select the partner health care providers

This step consists of identifying and selecting the health care providers whose services will be
covered by the future scheme. This may include health care providers with which the scheme
wishes to conclude:
a fee agreement;
an agreement concerning patient reception procedures for insured persons or concerning
treatment protocols *;
an agreement concerning payment methods: fee-for-service* or global fee;
and/or a third-party payment agreement.
It may also include health care providers with which the scheme does not intend to conclude
any particular agreement, but whose services will be covered by the scheme. The prior identification of the health facilities whose services are covered to the exclusion of all others helps to
contain the rise in costs that would occur if insured persons routinely sought treatment primarily
from the most expensive health care providers.
In selecting partner health care providers, the steering committee may utilize a participatory approach that allows for the involvement of representatives of the target population. This
approach consists of:
selecting the partner health care providers.
2. Preparing the data-presentation and decision-making materials that will be used during
working group sessions: map of the schemes area of operation, comparative table of the
various candidate health care providers.
3. Convening a working group to select the health care providers whose services will be
covered by the scheme.
4. Putting together a list of the decisions to be confirmed when the scheme is officially
established.
50
ILO / STEP
Select health care providers

Health care providers are selected on the basis of criteria relating to location, quality and cost.
Criteria relating to location

To the extent possible, the selected health care providers must be located in proximity to the
target population. In particular, if the scheme plans to cover primary health care services, it is
important for providers at this level to be located relatively close to the people.
The geographic distribution of health care providers at each level of the health pyramid
may be illustrated on a map of the schemes area(s) of establishment. This map may be used
to identify the partner health care providers serving the various targeted villages or neighbourhoods. It also highlights the areas for which no health care provider has yet been identified.
Criteria relating to quality and cost

The steering committee may compare prospective health facilities on the basis of the following
criteria: the health facilities objective quality, perceived quality, and frequentation rates. Given
a competitive environment, the higher the frequentation rates of health facilities, the more health
services are, in principle, accessible, of good quality and well-regarded by users.
In order to choose between two providers offering services of similar quality, the steering
committee may give precedence to the least expensive provider.
Often the decision is not so simple, and other factors must be taken into account: the public
or private nature of the health facility, the recognition or lack of recognition given to the facility
by the health administration, the transparency and cost-efficiency of practices used by health
professionals, the extent to which prevention and health education are promoted by health
professionals, the quality of relations between the promoters of the scheme and the managers
of the prospective health facilities, etc.
A comparative table of the various candidate health providers may be used to facilitate
the selection process. For a sample comparative table, please refer to:
u 4.3 Selecting the partner health care providers, Volume 2, Chapter 4,
page 127.
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Step 4: Select the services and health care providers

to include in a third-party payment mechanism
This step involves deciding whether to set up a third-party payment mechanism and, if so,
identifying the health care providers and services that would be included under such an
arrangement.
The provision by the scheme of third-party payment for all covered health services is certainly
more convenient for insured persons; however, it exposes the scheme to moral hazard. It is therefore advisable to identify those services for which third-party payment is genuinely necessary.
The steering committee may adopt a participatory approach by working in conjunction with
representatives of the target population and, if necessary, with representatives of the health
care providers pre-selected in step 3. This approach consists of:
determining methods of coverage: direct payment or third-party payment.
2. Preparing the data-presentation and decision-making materials that will be used during
working group sessions, including explanatory diagrams of the third-party payment and
direct payment (also known as third-party guarantor *) mechanisms, as well as a comparative table indicating the services for which third-party payment appears to be most
important.
3. Convening a working group to choose the services to be provided through the mechanism
of third-party payment and the health care providers concerned.
4. Putting together a list of the decisions to be confirmed when the scheme is officially established.
Choose the services to be provided through

the mechanism of third-party payment
Choosing the health services to be provided through third-party payment may be based on
the following criteria:
the cost of the services;
the degree of urgency or unexpectedness of the services: e.g. the hospitalization of a
wounded person following an accident is at once urgent and unexpected.
For sample diagrams explaining the different methods of coverage (with or without third-party
payment) and a sample comparative table to help identify and select the health services for
which third-party payment is considered a priority, please refer to:
u 4.4 Selecting the services and health care providers to include in
a third-party payment mechanism, Volume 2, Chapter 4, page 128.
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ILO / STEP
Step 5: Select the benet plans and calculate

the corresponding premiums
The health micro-insurance scheme may cover the total cost of each health service or transfer
part of this cost to its members (co-payment * mechanism). Co-payment mechanisms have
two advantages: (1) they make it possible to reduce premium levels; (2) they help to contain
moral hazard. However, the introduction of a co-payment may be strongly resented by health
scheme users, particularly during periods of low liquidity. There are different types of copayments, including percentage co-payments *; flat-rate benefits * or maximum benefits *; maximum number of days, cases or sessions *; monetary deductibles *; and numerical deductibles *.
For a description of the different types of co-payment, please refer to:
u 4.5.1 List of co-payments, Volume 2, Chapter 4, page 129.
In addition, a health micro-insurance scheme may offer: (1) a single benefit plan that is common
to all members; or (2) several plans from which members may choose: a basic plan, an
extended plan, optional benefits, etc.
The health services to be covered under each benefit plan were pre-selected in step 2.
Step 5 consists of determining, for each benefit plan (if the scheme plans to offer more than
one), the levels of coverage corresponding to the services included and, if applicable, the
types and levels of co-payment.
Higher levels of coverage necessarily entail higher premiums. Even if a scheme initially plans
to provide a high level of coverage (80 or 100 per cent of expenses) for a certain number of
health services, it is often forced to scale back this initial benefit plan, given the high premium
levels entailed.
CALCULATION OF PREMIUMS, METHOD OF INVOICING

AND METHOD OF PAYMENT USED TO PAY HEALTH CARE PROVIDERS
The tasks of deciding which health services to cover, defining levels of coverage and calculating the corresponding premiums are related to the way in which health care providers
usually bill their patients for health services. For example, if a provider bills each health
service separately, the data collected on the quantity of services consumed or on unit
costs will relate to individual health services; consequently, it will be possible to calculate
the pure premium (see definition below) corresponding to each service. If a health care
provider charges a global fee per episode of illness, regardless of the services provided
or the medicines consumed, the collected data will correspond to these terms. As a result,
it will be difficult to calculate a pure premium for each health service provided.
The tasks of deciding which health services to cover, defining levels of coverage and calculating the corresponding premiums are also related to the method that will be used to pay
health care providers. If a scheme plans to pay on a fee-for-service basis, premiums must
be calculated for each service. When the method of payment has not yet been decided
upon at this point, premiums should be calculated on a fee-for-service basis, which leaves
open the possibility of using any of the various methods of payment, such as those based
on clusters of health services, episodes of illness, capitation, etc. The decision concerning
what method of payment to use is made in step 6 Prepare negotiations or agreements
with partner organizations, particularly with health care providers.
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A benefit plan consists of a set of covered health services and the level of coverage corresponding to each service. After defining an initial benefit plan, the premium corresponding to
that plan is calculated. If the premium level is too high with respect to the target populations
willingness to pay, this initial plan is adjusted by reducing levels of coverage or by removing
certain services from the benefit plan. A compromise is worked out between the benefits
(services to be covered and levels of coverage) and the premium levels to pay until an acceptable benefit/premium combination is found.
In deciding upon levels of coverage and calculating the corresponding premiums, the
steering committee may utilize a participatory approach that allows for the involvement of
representatives of the target population. This approach consists of:
1. Summarizing the data collected:
for the purposes of objective 6 To establish a basis for calculating premiums based
on the health expenses of the target population. This requires first calculating for each
covered service the indicators used to calculate the pure premium: the probability of
using the service, average quantity covered, average unit cost of the service and/or
frequency of utilization of the service; or
for the purposes of objective 7 To establish a basis for calculating premiums based
on the operating costs of health facilities. This requires first calculating the health facilitys
estimated operating costs corresponding to each individual.
2. Summarizing the data collected for the purposes of objective 8 To evaluate the target
populations willingness to pay. Whether or not the target populations willingness to pay
has been taken into account in choosing the level and periodicity of premiums can affect
the success of the scheme in terms of enrolment and the collection of premiums.
3. Preparing the premium calculation charts that will be used during working group sessions;
for a sample calculation chart, please refer to:
u 4.5.5 Sample premium calculation chart, Volume 2, Chapter 4,
page 148.
Action 1: Define several scenarios. This involves defining several benefit plans. At this
point, it is preferable to define scenarios together with the actors not to present them
with a limited selection of pre-established scenarios;
Action 2: Calculate the premium levels that correspond to the various scenarios. This
step presupposes that the members of the steering committee understand the basic
techniques of premium calculation. If necessary, they may call upon external technical
support services;
Action 3: Take into account the level of the target populations willingness to pay;
Action 4: Choose several scenarios, i.e. several benefit/premium combinations meeting
various criteria.
5. Putting together a list of the decisions that will be confirmed when the scheme is officially
established.
This step may prove to be somewhat lengthy. However, experience has shown that time spent
on it is a worthwhile investment since one of the main reasons for the failure of many current
initiatives is a poor choice in terms of the benefit/premium combination(s).
54
ILO / STEP
Action 1: Define several scenarios

The first scenario generally consists of:
the services pre-selected in step 2 Pre-select the health services to be taken into account
in the various benefit plans;
one or more benefit plans: for example, a basic plan that includes services considered
a priority by a large majority of the population, and an extended plan that, in addition,
includes services that are not considered to be a priority;
a high level of coverage for each service (80 or 100 per cent of expenses incurred).
If after calculation (see Action 2 below), the premium level seems high, a second scenario
may be defined:
by reducing the number of services to cover;
by reducing the levels of coverage: introducing co-payments, such as percentage copayments, deductibles, flat-rate benefits and maximum benefits.
Action 2: Calculate the premium levels

that correspond to the various scenarios
Premiums may be calculated in two ways:
on the basis of the health expenses incurred by the target population, i.e. on the basis of
the data collected for the purposes of objective 6;
on the basis of the operating costs of the health facilities, i.e. on the basis of the data
collected for the purposes of objective 7.
On the subject of deciding between these two methods, please refer to:
u Step 1: Define the data-collection procedure, Action 1: Complete the
strategy chart, Choosing between objective 6 and objective 7, Volume 1, Chapter 3,
page 32.
This deals exclusively with the first method. For details on the second method, please refer to:
u 4.5.2(b) Calculating the pure premium based on the operating
costs of the health facilities, Volume 2, Chapter 4, page 143.
and to the practical example provided in:
u 3.4.7 Example of processing the data collected for objective 7,
Volume 2, Chapter 3, page 108.
Premiums constitute the primary source of revenue of a health micro-insurance scheme. They
must be able to: (1) finance the provision of services included in the benefit plans; (2) finance
the operating costs of the scheme; (3) generate a surplus * in order to accumulate financial
reserves and ensure the schemes sustainability.
Premiums are calculated on a yearly basis.
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Note: When these reserves are sufficient, a portion of the surplus may be used to increase
levels of coverage or insure new health services while maintaining current premium levels;
reduce premiums; or finance social welfare activities for beneficiaries.
In order to determine the total individual premium that is, the premium corresponding to an
individual the individual premium for each covered health service must first be calculated.
The health service premiums are then added together to obtain the total premium for an individual. The total individual premium is thus equal to the sum of the premiums calculated for
each health service. The individual premium for a given health service is equal to the sum of
the following elements:
the adjusted pure premium;
the safety loading;
the unit operating costs;
the unit surplus.
Payment
of operating expenses
Premium
Adjusted
(health service) = pure premium +
Safety
loading
Unit operating
cost
Unit
surplus
Surplus
generation
Claims settlement
Accumulation
of reserves
Welfare
activities
The following process, consisting of six steps, may be used to calculate premiums:
First step: Calculate the pure premium
Second step: Adjust the pure premium
Third step: Calculate the safety loading
Fourth step: Calculate unit operating costs
Fifth step: Calculate the unit surplus
Sixth step: Calculate the total premium
56
ILO / STEP
First step: Calculate the pure premium

The pure premium is the average cost of the coverage provided for each covered health
service. It is the average expense to be assumed by the scheme for each protected person.
There are two formulas for calculating the pure premium: the general formula and the
specific formula, which is a specific application of the general formula. These formulas are as
follows:
General formula
Specific formula
Pure premium
(for a health service)
=
Probability of utilizing this service
Average unit cost
Pure premium
=
of this service
Average unit cost
Note: In the specific application of the general formula, the concepts of probability and
average quantity covered are combined in the concept of frequency of utilization.
The comparative advantages of these two formulas are described in:
u 3.1.6 Lists of information to be collected for objective 6, Volume 2,
Chapter 3, page 46.
The term probability refers to the odds that an individual will utilize a given health service
at least once in the course of a year. It is therefore equivalent to the percentage of persons
who will utilize this service at least once in the course of a year.
In most cases, the average quantity covered is equal to the average number of times
a given health service is utilized by users of the service. For certain levels of coverage (subject
to limitation in terms of a maximum number of uses per person and per year, or to a numerical deductible), the average quantity covered is less than the average number of utilizations.
Examples of limitations: A benefit that provides for a maximum of three prenatal
consultations per person per year; a benefit that provides for hospitalization as of the
second hospital day, meaning that the cost of the first day is borne by the member.
The term average unit cost of a health service refers to the average expense incurred
by an individual for that service if the level of coverage is 100 per cent. In all other cases
(flat-rate benefits, benefits subject to a percentage co-payment or to a monetary deductible)
the average unit cost is less than the average expense incurred.
The term frequency of utilization refers to the number of times, on average, that a
given health service is consumed by the total population under consideration.
For a description of the methods used to calculate these various indicators (probability,
average quantity, average unit cost, frequency), please refer to:
u 4.5.2(a) Calculating the pure premium based on the health
expenses of the target population, Volume 2, Chapter 4, page 131.
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Once these indicators have been calculated, they are simply multiplied by each other to obtain
the pure premium:
General formula
Pure premium (health service) =
Average unit cost
Specific formula
Pure premium (health service) =
Average unit cost
Second step: Adjust the pure premium

At this point, adjustments must be made to the pure premium to take into account factors that
have a bearing on health care consumption and thus, on the level of expenses. These include
individual characteristics such as age, sex, place of residence and the existence of certain
services or methods of payment, such as third-party payment. For a discussion of the methods
used to adjust the pure premium, please refer to:
u 4.5.3 Adjusting the pure premium, Volume 2, Chapter 4, page 144.
Third step: Calculate the safety loading

The safety loading is added to the pure premium to make allowances for the risk that the average real expenses per beneficiary exceed estimates.
The pure premium is calculated on the basis of estimates corresponding to a large number
of persons. When the number of persons is small, this may give rise to considerable statistical
discrepancies between the actual utilization of health care by beneficiaries and that observed
in the population as a whole. According to the law of large numbers, the smaller the number
of beneficiaries, the greater is the risk that these discrepancies will be significant. The real cost
of the risk * may then be greater than or less than that of the total population. The purpose of
the safety loading is to make allowances for the loss * that would be incurred by a scheme
if the real cost of the risk was greater than the initially calculated pure premium. The safety
loading is calculated as follows:
Safety loading (for a health service) =
Pure premium Coefficient (N, p)
Where N = number of beneficiaries and p = the probability of utilizing the health service
As N and p increase, the coefficient and the safety loading decrease
For a chart listing various values for the coefficient (N,p) as a function of the values of N
(size of the population) and p (probability), please refer to:
u 4.5.4 Calculating the safety loading, Volume 2, Chapter 4, page 147.
58
ILO / STEP
Fourth step: Calculate unit operating costs

This element of the premium corresponds to the operating costs of the health micro-insurance
scheme that are assigned to each individual.
A preliminary approximation of this figure may be determined as +/-10 per cent of the sum
of the adjusted pure premium and the safety loading. When establishing the budget estimate
of the health micro-insurance scheme (see step 9 below), this figure can then be adjusted, often
upwards. Next, the unit operating cost is calculated by estimating the total operating costs and
dividing this figure by the estimated number of beneficiaries.
Estimates of unit operating costs are more precise in subsequent years because they are
based on the actual operating costs incurred during previous accounting periods.
Fifth step: Calculate the unit surplus

The unit surplus is expressed as a percentage of the total of the three preceding elements; it
establishes the unit amount of surplus to be set aside.
Sixth step: Calculate the total premium

The formula for calculating the premium may be used to determine the premium per individual,
per covered health service and per year. Consequently:
if several health services are covered, the total individual premium is equal to the sum of the
premiums determined for each health service;
the annual premium may be divided into daily, monthly, quarterly, etc. payments, depending
upon the periodicity selected. This arrangement must be adapted to the characteristics of
the target populations income;
the premium corresponding to a family or group of persons may be calculated as follows:
(1) by multiplying the total individual premium by the exact number of members of the family
or group; (2) by multiplying the total individual premium by an identical average figure to
be used for all families or groups, which would give large families an advantage. Other
intermediate methods of calculation may also be used.
Example: A scheme provides three levels of premium: one for families of from one to
three persons; a second for families of from four to eight persons; a third for families of nine
persons or more.
The various steps in the premium calculation process are illustrated in the practical example
contained in:
u 4.5.6 Performing premium calculations (practical example),
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Action 3: Take into account the level

of the target populations willingness to pay
The evaluation of the target populations willingness to pay may be used to identify a premium
level that is affordable for a large majority of the population and/or to identify several categories of potential members with differing levels of willingness to pay.
A data-presentation tool on the level of willingness to pay is provided in Volume 2:
u 4.5.7 Calculating willingness to pay, Volume 2, Chapter 4, page 157.
Note: When the ability to pay * of the target population or of certain categories of the
target population, such as indigents, is very low, efforts must be made to seek additional
sources of financing. In particular, if legislation guarantees access to a minimum package of health services and if the populations ability to pay is insufficient to cover the
average cost of such a package, the State could make up the difference (by subsidizing
premiums).
Action 4: Choose the benefit/premium combination(s)

Premium levels vary significantly, depending upon the health services covered and the levels of
coverage provided. To assume responsibility for all health expenses incurred by beneficiaries
would be unrealistic because it would require too high a premium, thus making it unaffordable for potential members with the lowest incomes. For this reason, a compromise must be
worked out, together with the target population, between the benefits to be provided and the
premiums to be paid.
In order to achieve this compromise, the actors associated with the scheme must ensure that
each of the potential scenarios fulfils the following four criteria or requirements:
Criteria for selecting the benefit/premium combination(s)
First criterion: The health care coverage provided must be relevant
Third criterion: The premium

must be affordable
Second criterion: The coverage

provided must be visible
Fourth criterion: The scenario selected

must enable the scheme to guard against:
Adverse selection
Moral hazard and the risk

of over-prescription
Fraud and abuse
Catastrophic cases
60
ILO / STEP
the health care coverage provided must be relevant;

the coverage provided must be visible;
the premium must be affordable.
the scenario(s) selected must enable the scheme to guard against insurance-related risks:
adverse selection, moral hazard, over-prescription, catastrophic risks *, fraud and abuse.
The scenarios selected will be those that best meet the above criteria.
First criterion: The health care coverage provided must be relevant

The health services to be covered must effectively correspond to situations that members
perceive to be a risk. These are health services whose utilization poses financial constraints
to members, owing to the fact that their consumption is either frequent or costly. Frequently
utilized health services fall into the category of primary health care; these are referred
to as minor risks. Less frequently utilized and costly health services fall into the category
of secondary and tertiary health care services; these are referred to as major risks. The
promoters of health micro-insurance schemes are often divided on which of these two risk
categories to cover.
Minor risks: Utilization of primary health care
Primary health care constitutes the first level of entry into the health system and its costs are
relatively low. The coverage of minor risks by a health micro-insurance scheme is principally
aimed at promoting quick access to health care in order to prevent a decline in the health
status of sick persons. However, this type of coverage must contend with two major constraints:
owing to the frequent occurrence of minor risks, premium levels will be high. As a result,
access to the health micro-insurance scheme will be difficult for the poorest families;
the coverage of minor risks is particularly exposed to the phenomena of adverse selection,
moral hazard and over-prescription. These can undermine the viability of the health microinsurance scheme.
Major risks: Utilization of secondary and tertiary health care
The coverage of major risks, on the other hand, is aimed at organizing protection against the
most costly health services, that is, those that present the greatest financial difficulty for families,
particularly when serious or urgent cases arise. The coverage of major risks allows for setting
a lower premium level, despite the high unit cost of the related health services, given the low
frequency with which these risks occur. However, the coverage of major risks is subject to the
following constraints:
the frequency of hospitalizations and surgical operations is low. Depending on the context,
it may be estimated that out of 100 persons, as few as between four and eight persons will
need to seek secondary treatment in the course of a year. The protection provided will consequently offer a low level of visibility, thereby running a strong risk of discouraging members;
if families have difficulty paying for primary health care, the health micro-insurance scheme
will fail to resolve problems related to the postponement of treatment and the decline in the
health status of sick persons;
a health micro-insurance scheme starting up operations or a small-sized scheme may
quickly find itself in financial crisis following a very costly hospitalization case if no precautions have been taken, such as setting a maximum benefit or introducing a reinsurance * or
co-insurance mechanism.
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Second criterion: The coverage provided must be visible

Even if the members of a health micro-insurance scheme have understood the principles of
solidarity and risk management, they must be able to see for themselves that the scheme is
functioning. This is because:
the payment of a premium imposes a certain constraint, requiring that people pay out of
their own pockets either frequent instalments (every week, every month) or a relatively
large amount once per year;
premiums are pooled in a common fund, and it often happens that local organizations
experience problems related to poor management, whether of an intentional or unintentional nature. There is a risk that distrust will arise rapidly if benefits are provided only rarely;
health micro-insurance schemes that take the form of mutual health organizations assume
as one of their basic principles a democratic style of management, which calls for regularly
assembling members. However, if the mutual organization is not very active, that is, if benefits
are provided only rarely, members will have little motivation to take part in decision-making.
Consequently, a health micro-insurance scheme that chooses to cover only health services that
are used rarely, such as emergency hospitalizations or surgery, runs the risk of not being very
lively and attractive. A scheme that covers minor risks, on the other hand, will be very active,
and therefore very visible, but will require members to pay a high premium, no doubt rendering
the scheme less accessible.
Third criterion: The premium must be affordable

The protection that a health micro-insurance scheme is able to offer its members depends upon
what the members are prepared to pay (willingness to pay) and what they are able to pay (ability
to pay). Willingness to pay depends at once on individuals level of income and their perception
of the risks: the greater a persons aversion* to risk, the more he or she will be willing to pay. An
individuals ability to pay is the maximum amount he or she is capable of paying; it is therefore
linked to income. Ability to pay is always greater than or equal to willingness to pay, even for
persons with a strong aversion to risk. In a context of poverty, however, the levels of ability to
pay and willingness to pay are both very low and tend to be indistinguishable from one another.
A premium that is too high will be prohibitive for the vast majority of the schemes members.
A health micro-insurance scheme that delivered all health services, primary and secondary, for
free would consequently be very attractive but economically and financially unfeasible.
Conversely, several experiences have shown that health micro-insurance schemes with low
premiums have the highest population coverage rates.
When selecting health services and their levels of coverage, the actors must gauge the
consequences of a given decision on premium levels and verify that the latter remain affordable
for a large proportion of the schemes potential members. If the premium level required for covering a particular package of services at 100 per cent of expenses incurred is too high, certain
elements of the package may be withdrawn and/or the levels of coverage reduced through
the introduction of co-payments. Co-payments help to reduce premium levels and effectively
counter moral hazard and the risk of over-prescription. On the other hand, co-payment levels that
are too high may result in a failure to resolve the problem of health care accessibility. They may
also slow down the trend of enrolment owing to the relative unattractiveness of the benefit plan.
Note: Seeking additional sources of financing, such as State-subsidized premiums,
enables the scheme to improve the coverage of the poorest members of the population
who cannot afford to pay the required premium.
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ILO / STEP
Fourth criterion: The scenario selected must enable the scheme to guard against
insurance-related risks
The coverage of basic * health services utilized frequently by households, such as consultations,
medicines, laboratory tests and injections, presents a high level of moral hazard and risk of
over-prescription, which can lead to a considerable increase in the schemes expenses. Copayments (percentage co-payments, deductibles, etc.) are an effective means of countering
these risks.
The coverage of costly and partially foreseeable treatments, such as planned hospitalizations, optical items and treatment for certain chronic illnesses, is accompanied by a high risk
of adverse selection.
Example: Persons who know they must undergo a costly surgical operation within the
next six months join a health micro-insurance scheme with the assurance that the operation
will be covered when the required waiting period is over.
The scheme must therefore carefully select the services for which coverage is to be provided
and, if necessary, introduce other, more suitable mechanisms, such as health savings, for covering foreseeable health expenses, or solidarity funds, for covering chronic health expenses.
The coverage of costly and unforeseeable health care services, such as unplanned hospitalizations, leaves the scheme highly exposed to the risk of catastrophic cases, which can
jeopardize the financial vitality of the scheme. The scheme can protect itself by reducing the
level of coverage it offers for these services.
Example of a catastrophic case and a precautionary measure: The scheme may protect
itself, beginning in the first year, against the financial consequences of a greater-thanexpected number of very costly hospitalizations for surgery, by limiting the number of
hospital days covered.
The following table provides a summary of various measures that may be taken in order to limit
these risks and their impact on the scheme.
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Risks
Measures 1
Adverse selection
Carefully choose the health services to be covered: avoid planned

hospitalizations
Opportunistic behaviour
Offer increasing levels of coverage as a function of the number

of years of membership
Introduce restrictions on coverage (co-payments): limit the number
of hospital days covered, make the reimbursement of surgical
operations or specialist consultations subject to a maximum benefit
Moral hazard
Risk of over-prescription
Carefully choose the health services to be covered: avoid covering

only minor risks; limit coverage of medicines to generic drugs * or
to a list of essential drugs *
Introduce limits on coverage (co-payments): deductibles;
percentage co-payments; maximum number of days; flat-rate or
maximum benefits
Catastrophic cases:
epidemics, exceptionally
high expenditures
Precisely define the sphere of intervention of the health microinsurance scheme by excluding the coverage of health services
that are specific to certain serious pathologies
Introduce limits on coverage (co-payments) and annual maximum
limits for each covered person
Include members and their dependents in prevention programmes
Offer other methods of financing for planned health expenses
(health savings) or chronic health expenses (solidarity funds)
If possible, set up a reinsurance or co-insurance mechanism
The measures listed here are not exhaustive. In particular, the influence of the various membership arrangements
has not been taken into consideration. On this subject, please refer to Step 8, page 81.
Summary table: Criteria to be used in selecting

the benefit/premium combination
Hospital care *
Basic health care
Unplanned
1. Is coverage relevant?
Planned
depends on real needs/needs expressed by the population
2. Is coverage visible?
No
No
Yes
3. Is premium affordable?
Yes
Yes
Partially
moral hazard
and over-prescription
Yes
No
No
adverse selection and

opportunistic behaviour
Yes
No
Partially
catastrophic cases
No
No
Yes
4. Is coverage subject to
insurance-related risks?
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ILO / STEP
Step 6: Prepare negotiations or agreements

with partner organizations, particularly
with health care providers
Step 6 consists, in particular, of preparing negotiations with the health care providers preselected in step 3. This involves reaching an agreement on the quality and price of the health
care to be provided, patient reception procedures for insured persons, treatment protocols,
methods to be used to pay for health services (fee-for-service or global payment) and/or a
third-party payment agreement. In the case of a third-party payment agreement, the steering
committee must also reach an agreement on the verification procedures to be followed and
on the rules pertaining to invoicing and payment.
This step also consists of preparing partnership agreements, where applicable, with other
organizations identified during the data-collection and analysis phase:
the local health authorities, in order to secure a commitment from them to improve the
health care supply through the provision of additional staff or equipment at the district or
regional level;
a trade union or cooperative in a position to promote the scheme among its members and
assume responsibility for enrolments and the collection of premiums;
a prevention/information/health education programme with which the scheme might
organize sessions to raise awareness among members regarding hygiene, the prevention
of certain illnesses, etc.;
a financial establishment located in the vicinity, where the health micro-insurance scheme
might open an account;
a private insurance company or a reinsurance company that could reinsure a share of the
schemes risks;
a technical union of health micro-insurance schemes offering technical support or financial
services;
an association or trade union of transport operators with which the health micro-insurance
scheme might conclude an agreement for patient evacuations.
This step also consists of preparing an agreement with the State, where applicable, concerning the grant of financial assistance. This would make it possible, for instance, to subsidize the
premiums of the poorest families.
It is advisable for the steering committee to closely associate the representatives of the
future partner organizations in efforts to prepare the agreements concerning them. The steering committee should:
1. Summarize the data collected for the purposes of objective 9 To establish a basis for
negotiating with health care providers, negotiating with transport operators, collaborating
with prevention programmes, and obtaining information on public aid.
2. Prepare a file or a chart for each partner containing the elements needed to draft the
agreements. For an example of a health care provider chart, please refer to:
u 4.6 Preparing negotiations or agreements with partner organizations (health care providers and others), Volume 2, Chapter 4, page 158.
VOLUME 1
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3. Begin negotiations with partners. In the case of a health care provider, this involves:
Action 1: Define standards of quality and treatment protocols (standardize health
services) and reach an agreement on fees (regulate the price of services);
Action 2: Choose the methods to be used to pay providers for health services whether
according to the fee-for-service, episode of illness or capitation method and the mechanisms to be used for payment: services provided through third-party payment mechanisms, procedures to follow, frequency of payments to providers.
4. Regularly inform the target population of the progress of negotiations through working group
sessions.
5. Put together a list of the decisions that will be confirmed when the scheme is officially
established.
Action 1: Define standards of quality and treatment protocols,

and reach an agreement on fees
This involves standardizing the health services delivered to insured persons by the health
care provider in order to ensure a particular level of quality and regulating the price of these
services in order to avoid an uncontrolled rise in the expenses of the health micro-insurance
scheme.
In order to standardize health services, a deadline can be set in advance for the quality
standards and objectives to be achieved.
Example: The rate of availability of essential drugs should increase from 50 to 80 per
cent before 1 January 2006.
Treatment protocols may also be defined. These are standardized procedures of treatment for
each type of pathology that define the diagnostic interventions (laboratory tests, X-rays, etc.),
medical treatment or medicines to be prescribed. If followed, they allow for treating the patient
at the lowest cost and at a guaranteed level of quality.
In order to regulate the price of health services, fees may be established on the basis of
each health service or cluster of health services. These are used by health care providers as
a basis for billing the services provided to the schemes beneficiaries.
This rationalization of health services (standardizing health services and regulating the fees
charged) offers both advantages and disadvantages. It limits the schemes costs and allows it
to ensure the quality of the health care provided. On the other hand, it implies concluding an
agreement with health care providers (general agreement, or on a case-by-case basis) and
requires the services of a medical adviser* for overseeing the agreements.
Action 2: Choose the methods to be used

to pay providers for health services
Payment methods, in this case, refer to the different means employed by the health microinsurance scheme and/or by patients who are members of the scheme to purchase medical
services from providers. Four methods of payment may be distinguished:
Payment on a fee-for-service basis consists of paying the provider for each delivered health
service that is covered by the health micro-insurance scheme.
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ILO / STEP
Example: If a patient covered by the scheme undergoes a consultation, the consultation

fee is paid to the provider either directly by the patient (who then claims reimbursement) or
by the health micro-insurance scheme (in the case of a third-party payment arrangement).
Likewise, if a covered patient utilizes several health services, the cost of each service is
paid to the provider.
Payment by cluster of health services consists of paying the health care provider a global fee
for a group of related health services.
Example: A global Consultation and treatment fee includes consultation at a health
centre, and, depending on the patients needs, medicines, examinations, etc. Additional
example: a fixed daily rate per hospital day includes accommodation fees, consultations,
examinations performed during the hospital stay, etc.
Payment per episode of illness consists of paying the health care provider a global fee for all
services provided in connection with an episode of illness or a maternity case.
Example: A global maternity fee includes all health services utilized before delivery,
as well as the delivery itself regardless of whether it is complicated or uncomplicated
and the follow-up after delivery.
A capitation payment consists of paying the health care provider a global fee per person
covered or per head and for a defined period, usually one year.
Each method of payment has its advantages and disadvantages in terms of countering
moral hazard and the risk of over-prescription, on the one hand, and in terms of the quality of
health services, on the other.
Global payment mechanisms based on clustered health services, episodes of illness or
capitation are techniques that permit shifting to health care providers part of the financial
burden of the risks related to sickness. When a patient consumes little, the provider wins.
When a patient consumes more than average, the provider loses. This is referred to as the
transfer of risk from the health micro-insurance scheme to the health care provider.
These mechanisms limit over-prescription to the extent that any increase in prescriptions
(medicines, diagnostic interventions, etc.) is borne by the provider when these services are
included in the global fee. Conversely, in the case of a fee-for-service arrangement, health
providers may have a tendency to prescribe more medicines than necessary, require patients
to return for consultation several times, or perform a greater number of diagnostic tests than
necessary in order to amortize their medical equipment, etc.
Moreover, such tasks as claims management, checking invoices and paying providers,
are relatively simple under the global payment method. Conversely, under the fee-for-service
method, these tasks may require the services of one or more specialists.
Nonetheless, the global payment method may entail a decline in the quality of care if
providers cut back on the services provided in an attempt to contain costs. The health microinsurance scheme will have to rely upon medical advisers to implement quality control mechanisms for these services, which implies additional costs.
Lastly, the capitation method of payment may give rise to a form of risk selection * on the
part of providers. In offering services, providers may tend to favour patients who present a low
risk of illness and who will therefore not consume too many health services, and to discourage those who present a high risk. The health micro-insurance scheme must see to it that such
practices do not arise.
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Methods of payment
Advantages
Contributes to quality
health care
Fee-for-service
Disadvantages
Exposes scheme to risk

of over-consumption
Complicates
management
Accompanying measures
Checking of invoices
Prior agreement *
Co-payments
Requires that health

micro-insurance schemes
bear entire burden of risk
Global payment (clustered
health services, episode of
illness, capitation)
Reduces risk of overconsumption and overprescription

Simplifies management
May lead to reduction

in quality of health care
May encourage risk
selection
Allows transfer of risks

to health care provider
Quality control
of health care through
regular inspections
Monitor attitudes
of health care staff
(risk selection)
When health care is billed on a fee-for-service basis, by clustered health services, or by

episode of illness, the health micro-insurance scheme can use two coverage mechanisms:
direct payment by the patient in exchange for treatment, referred to as a third-party guarantor mechanism: patients advance the cost of their health expenses and then claim reimbursement from the health micro-insurance scheme;
third-party payment: patients pay health care providers only the amount of the co-payment
at the time services are delivered. The provider obtains payment for the remaining expenses
from the health micro-insurance scheme.
The capitation method of payment, on the other hand, generally uses a third-party payment
mechanism: the scheme pays the health care provider directly the annual comprehensive fees
corresponding to the individuals covered, which entitles the latter to free access to the partners
health care structure.
Step 7: Dene the schemes organization

This step consists primarily of defining the relationship between the health micro-insurance
scheme and the responsible organization, including how the scheme relates to the organizations other activities. It also involves determining the schemes legal status and internal organization in conformity with the current legislative framework.
In following this step, the steering committee may adopt a participatory approach that
allows for the involvement of the representatives of the target population in the committees
activities. This approach involves:
1. Summarizing the data collected:
for the purposes of objective 10 To establish a basis for defining the organization and
operation of the scheme. These data include in particular examples of the organization
of other health micro-insurance schemes;
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ILO / STEP
for the purposes of objective 1 To understand the context. The legislative framework
of the country concerned (laws governing insurance companies, mutual benefit organizations, associations or cooperatives, etc.) may partially determine the organization of
the scheme and how it relates to the other activities of the responsible organization.
2. Preparing a table that will be used during working group sessions to identify the internal
bodies and actors of the scheme. For a sample of a table to be used for this purpose,
please refer to:
u 4.7 Defining the schemes organization, Volume 2, Chapter 4, page 159.
Action 1: Define the relationship of the scheme to the other activities of the responsible
organization;
Action 2: Determine the legal status of the scheme;
Action 3: Define the schemes organization: internal bodies and actors.
established.
Action 1: Define the relationship of the scheme

to the other activities of the responsible organization
In many cases, the health micro-insurance scheme is set up by an organization that engages
in other activities, such as:
economic activities (agricultural cooperative, micro-credit institution, tontine, etc.);
social activities (mutual aid for family events, organization of celebrations, etc.);
other insurance-related activities (life insurance, theft insurance, fire insurance, etc.);
health-related activities (provision of health care, sale of medicines, health education,
prevention, etc.);
trade union activities (defence of the right to work and the right to housing, legal defence,
member representation, etc.);
activities related to financing access to health care other than health insurance (health credit,
health savings, prepayment, solidarity funds, etc.).
In some cases, the activities have no direct connection to the health micro-insurance scheme.
In other cases, they are complementary.
Examples: Health savings is a form of risk management that can complement health
insurance coverage. Health credit allows for pre-financing health expenses in the absence
of a third-party payment.
It is important to define the relationship between the health micro-insurance scheme and the
other activities from the following standpoints:
Legal. When the responsible organization is a health care provider, it is generally desirable
for the health micro-insurance scheme to have an independent legal status, separate from
that of the health facility.
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Accounting and financial. Even if the scheme has an independent status, transfers of funds
may be envisaged with the other activities of the responsible organization. Hence, the
schemes operations may be financed in part from the earnings generated by economic
activities. Transfers from one activity to another must remain transparent, which implies
separate accounting.
Functional. It is important to decide if the future scheme will be assisted by decision-making
and supervisory bodies that are separate from those of the original responsible organization, or if certain bodies will be common to both. It must also be decided what resources
(human, material, physical facilities) may be made available to the new scheme in an effort
to limit its operating costs in the first few years.
Action 2: Determine the legal status of the scheme

Health micro-insurance schemes may take the form of a variety of legal entities, depending
upon their objectives whether more social or more commercial in nature and the legislative
environment in which they operate. The most common are: mutual organizations, associations,
cooperatives or commercial enterprises.
Action 3: Define the schemes organization: internal bodies and actors

All health micro-insurance schemes must include:
Decision-making bodies. The general assembly (of shareholders or members) and the
board of directors * usually have the power to make decisions. The general assembly
approves the statutes, internal rules, budget and financial statements, and establishes the
general policy of the scheme in accordance with the statutes. The board implements the
general policy established by the general assembly.
An executive body responsible for the day-to-day administration of the health microinsurance scheme. They may be broken down into operational divisions, such as the claims
management, membership management, personnel and accounting departments, etc.
A supervisory body. This may include a supervisory committee * or an internal or external
audit service, responsible for ensuring the schemes compliance with the statutes and internal
rules *, as well as its observance of contracts and management procedures. It also verifies
the accuracy of the financial statements and, more generally, attempts to prevent the abusive
or fraudulent use of the schemes resources.
A wide variety of organizational formats exist for each of these functions.
Example: In the case of a medium-sized scheme, direct suffrage may be used. A larger
or geographically extensive scheme may set up a pyramid-type structure, comprising local
sections that elect representatives to the general assembly. Additional example: the dayto-day administration of a large scheme may be distributed among central departments
(general management, accounting, membership management, claims management) and a
regional authority in each of the schemes areas of operation. In the case of a small scheme,
an executive committee, consisting of a president, secretary and treasurer, may suffice for
the day-to-day management of the scheme.
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ILO / STEP
Moreover, each of the decision-making, executive and supervisory functions may be

performed by:
scheme members. In mutual organizations, the power to make decisions is entrusted to
members with a seat in the general assembly;
volunteer, compensated or salaried staff by the health micro-insurance scheme or by other
branches of activity of the responsible organization (pooling of human resources). The
schemes ordinary activities, such as the collection of premiums, enrolment of new members,
etc., are often carried out by volunteers during the start-up of the scheme. Once it has been
in operation for several years, a scheme is usually able to compensate these persons or
to hire salaried employees. When the operating costs of a scheme are subsidized, the
scheme may envisage hiring salaried employees from the start. However, its viability could
be undermined should this type of assistance no longer become available;
partner health care providers who may perform certain managerial tasks, such as collecting
premiums, enrolling new members, checking the membership cards * of insured persons;
technical assistance provided by projects, NGOs, decentralized departments of the State,
trade unions or associations, technical unions, etc.;
specialized consultants, such as accounting experts, statisticians, etc.
Tasks that call for specific expertise, such as accounting, monitoring or evaluation, may be
outsourced to external actors.
Step 8: Dene the schemes methods of operation

This step consists of defining the mechanisms and the material and human resources to be
implemented in order to ensure the effective operation and management of the health microinsurance scheme. In particular, this involves:
defining the operating rules, i.e. membership arrangements, payment of membership fees *
and premiums, coverage of health expenses;
defining management * procedures, i.e. the steps required to put these rules into practice;
defining monitoring procedures to ensure the proper functioning of the health micro-insurance
scheme;
verifying that the operating rules and the management and monitoring procedures enable
the scheme to guard against insurance-related risks: adverse selection, moral hazard, overprescription, fraud, abuse and catastrophic risks.
In any case, the establishment of management and monitoring procedures requires adequate
familiarity with the principles governing the operation of this type of scheme. The discussion of
these falls outside the scope of this Guide and is dealt with in another guide, which the reader
is invited to consult:
u Guide de gestion des mutuelles de sant en Afrique (Management guide for mutual
health insurance organizations in Africa), ILO/STEP, 2003.
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Whether or not a participatory approach is used, the procedure to be followed in this case
consists of:
1. Summarizing the data collected for the purposes of objective 10 To establish a basis
for defining the organization and operation of the scheme.
2. Preparing the decision-making materials that will be used by the working groups, including:
comparative tables, which may be used to assess the advantages and disadvantages
of each proposed operating rule;
role tables, which help to break down each process and identify the human and material
resources needed. For an explanation of this method, please refer to:
u 4.8 Defining the schemes methods of operation, Devising a
role table, Volume 2, Chapter 4, page 161.
3. Convening a working group that includes representatives of the target population, or
convening a select committee (steering committee + experts) in order to:
Action 1: Define the main operating rules: rules pertaining to membership, payment
of premiums, coverage of health expenses, reimbursement of members or payment of
providers:
membership rules: Who may join? Are there restrictions with respect to geographic
location, occupation, age, etc.? How can double indemnity be avoided?;
dependents: Who are the beneficiaries? What does the term family include:
extended family, ascendants, descendants, children who have attained the majority,
working children, polygamous relationships, elderly persons, etc.?;
categories of persons whose membership or coverage poses problems in terms of
financing;
persons protected by another health insurance plan;
membership arrangements: Individual, family or collective membership? Automatic or
voluntary membership?;
enrolment period: Open or closed?;
conditions of withdrawal and termination;
existence of membership fees and their amount;
method of calculating premiums for families: individual rate, global family rate, etc.;
frequency of premium payments;
procedures for reviewing premiums;
existence and duration of waiting period;
procedures to follow in order to be eligible for coverage;
Action 2: Define the principal management procedures, i.e. the various activities related
to enrolment, the collection of premiums and the provision of coverage;
Action 3: Define the monitoring procedures that help to ensure the proper functioning of
the health micro-insurance scheme, including:
monitoring the application of operating rules and management procedures;
monitoring the risk portfolio *;
budgetary monitoring;
Cross-cutting action: Ensure that the operating rules enable the scheme to guard against
insurance-related risks: adverse selection, moral hazard, over-prescription, fraud, abuse
and catastrophic risks.
established.
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ILO / STEP
Action 1: Define the main operating rules
Definition of a member
In principle, any person who has attained the prescribed minimum age (determined in accordance with the customs and conditions of the country or region), without discrimination of any
kind on the basis of health, sex, race, ethnic origin, religion, philosophical or political ideology
may enrol in a health micro-insurance scheme, provided that he or she agrees to observe the
statutes and operating rules of the scheme and to pay his or her premiums regularly.
Nevertheless, when a health micro-insurance scheme is set up by a civil society organization, it is natural, at least during the initial stages, for membership criteria to be defined in terms
of common bonds between members: the inhabitants of a village or neighbourhood, workers
within an enterprise, members of a social movement or professional organization, such as a
trade union, womens association, etc.
When the scheme is managed by a health care provider, membership criteria are, a priori,
broader to the extent that the user population of the health facility is generally not restricted
to a single community.
When the scheme is managed by a commercial enterprise (such as an insurance company
wishing to provide coverage to the most destitute segments of the population, for example),
very strict criteria pertaining to the age or state of health of users are sometimes employed.
Example of a restrictive criterion: Members must be under the age of 65 at the
time of enrolment in the scheme.
The various restrictions placed on the definition of what constitutes a member each have their
share of advantages and disadvantages. The following table lists for certain restrictions on
age, state of health or place of residence, the advantages and disadvantages of some criteria
applied in schemes.
Membership criteria
Advantages
Minimum age
(for example: 18)
Excludes persons who do

not possess civil liability
Maximum age
(for example: 65)
Reduces amount
of claims
Absence of chronic disease
Reduces amount
of claims
Residence in a given
village or neighbourhood
Encourages cohesion,
social control * and
mutual aid
Employment in a given
enterprise
Disadvantages
Introduces exclusion,
contrary to operating
principles and objectives
of most schemes
Provide for additional

forms of solidarity: for
example, a separate fund
for persons living with
HIV/ AIDS
Reduces schemes
viability (schemes are
less exposed to risks
if beneficiaries are
spread out over several
geographic areas)
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Definition of a dependent
In most cases, a number of individuals in a members family may enjoy the benefits provided
by the scheme. These individuals usually include spouses and legitimate, natural or adopted
children up to a certain age.
The precise definition of a dependent and/or the limit to be placed on the number of
dependents is important if the scheme plans to apply a global premium per family, or a
premium that is not exactly proportional to the number of persons in the family. The definition
of a dependent is a trade-off between:
taking local customs into account: the existence of polygamous families, ascendants (elderly
persons) who are cared for by their children, young single persons who live in their parents
home while waiting to become financially independent;
the need to offer affordable premium levels.
When premiums are not proportional to the size of the family, an overly broad definition of a
dependent has the effect of increasing premium levels and requiring too high a premium of
small families.
In general, family members are considered to be dependents only if they are, in actual fact,
financially dependent on the member. Spouses and children who work and earn an income
are no longer dependent and must register as members in their own right.
Categories of persons whose membership or coverage

poses problems in terms of financing
The health care consumption of certain categories of persons is much higher than the average
for the target population. These include elderly persons and persons with chronic diseases,
such as diabetes, hypertension and cardiac deficiency, persons living with HIV, etc.
Their inclusion as members or dependents in a greater proportion than their ratio to the
target population can jeopardize the financial equilibrium of the scheme inasmuch as premiums are calculated on the basis of the target populations average health expenses. On the
other hand, social or ethical considerations often make it unthinkable to exclude them from the
scheme. Such exclusion also runs contrary to the objective of universal coverage.
The following solutions may be envisaged:
promote family enrolments that include young persons and elderly persons, sick persons
and persons in good health;
require a higher premium of first-time members who have reached a certain age. Such a
decision poses problems of exclusion and should be implemented only in those cases in
which the members in question did not join the health micro-insurance scheme when they
had the chance to do so;
carefully choose the health services to be covered by the health micro-insurance scheme
and the levels of coverage to be provided;
Examples: Limiting hospitalization coverage to 12 days per person and per year;
disallowing coverage of specific treatments for certain serious pathologies.
disallow coverage of certain patent medicines or brand-name drugs *;
seek other methods of financing for treatments needed by chronically ill persons. In some
countries, treatment for diseases such as tuberculosis, leprosy or HIV infection is provided
by special programmes run by the State or by external financing institutions. In the absence
of such external assistance, consideration may be given to the creation of a solidarity fund
that is independent of the insurance scheme.
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ILO / STEP
Persons protected by another health insurance plan

Some persons may benefit from another generally pre-existing health insurance coverage:
social security, a health insurance plan organized by their employer, etc. If the health micro-insurance scheme agrees to cover such persons, whether as members or dependents, it is important
that mechanisms be set up so as to avoid over-compensating them when benefits accrued in
connection with the two plans are higher than the health expenses actually incurred.
The following measures may be taken in such cases:
stipulate in contracts * and/or the internal rules that coverage is to be provided up to the
amount of expenses incurred, and as a complement to any benefits to which the person
may be entitled from other sources;
introduce specific management procedures for persons protected by another health insurance plan: reimbursement upon presentation of receipts, verification procedures, etc.;
do not set up a third-party payment mechanism for these persons.
Example: A health micro-insurance scheme assumes responsibility for 100 per cent
of expenses incurred for consultations, up to a maximum limit of 500 MUs per consultation. Through the enterprise where he or she works, a scheme member is already a
member of a mutual health organization that covers 50 per cent of consultation fees.
The member undergoes a consultation and pays 1,400 MUs. The mutual organization of
the enterprise reimburses 50 per cent of that expense, or 700 MUs. With the invoice from
the health care provider and the reimbursement voucher from the mutual organization,
the member then files a claim for reimbursement from the health micro-insurance scheme
for the remaining portion of his or her expenses, or 700 MUs. The health micro-insurance scheme reimburses 100 per cent of these remaining expenses, up to a maximum of
500 MUs, or a total of 500 MUs. This leaves 200 MUs to be financed by the member.
Membership arrangements
Membership in a health micro-insurance scheme may be of the following types:
individual: each person may join on an individual basis;
family-oriented: all members of a family must be registered;
collective: the employees of an enterprise or the members of a cooperative join collectively
and not as individuals.
An individual may have a greater or lesser degree of freedom to join a health micro-insurance
scheme. Membership may be:
Voluntary. The decision to join a health micro-insurance scheme is taken by each individual
or each family.
Automatic. Belonging to a group (cooperative, village, trade union, enterprise) or concluding
a contract, such as a request for credit from a microfinance institution, automatically entails
membership in a health micro-insurance scheme. The decision to join the scheme is not taken
by the individual, but by the group to which he or she belongs or the institution of which he
or she is a client.
Compulsory. This refers to the situation of individuals, families or groups who are compelled
to join a scheme without this decision having been made by them or the group to which
they belong. This is the case with many wage-earners who are required to join a social
security scheme, for example.
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Each type of membership presents advantages and disadvantages, the main aspects of which
are contained in the table below. A health micro-insurance scheme may apply one or more
membership arrangements jointly.
Example: A scheme provides collective and automatic membership for the employees
of an enterprise with which it has concluded an agreement, and voluntary family-oriented
membership for the members of village-based groups.
Membership
arrangements
Advantages
Disadvantages
Collective and familyoriented membership
Reduces adverse selection
May reduce attractiveness

of the scheme
Establish agreements
with enterprises, or trade
unions in the case of
collective membership
Individual membership
Simplifies and increases

flexibility of membership
Increases risk of adverse

selection and fraud
Waiting period
Is often the only

arrangement possible
in the informal economy
Increases risk of adverse

selection
Waiting period
Reduces adverse selection
May lower members

sense of responsibility
(possibility of fraud and
abuse)
Verification of compliance
with obligation to join
scheme
Increases population
coverage rate
May increase
attractiveness of the
scheme
Voluntary membership
Automatic membership
Simplifies management
(collection of premiums at
group level)
Compulsory
membership
Eliminates adverse
selection
Compulsory membership is
often not applicable in the
informal economy
Verification of benefit
entitlement
Verification in order to limit

moral hazard, fraud
and abuse
Enrolment period: open or closed

When enrolment in the scheme is permitted at any time of the year, this is referred to as an
open enrolment period.
When enrolment is permitted for only a limited period of the year, this is referred to as a
closed enrolment period. In a closed enrolment period, the risk of adverse selection is reduced.
Since potential members cannot choose when to enrol, there is less risk that they will do so
at a time when they are planning to incur major health expenses. A closed enrolment period
also simplifies management since the effort required to collect premiums may be concentrated
in a short period of time, while that required to monitor enrolment and verify entitlement to
benefits presents less of a burden. This solution has been well-received in rural areas when it
is combined with the payment of premiums during harvest season. A closed enrolment period
makes it less necessary to establish a waiting period. However, it does constitute a constraint
for potential members and may decrease enrolment trends.
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ILO / STEP
Conditions of withdrawal and termination

Members must have the ability to withdraw from the health micro-insurance scheme.
Arrangements concerning withdrawal are related to those of membership. If membership
is collective, withdrawal is also collective; a group member cannot withdraw from the scheme
on an individual basis.
In order to protect itself from opportunistic behaviour on the part of members, the scheme
can establish strict rules regarding withdrawal from the scheme. For example, it may establish
a closed withdrawal period, according to which members or groups may submit requests for
withdrawal only during certain periods of the year, or only on the anniversary of their enrolment.
It may also establish somewhat restrictive procedures concerning requests for withdrawal, such
as requiring members to file requests one month before the desired date of withdrawal. Likewise,
the scheme may establish restrictive provisions concerning the termination of dependents by
the member. However, such measures are difficult to apply because they are contingent upon
being able to constraint members that did not abide by the rules, which often is not possible.
For its part, the scheme must reserve the right to terminate members and dependents in
certain circumstances, such as the repeated failure to pay premiums, cases of obvious fraud
or abuse, etc.
All these rules must be defined clearly in the internal rules or the contract.
The existence of membership fees and their amount

Membership fees are used to cover the cost of enrolment. They may be replaced by the sale
of the membership card, which is more acceptable to members. Membership fees are usually
paid upon enrolment on a one-time-only basis. However, some schemes require members to
pay these fees each time they renew their membership card.
The membership fee must not be so high as to discourage potential members from enroling
to the scheme.
Method of determining the premium for a family:

individual rate, global family rate, etc.
There are a variety of ways to determine premiums:
individual premiums: each person, whether member or dependent, pays the same premium
amount. Alternatively, each person pays a premium, but dependents premiums are lower
than those of members. Premiums may also be determined on the basis of individual characteristics, such as age, sex, state of health, place of residence or occupation;
global family premium: a single premium is paid, irrespective of the number of dependents
in the family;
intermediate types of premium: the single/family premium, with one premium level for
single persons without dependents and another for families, irrespective of the number of
dependents; or several premium levels depending upon the size of the family;
Example: An initial premium level for families of from one to three persons; a second
premium level for families with from four to nine persons; a third premium level for families
with more than nine persons.
income-based premiums: the premium level is proportional to income, with the possibility
of establishing a ceiling.
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The following table indicates the main advantages and disadvantages of the various methods
of determining premiums.
Methods of determining
premium
Individual premium
(each covered person
pays a premium)
Advantages
Disadvantages
Based on equality
among members
(no transfers between
large and small families)
Encourages adverse
selection (members give
priority for registration
to family members who
present a high risk of
sickness or maternity)
Waiting period
Closed enrolment
Identity checks:
membership cards with
photos of dependents
Encourages fraud
concerning the identity of
beneficiaries
Global premium per family,
not proportional to the
number of beneciaries
Creates solidarity
among families
Income-based premium
Creates solidarity
between rich and poor
Encourages abuse
(since members have
a tendency to register
a maximum number of
dependents)
Limit the number

of dependents
Verify compliance
with rules concerning
dependents
Very difficult to apply

in the informal economy
Philosophy of equity
and inclusion
Frequency of premium payments

Premiums may be paid in a variety of ways: daily, weekly, bi-monthly, monthly, quarterly or
by trimester, bi-annually, annually, etc. The collection of premiums is complicated by a high
payment frequency (daily, weekly, or bi-monthly).
The health micro-insurance scheme can:
choose a single payment frequency that applies to all members;
allow members to choose the payment frequency that suits them best.
The first option is easier to manage. In order to choose the most suitable payment frequency,
the data collected for the purposes of objective 8 To evaluate the target populations willingness to pay must be taken into account. These data indicate the payment frequency preferred
by the target population, and, in the case of an annual or bi-annual arrangement, the most
favourable months for payment of the premium.
For an example of how to present data on seasonal variations in willingness to pay, please
refer to:
u 4.8 Defining the schemes methods of operation, Seasonal nature of
income and willingness to pay, Volume 2, Chapter 4, page 160.
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ILO / STEP
Procedures for reviewing premiums

It is important to establish the frequency with which premium levels will be reviewed and to
define the indicators to be used to review these levels.
Examples of review frequency: Every year on the anniversary of enrolment; every
1st of January. Examples of indicators used to review premiums: claims ratio, inflation rate.
The existence and duration of the waiting period,

sometimes referred to as the observation or qualifying period
The waiting period is the time following enrolment during which members pay their premiums
but cannot yet benefit, or enable their dependents to benefit, from the services provided by
the health micro-insurance scheme.
This period is necessary in order to prevent opportunistic behaviour in persons who might
enrol in the scheme at a particular moment of need in anticipation of childbirth or a planned
surgical operation, for example and withdraw from the scheme once the need had been met.
The waiting period also has the effect of reducing the cost of the risk during the first year, which
can be taken into account by lowering premium levels over the entire length of the membership.
The waiting period is less useful when membership is collective, automatic or compulsory.
There is no standard length of time for the waiting period. If it is too short, it may fail to
prevent opportunistic behaviour and adverse selection; if it is too long, it may risk discouraging
enrolment. Besides the waiting period can vary from one covered health service to another.
In the case of maternity, the usual waiting period is from nine to 10 months. For other risks,
this period is usually shorter generally lasting from one to three months. The use of different
waiting periods, depending upon the risk involved, complicates management.
Procedures to follow in order to be eligible for coverage

Verification of scheme membership and entitlement to benefit
In order to be eligible for third-party payment, preferential agreements with health care providers or simply to obtain reimbursement, patients must be protected by the scheme, as a member
or dependent, and be up to date with their premium payments. Verification of scheme membership and entitlement to benefits may, depending upon the case, be carried out before, during
or after the utilization of health services.
Verification prior to or at the time health care is delivered may be carried out primarily:
in the case of a third-party payment mechanism, in which members and/or dependents are
not required to advance payment for health care expenses covered by the health microinsurance scheme;
in the case of schemes that have concluded agreements with certain providers concerning
fees, quality and/or treatment protocols.
Verification prior to or at the time care is delivered may be carried out by the health care provider.
Presentation of the membership card may be used as proof of membership in the scheme.
The guarantee letter * is a mechanism that may be used to prove that members are up to
date with premium payments. This is a certificate of entitlement that the patient must obtain
from the health micro-insurance scheme before obtaining care. This procedure which is quite
burdensome, particularly in the case of emergencies may be replaced by stamping the
membership card on each premium due date as proof that the premium was paid.
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Verification following the delivery of health care is carried out by scheme managers. After
receiving care, and in the absence of a third-party payment, the patient (member or dependent) submits an invoice to the health micro-insurance scheme specifying the services that
were delivered and the expenses incurred. Some schemes require the use of model invoices,
which are easier to read and contain all the information needed by the scheme to carry out
verification and issue reimbursement.
Other mechanisms conditioning coverage

For certain costly health services, the health micro-insurance scheme may set up a prior agreement mechanism, according to which members or dependents must submit an estimate to the
scheme before receiving care. If approved, the scheme issues an authorization of coverage.
This mechanism may be used to limit the schemes exposure to moral hazard and the risk of
over-prescription. The health micro-insurance scheme must call upon the services of a medical
adviser to examine requests for prior agreement.
The health micro-insurance scheme may set up a system of compulsory referral for health
care provided at the second or third level of the health pyramid (hospitalizations, specialist
treatments). The member or dependent is required to consult a provider at one level before
being able to obtain care from a provider at a higher level. This mechanism may be used to
reduce the consumption of costly, specialist treatments that are not absolutely necessary.
The following table summarizes the advantages and disadvantages of the mechanisms of
prior agreement and compulsory referral.
Mechanisms
Prior
agreement
Advantages
Reduces over-consumption
Disadvantages
Requires burdensome
administrative procedures
for beneficiaries
Resort to the services

of a medical adviser
Entails costs in that it requires the

services of a medical adviser
Compulsory
referral
Reduces consumption
of costly services
Reduces freedom of choice

Difficult to set up in schemes that
are already in operation
Presupposes a well-organized
health pyramid
Action 2: Define the principal management procedures

Once the main operating rules have been established (rules pertaining to membership, payment
of premiums, coverage and/or reimbursement) the steering committee may draw up a detailed
description of the schemes management procedures through the use of the role table method.
For an illustration of this method, please refer to:
u 4.8 Defining the schemes methods of operation, Devising a role
table, Volume 2, Chapter 4, page 161.
The role table method may be used to list all the activities necessary for the schemes management and operation and to verify that its human resources are sufficient and have been allocated optimally.
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ILO / STEP
Each operation carried out by the health micro-insurance scheme may be seen as a process
that includes a number of steps, requires a variety of skills and utilizes tools such as forms,
registers, computerized tools, etc.
The role table is drawn up, in this case, on the basis of the following: an analysis of the
principal management procedures, understanding of the various steps, identification of the
actors involved in each step, details concerning the duties and responsibilities of the actors, a
list of all tools and documents utilized (sheets, registers, computerized tools) and instructions
on how to use them.
The use of the role table provides actors with a better overall view of the schemes operation
and a better understanding of each persons role and the nature of his or her involvement. It
allows the actors, as a whole, to reach an agreement on the steps and rules that everyone will
be required to follow. It may be used in preparation for drafting the procedures manual and
designing record-keeping tools. Role tables may also be used for training officials. In addition,
they may serve as a basis for future agreements between the health micro-insurance scheme
and health care providers.
For more information on management procedures and accounting operations, please
refer to:
u Guide de gestion des mutuelles de sant en Afrique, (Management guide for mutual
health insurance organizations in Africa), Parts 3 and 4, ILO/STEP, 2003.
Action 3: Define the monitoring procedures

Various monitoring procedures may be identified in order to ensure the proper functioning of
the health micro-insurance scheme:
monitoring the application by the various actors of the operating rules and management
procedures helps to ensure that all upstream verifications have been carried out (before
accepting new members, before issuing reimbursements, etc.) and that record-keeping
devices have been properly utilized;
monitoring the risk portfolio allows for the timely detection of such phenomena as overconsumption and over-prescription, which can risk jeopardizing the financial equilibrium of
the scheme. It may also serve as a basis for adjusting premium levels;
budgetary monitoring is used to ensure that the budget estimate has been met. It consists
of comparing the estimate made at the start of the accounting period with the actual transactions registered during the accounting period. Discrepancies between the estimate and
the actual transactions necessarily entail making adjustments to activity programmes or
establishing a new budget;
cash flow monitoring is used to ensure that the health micro-insurance scheme will be able to
meet its obligations, in particular with respect to beneficiaries and providers, without having to
maintain too high a level of liquidity. It consists of comparing estimated cash receipts and expenditures against actual transactions. Discrepancies between estimates and actual transactions
necessarily entail making adjustments to cash flow management and activity programmes.
For more information on monitoring activities, please refer to:
u Guide de suivi et dvaluation des systmes de micro-assurance sant (Health MicroInsurance Schemes: Monitoring and Evaluation Guide), Volume 1: Methodology, Part II
Monitoring tools and procedures, ILO/STEP and CIDR, 2001.
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Cross-cutting action: Ensure that the operating rules make it possible

to limit the schemes exposure to insurance-related risks
The schemes operating rules must, to the extent possible, provide a means of limiting the
phenomena of adverse selection, moral hazard, over-prescription, fraud, abuse and catastrophic risks, and their impact on the scheme.
Some of these rules are presented in the summary table below:
Countering adverse selection and opportunism
Membership rules
Compensate for the enrolment of persons with a high risk of illness with
the enrolment of persons in good health by:
promoting family membership: as soon as one family member enrols, all
other family members must be registered; and/or
encouraging group membership
Example: All the members of an enterprise, trade union,
association, religious community, etc.
Promote automatic membership by concluding agreements with structured
groups, such as trade unions, enterprises, associations
Set a maximum age for first-time members or
Have first-time members who have reached a certain age pay a higher
premium
Enrolment period
Establish a closed enrolment period
Rules pertaining
to eligibility
for coverage
Introduce a waiting period whose length may depend on the services

covered
Rules pertaining
to withdrawal
or termination
Introduce restrictive provisions concerning withdrawal from the scheme

or termination of membership
Premiums
Introduce a global premium per family in order to avoid

the disproportionate registration of persons with a high risk of illness
Membership fee
Require the payment of an additional membership fee for members

failing to renew their membership by the established deadline (annual
membership renewal, for example)
Example: Nine months in the case of maternity
Countering moral hazard and the risk of over-prescription
Rules
and procedures
pertaining
to eligibility
for coverage
Introduce a prior agreement mechanism for costly and non-urgent health

services
Monitoring
procedures
Introduce procedures to monitor and control the health care consumption

of beneciaries as from the rst year
Other verication
procedures
Encourage social control and the development of a sense of responsibility

in each member and dependent
Introduce a system of compulsory referral to regulate access to care at a

higher and more costly level
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ILO / STEP
Countering fraud and abuse
Dependents
Establish a narrow denition of the family in order to limit abuse (such as

the enrolment of a large number of persons per family) in cases in which
the premium does not depend upon the number of beneciaries
Premiums
Introduce particularly rigorous identity checks in cases in which each

member of the family pays a premium
Limit the number of dependents when premiums remain the same
regardless of family size
Rules
and procedures
pertaining
to eligibility
for coverage
Utilize a guarantee letter in order to verify that members are up to date

with their premiums
Clearly indicate the beneciaries identity on the membership card: last
name, rst name, date of birth, photo id
Verify patient identication and entitlement when service is delivered,
especially when scheme members benet from third-party payment or
preferential fees
Verify patient identication and entitlement when reimbursing patients in
the case of direct payment for services
Limit the schemes exposure to nancial risks associated with catastrophic events,
such as epidemics or exceptionally high health expenses
Membership rules
Spread the risks over several geographic areas by accepting members

from various villages or districts
Rules pertaining
to eligibility
for coverage
Introduce a waiting period in order to build up nancial reserves as from

the rst year
Rules for insuring

coverage
Subscribe to a reinsurance or co-insurance plan
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Step 9: Prepare the schemes budget estimate

The purpose of this step is to verify the overall financial coherence of the future health microinsurance scheme.
The budget is based on estimates of the income and expenditure needed to carry out the
activities of the health micro-insurance scheme over the course of a defined period, generally
referred to as an accounting period. The budget must be balanced in terms of income and
expenditure.
Each quarter, a comparison of estimates against actual income and expenditures should
serve as a basis for determining what measures, if any, are needed to properly execute the
budget, and consequently, to maintain the financial equilibrium of the scheme.
The establishment of a budget estimate, which is carried out once the scheme has been
set up, involves:
1. Listing and evaluating the total estimated revenues of the scheme. These consist primarily
of premiums, membership fees, receipts from fee-based activities, donations, grants and
subsidies, if any.
2. Listing and evaluating the total estimated expenses of the scheme. These consist primarily
of the expenses associated with covered health services, the provision of ancillary health
services (health education classes, etc.), operating costs (payroll costs, office supplies, etc.)
and training and facilitation costs.
3. Establish the budget estimate and verify that financial equilibrium has been attained. The
establishment of the budget estimate is explained and illustrated in Volume 2.
u 4.9 Preparing the schemes budget estimate, Volume 2, Chapter 4,
page 163.
Readers may also consult:
health insurance organizations in Africa), Part 5, ILO/STEP, 2003.
4. If the budget is not balanced or if the contingency reserve item is too low, make adjustments:
increase premiums, seek new sources of financing, reduce certain operating costs.
It is not always necessary to use a participatory approach for establishing the budget. However,
it is preferable to include representatives of the target population if adjustments must be made,
particularly if premium levels must be increased.
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5. PHASE TO PREPARE FOR SETTING UP THE SCHEME
5.
Phase to prepare
85
Introduction
Objectives of the phase to prepare for setting up the scheme
The last phase of the feasibility study consists of drafting a report based on the set of assumptions and outcomes of the various phases already completed. This report formalizes all the
various aspects of the feasibility study: the course of action taken, the steps followed and
results obtained in the data collection, and the decisions reached. The feasibility study report
provides an opportunity to verify the overall coherence of the scheme before the start-up of
operations.
This last phase also consists of setting down in the reference documents and tools all the
decisions made during the preceding phase. These documents and tools are necessary for
starting up operations. They include: the action plan, statutes, organizational chart, internal
rules (in the case of a mutual organization) or contracts, management tools and documents,
procedures manual and agreements with health care providers.
Note: This is not an exhaustive list of the documents and tools the scheme will need to
implement, manage and monitor its operations all documents relating to accounting and
to budget and cash-flow monitoring, for example, have been omitted but rather those
directly related to the decisions made during the feasibility study, and which it is thus logical
to produce at the end of the study.
For a detailed description of all the documents and tools needed by the scheme, please
refer to:
health insurance organizations in Africa), ILO/STEP, 2003 and Guide de suivi et dvaluation
des systmes de micro-assurance sant (Heath micro-insurance schemes: monitoring and
evaluation guide), ILO/STEP and CIDR, 2001.
The phase of preparation culminates in the official establishment of the scheme. At that point,
the steering committee is dissolved and responsibility is handed over to the decision-making,
executive and supervisory bodies charged with representing and managing the health microinsurance scheme.
Chapter contents
This chapter provides a brief description of the feasibility study report, as well as of the various
reference documents and tools mentioned above.
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ILO / STEP
The feasibility study report

The feasibility study report provides a summary of the process involved in carrying out the study
and its outcomes. It is drafted by the steering committee on the basis of the set of assumptions
and outcomes of the various phases of the feasibility study.
Note: The report is usually prepared at the conclusion of the feasibility study, and thus,
after the schemes reference documents and tools have been prepared. However, in order
to stress its importance, the feasibility study report will be discussed before these documents.
There are several reasons why it is important to prepare such a report.
First reason: It describes the course of action taken during the feasibility study, including
the data-collection procedure, the decision-making process and the design of the scheme. In
particular, the report specifies why certain data were collected rather than others, why certain
options were chosen over others, etc. Keeping a record of the procedure followed and the
rationale behind the decisions reached helps to prevent calling the schemes strategy into question from one day to the next, or selecting, on the basis of insufficient analysis, options which
had previously been rejected.
Second reason: The report also assembles the collected data. These data may be used to
prepare studies concerning, inter alia, the health, economic or social situation that existed prior
to setting up the scheme. They may also be used to carry out studies concerning the schemes
impact, in particular, on the frequentation of the health facilities, the means of treatment sought
in response to illness, financial difficulties experienced by households in dealing with sickness
or maternity, and, lastly, to make new decisions when expanding a scheme, without having to
organize another full-scale data collection.
Example: If the schemes managers choose to extend coverage to include new services,
they can give preference to the services that were considered to be a priority by the target
population during the feasibility study. Nevertheless, it is important regularly to conduct new
polls or surveys of the target population in order to ensure that the health micro-insurance
scheme is still in line with the needs and expectations of the target population.
Third reason: Preparing a report compels the steering committee to formalize all the components of the feasibility study and to verify the overall coherence of the scheme before starting
up its operations.
The report should not be too long. However, it is imperative that certain key data be
included: the process of carrying out the study, including its steps and milestones; the methods
of collection and facilitation utilized; the various data-collection, calculation and data-presentation tools utilized (data-entry forms, interview forms, survey questionnaires, premium calculation
charts, role tables, etc.); figures for a number of reference indicators, such as the frequentation rate; the initial assumptions relating to the scheme, such as its budget estimate; and the
statistics used as an input for calculating premiums (probabilities and/or frequencies, quantities
consumed and unit costs).
For examples of both a chronological and a thematic outline for preparing the feasibility
study report, please refer to:
u 5.1 Sample outlines of the feasibility study report, Volume 2, Chapter 5,
page 169.
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87
The action plan

The action plan is a summary report used to plan and to describe all the necessary actions for
starting up or expanding a health micro-insurance scheme. The steering committee may adopt
a participatory approach that associates representatives of the target population in efforts to
define, in particular, the strategy for setting up or expanding the scheme.
Drawing up an action plan consists of:
1. Defining (in some cases, using a participatory approach) the strategy for setting up or
expanding the scheme. This consists mainly of replying to the following questions:
What areas (or groups) will the scheme cover?
When will the start-up/expansion take place?
How many promotional campaigns are planned?
What are the objectives of the promotional campaigns in terms of the number of
enrolments?
How will the start-up/expansion be carried out?
2. Drafting a document that formalizes the replies to each of these questions and drawing
up the corresponding programme. For a sample action plan, please refer to:
u 5.2 Sample plan of actions, Volume 2, Chapter 5, page 174.
The statutes and the organizational chart

The statutes constitute a reference document that describes, in particular, the schemes purpose
and organization, and the relationship between the various internal bodies and their respective functions.
The statutes fulfil several roles:
1. They establish the objective of the scheme, as well as the rules pertaining to its organization
(relationship between the internal bodies, tasks of the various actors) and its financing (in
particular, rules for reviewing premiums at the end of the accounting period).
2. Once they are approved by the competent authorities, the statutes confer juridical personality * upon the scheme. The scheme can then open a bank account, or conclude agreements with health care providers or contracts with insured persons (for schemes other than
mutual health organizations).
3. They determine the rhythm of the schemes activity, e.g. the frequency with which general
assemblies are held, annual reports and financial statements are submitted and approved,
officers stand for re-election, etc.
4. Depending upon the legal status of the scheme, the statutes may determine the rights and
obligations of members (in the case of a mutual organization) or of investors (in the case
of a commercial enterprise).
The broad features of the statutes are conditioned by the institutional and legal framework
within which the health micro-insurance scheme operates. There are two possible situations.
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ILO / STEP
First situation: In some countries, there are laws governing mutual health organizations
and/or insurance companies. These laws establish, inter alia, model statutes to which all health
insurance schemes must conform. In Mali, for example, the mutual benefit insurance code
establishes model statutes pertaining to mutual organizations.
Second situation: No specific legislation exists. Health micro-insurance schemes adopt
statutes that conform to existing laws and regulations governing associations, cooperatives,
commercial enterprises, etc.
Drafting the statutes generally involves several steps. At the conclusion of the feasibility study,
the steering committee assembles and consolidates the rules of organization and operation
that have been decided upon and prepares draft statutes in conformity with current legislation.
The draft statutes are then presented to the schemes decision-makers, who adopt the statutes
after making any necessary changes. The adoption of the statutes allows for the establishment
of the internal bodies, the election of officers, the legal recognition of the scheme through its
registration with the competent authorities and the start-up of its activities. Any subsequent
amendment to the statutes must be approved by the schemes decision-making body before
being registered with the competent authorities. In the case of a participatory scheme, it is
sometimes necessary to convene an extraordinary general assembly.
The amendment process may be quite complicated. For this reason, it is prudent to include
only the most essential aspects of organization and operation in the statutes. Other documents
which are easier to amend, such as the internal rules or insurance contracts, may complement
the statutes.
The statutes may also be complemented by the organizational chart. This is a diagram
representing the various internal bodies involved in administering the health micro-insurance
scheme and their hierarchical relationships. The organizational chart provides a graphic overview of the distribution of responsibilities within the scheme.
For an example of how to draft statutes, please refer to:
health insurance organizations in Africa), ILO/STEP, 2003, Part 2, Chapter 3, which
describes the statutes of the mutual organization of cycle taxi owners of Kenlodar.
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The internal rules or the insurance contract

The internal rules (in the case of a mutual organization)
Only health micro-insurance schemes that are set up and managed by and for their members
(mutual organizations) have internal rules.
Note: In mutual organizations, members participate in management through the election
of officers and the general assembly. Mutual organizations are the collective property of
their members; the latter are at once the insurers and the insured. For this reason, there is no
formal contract governing the relationship between the mutual organization and its members
(since one cannot conclude a contract with oneself). Rather, this relationship is governed
by the rights and obligations set forth in the statutes and internal rules of the organization.
The internal rules complement the statutes. They clarify a certain number of the mutual organizations methods of operation.
The internal rules do not constitute a necessary document for obtaining the official recognition of the mutual organization. As its name indicates, it is an internal document that provides
a detailed description of the rules of organization and operation. The internal rules therefore
constitute a reference document that serves to establish the responsibilities of the members
and the internal bodies, and to ensure the proper management and supervision of operations.
Unlike the statutes, amendments to the internal rules do not require undertaking formalities
before the authority registering the scheme.
The internal rules have the same binding nature as the statutes, provided, however, that
their establishment is stipulated in the statutes and that members are aware of their content at
the time of enrolment. It is for this reason that enrolment in a mutual organization consists of
accepting the provisions of the statutes and the internal rules.
Several steps are involved in drafting the internal rules. At the conclusion of the feasibility
study, the steering committee prepares draft internal rules based on the consolidated list of
decisions concerning the scheme: rules of organization and operation, provisions concerning
insurance coverage and services, provisions concerning payment of premiums, etc. This draft is
then approved by the constituent general assembly of the mutual organization. Any subsequent
amendment to the internal rules must be approved by a general assembly.
For an example of how to draft internal rules, please refer to:
health insurance organizations in Africa), ILO/STEP, 2003, Part 2, Chapter 3, which
describes the internal rules of the mutual organization of cycle taxi owners of Kenlodar.
The insurance contract

Some health micro-insurance schemes conclude contracts with their members. This includes
most schemes managed by health care providers, as well as commercial insurance* schemes.
In most cases, the members are not co-owners of the scheme but are merely its clients.
The insurance contract is the document that establishes the mutual obligations of the members
and the health micro-insurance scheme, including the terms and conditions of membership, withdrawal, termination, insurance coverage and services, and the payment of premiums. Insurance
contracts are clearly defined, limited in time, renewable and revocable. It is by virtue of the
contract that entitlement to benefit is established.
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ILO / STEP
An insurance contract is binding to the extent that membership in the scheme is contingent upon
acceptance of its provisions. It is signed by each member (in the case of an individual contract)
or by a group of members (in the case of a group contract*). Individual contracts are generally standardized, that is, they are identical for all members; whereas group contracts are
often customized, meaning that they may vary from one organization to another. Regardless
of whether a contract is individual or collective in nature, individuals subscribing to them are
bound not by the scheme but rather by the contract.
Note: Mutual organizations may conclude group agreements with organizations (such
as cooperatives, trade unions or enterprises) in which scheme membership is automatic,
or even compulsory, for the members of these organizations. Even in such cases, membership in the mutual organization or association remains an individual undertaking in which
each member subscribes to the statutes and the internal rules. The group agreement simply
allows for streamlining certain administrative tasks, such as group collection of premiums,
group submission of claims, etc.
The process of drawing up insurance contracts is simpler than that of drafting internal rules, since
the contracts do not have to be approved by the general assembly (if one exists), but merely
by the legal representative of the scheme, such as the president or general manager.
For a contract framework, as well as a sample individual contract, please refer to:
u 5.3 Contract framework and sample health insurance contract *,
Management tools and documents

The steering committee may consider setting up a management system that is entirely manual. It
may also rely upon a computerized management system, or a mixed system using, for example,
paper-based record-keeping devices at the schemes branches and a computerized tool at
the main office. In such cases, the data entered at the branch level are submitted regularly to
the central management department, which then records them electronically.
Management tools and documents are prepared on the basis of the operating rules established during the scheme design phase. For obvious reasons, it is important for the main documents and tools to be ready before launching the scheme. Moreover, it is indispensable for
all actors concerned to be trained in how to use these various devices.
For paper-based devices, preparation consists of drafting the documents and duplicating
them: printing blank membership cards, model invoices, registration forms, etc. For computerized tools, preparation consists of installing a ready for use management software or designing
and developing a tailored application.
Tools and documents pertaining to membership management

Tools and documents pertaining to membership management should enable managers to
register members and their dependents, monitor the covered population and verify members
and dependents entitlement to benefits.
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In a manual or paper-based management system, these tools and documents consist of

sheets, registers and cards.
Examples: The membership sheet, membership register, membership monitoring chart
and membership card.
In a computerized management system, certain sheets and registers are replaced by computer
files known as tables.
Examples of tools and documents
Functions
Manual system of management
Computerized system
of management
Register members and their

dependents
Membership sheet
Membership sheet
Monitor the number of members

and dependents
Membership register
Beneficiary table
Membership monitoring chart
Automatic calculation
of indicators
Enrolment transactions table
Manual calculation of indicators:

number of members, size of families, etc.
Verify patients benet entitlement
in the case of third-party payment
Membership card
Membership card or
Printout of members
and dependents
For a detailed description of the tools and documents utilized in a manual system of management, please refer to:
health insurance organizations in Africa), ILO/STEP, 2003, Part 3, Chapter 1.
Tools and documents pertaining to premiums management

Tools and documents pertaining to premiums management should enable managers to register
premium payments, detect payments in arrears and monitor premium transactions.
Functions
Computerized system
of management
Record premium payments or

payments in arrears for each
member
Premiums sheet
Premiums sheet
Monitor premium payments
Premiums register
Reminder monitoring table
Membership fee and premium

monitoring chart
Automatic calculation
of indicators
Membership fee and premium

payment table
Manual calculation of indicators: level

of arrears, premiums collection rate
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ILO / STEP
For a detailed discussion of the tools and documents used in a manual system of management,
please refer to:
Tools and documents pertaining to claims management

Tools and documents pertaining to claims management should make it possible to avoid the
occurrence of certain insurance-related risks, such as fraud, over-consumption of health care,
etc. However, they must not be so numerous or so complicated as to cause members to experience undue delays in obtaining care.
The tools and documents utilized may differ depending upon whether the scheme sets up a
third-party payment mechanism or a mechanism to reimburse members following the delivery
of health services (see table below).
Functions
Computerized system of management
Third-party payment mechanism

Check entitlement
before care is provided
Order and issue payment to providers
Guarantee letter or authorization of coverage

Treatment certicate
* and consolidated invoice * of provider
Reimbursement mechanism
Order and issue reimbursement
to members
Receipt or individual invoice
All cases (third-party payment, reimbursement)

Check kind and cost of most
expensive services
Request for prior agreement
Register information concerning claims
Claims register
Monitor utilization of health services
Claims monitoring chart
Claims table
Manual calculation of indicators:

average unit cost, quantity
consumed, etc.
Automatic calculation of indicators
For a detailed description of the tools and documents used in a manual system of management, please refer to:
VOLUME 1
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The procedures manual

The procedures manual is a document that describes, for each management operation, the
activities to be performed, the tasks of the actors involved and the management tools and
documents to be used.
Management procedures must be defined for the following operations: enrolment, changes
in membership, withdrawal, collection of membership fees, billing of premium, requests for
prior agreement, reimbursement of insured persons in the absence of a third-party payer and
payment of providers under a third-party payment mechanism.
Each operation has its rules for recording data, checks to be performed (e.g. before settling
claims, the insured persons entitlement to benefit must be checked) and rules for issuing documents or payment orders.
The procedures manual may also describe the rules to be followed for monitoring membership, premiums and claims. In this case, it explains the checks that are to be performed, the
indicators to calculate, the measures to be taken to deal with discrepancies and the frequency
of checks and calculations.
The procedures manual fulfils several functions: (1) it serves as a reference, helping to
prevent omissions; (2) it encourages actors to become familiar with each others tasks; and
(3) it constitutes a basic document for training the new managers and staff of health microinsurance schemes.
The procedures manual, which is drafted at the conclusion of the feasibility study, is not a
static document. Rather, it should evolve; in particular, by keeping pace with changes to the
scheme and its development.
The procedures manual may include:
a reminder of the objectives of the health micro-insurance scheme and, if necessary, the
main articles of the statutes and internal rules dealing with management procedures;
for each operation, a description of the activities involved, the tasks of the actors concerned
and the management tools and documents to be used;
rules for monitoring operations in each management division (membership/premiums/
claims): checks to be performed, indicators to calculate, measures to be taken to deal with
discrepancies, and the frequency of checks and calculations.
For a detailed description of management and monitoring procedures, please refer to:
health insurance organizations in Africa), ILO/STEP, 2003, Part 3, Chapters 1- 4.
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ILO / STEP
Agreements with health care providers

These are contracts concluded between the health micro-insurance scheme and a health care
provider describing the mutual obligations of the two parties and, more precisely, formalizing
the mechanisms of coverage (with or without a third-party payer), payment (global payment,
fee-for-service, contractual fees), verification and standards of quality (treatment protocols,
quality objectives to be met).
The contents of the agreements are defined little by little during the scheme design phase
by the steering committee, which works in close collaboration with the managers of the health
facilities concerned.
Note: Some schemes that reach agreements with health care providers do so without
drawing up written contracts. It is therefore not necessary to draft a contract in order to
establish an agreement with a provider. Nevertheless, written agreements do have the
advantage of making the terms of understandings more specific and of serving as a reference in the event of a dispute, if any of the parties fails to honour its obligations.
Depending upon circumstances, schemes may draft either a standard agreement that is
common to all health facilities or several agreements (one for each health facility). The use of
standard agreements reduces drafting time and simplifies efforts to monitor compliance with
agreements and to deal with amendments.
Agreements must be ratified by the decision-making bodies of the health micro-insurance
scheme. As far as health care providers are concerned, the ratification of the text of an agreement may involve the managers, management committees or regulatory bodies of the health
facilities. Finally, the text of the agreement may be approved by other actors (support organizations, unions of mutual organizations, etc.), which may act as guarantors or assist in the
contractualization process.
Generally speaking, the signatories of the agreement are, in the case of the health microinsurance scheme, the president or general manager, and in the case of the health facility, the
manager in charge or if he or she does not have the authority his or her superior (official
of the regulatory body).
For an outline of an agreement with a health care provider, as well as a sample agreement,
please refer to:
u 5.4 Agreement framework and sample agreement with a health
care provider, Volume 2, Chapter 5, page 182.
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95
INDEX OF VOLUME 1 AND 2
Index of Volume 1 and 2
Volume 1
Volume 2
Ability to pay
59, 61
1, 72
Adverse selection
59, 63, 75, 78, 81
1, 146-147, 149
Agreement
94
2, 55, 182-188
Benefit
48-49
3, 7, 14-15, 129-142, 151-153,

180-181
Benefit plan
48-49, 52-54
3, 126, 148-149
Benefit/Premium combination
59-63
2, 148-149
Budget
26, 83
33, 117, 163, 167
Contract
89, 90
10, 178-182
Co-payment
52, 61, 63
5, 129-130, 148, 150
Data-collection
29-42
28, 35-36, 58-73
Deductible
--
14-15, 130, 139-142, 152-153
Dependent
73, 76-77
5, 14, 178-180
Enrolment (or membership)
71-76
15, 19, 161-167, 179-180
Feasibility study
7-12, 24-25
Feasibility study report
24, 85-86
169-173
Flat-rate benefit
52
7, 129, 138-139
Frequency
34-35, 56-57, 60
7, 17, 46, 50-52, 60-61,

70-71, 102-107, 143
Health care provider
9-10, 33-34, 49-50, 64, 67,

94
10, 41-42, 55-56, 64-70,

78-80, 113-116, 127, 158-159
Health service
17, 33, 46-48, 52
11, 24, 43-44, 64, 71-72,

80-86, 122-125
Internal rules
69, 89-90
12
Interview
37, 40
63, 68
Level of coverage
52-54, 56, 59
13, 133, 135, 137-140, 142
Management
Management/
Operating costs
Management procedures
Management tools
and documents
-55, 58
13, 58
17, 53, 108, 117, 166-167
69-71, 79-80, 93
80, 85, 90-93
19, 161-162
92, 95, 99, 107, 161-162, 176
Member
72-74
14, 161-162, 178-182
96
ILO / STEP
Volume 1
Volume 2
Membership (or enrolment)
71-76
14-15, 161-167, 179-180
Method of payment
48-52, 64-67
7-8, 15, 55-56, 108, 116,

155, 158-159
Moral hazard
59-60, 62-63, 66-67, 80-81
15, 146-147, 149
Over-prescription
59-60, 62-63, 66-67, 80-81
15, 20, 146-147
Percentage co-payment
52, 61-63
17, 101-102, 129, 136-138
Plan of actions
85, 87
174-176
Premium
17-19, 52-55, 61, 76-78
2, 17, 45, 53, 87, 108-113,

129-157
Prior agreement
79, 92
18, 186
Probability
18-19, 34, 56-57
18, 46-48, 60-61, 70-71,

87-93, 131-132, 147-148,
151-153
Pure premium
53-58
17, 19, 46, 87-107, 131-147,

149-155, 166-167
Risk
17-19, 57, 60-61, 66-67,

81-82
3, 20, 29, 124, 146-147
Safety loading
55, 57
17, 147-149, 153-155, 166-167
Sample (population, patients)
40
20, 61-63, 73, 94, 97-98
Scenario
53-54, 59-60, 62
148, 150
Statutes
69, 85, 87-89, 93
22
Steering committee
19-22, 40, 85
22, 58-59, 61, 63, 66, 68,

73
Subsidy
10, 59
55, 117, 157, 163, 165
Survey
38-40
68-73, 87-90, 102-104, 131,

143
Target population
9, 17-19, 27, 33, 40, 45-46
23, 28, 38-40, 43-45, 75, 77,

121-122
Third-party payment
51, 64-65, 67, 92-94
23, 45, 55, 86-87, 128, 144,

155-156, 159, 166-167, 181
Treatment protocol
64-65, 94
24, 55-56, 158-159, 187
Waiting period
25, 75, 78
25, 145-146, 166-167
Willingness to pay
59, 61, 77
25, 54, 72, 110-113, 157, 160
VOLUME 1
BIBLIOGRAPHY
Bibliography
Henriet, D. ; Rochet, J.-C. 1991 : Micro-conomie de lassurance, Economica, Paris.

Henry, A. ; Monkam-Daverat, I. 2002 : Rdiger les procdures de lentreprise,
Editions dorganisation, Paris, 3rd edition.
ILO (International Labour Organisation). 2002. Social security : a new consensus, Geneva.
ILO/STEP. 2003. Guide de gestion des mutuelles de sant en Afrique, Geneva.
. Forthcoming. Guide to setting up micro-insurance schemes.
; CIDR. 2001. Guide de suivi et dvaluation des systmes de micro-assurance sant,
Geneva.
Quivy, R. ; Van Campenhoudt, L. 1995 : Manuel de recherche en sciences sociales,
Dunod, Paris, 2nd edition.
Petauton, P. 2000. Thorie de lassurance dommages, Dunod, Paris.
Simonet, G. 1998. La comptabilit des entreprises dassurance, Les fondamentaux
de lassurance, Comptabilit-Gestion, LArgus Editions, Paris, 5th edition.
97

Volume 2: Tools
The Strategies and Tools against social Exclusion and Poverty global programme (STEP) of
the International Labour Organization (ILO) is active in two interdependent thematic areas: the
extension of social protection to the excluded and integrated approaches to social inclusion.
STEP supports the design and dissemination of innovative systems intended to extend social
protection to excluded populations, particularly in the informal economy. It focuses in particular
on systems based on the participation and organization of the excluded. STEP also contributes
to strengthening links between these systems and other social protection mechanisms. In this
way, STEP supports the establishment of coherent national social protection systems, based on
the values of efficiency, equity and solidarity.
STEPs action in the field of social protection is placed in the broader framework of combating
poverty and social exclusion. It gives special emphasis to improving understanding of the phenomena of social exclusion and to consolidating integrated approaches at the methodological
level which endeavour to reduce this problem. STEP pays special attention to the relationship
between the local and national levels, while at the same contributing to international activities
and agenda.
STEP combines different types of activities: studies and research; the development of methodological tools and reference documents, training, the execution of field projects, technical
assistance for the definition and implementation of policies and the development of networking
between the various actors.
The programmes activities are carried out within the Social Security Department of the ILO,
and particularly its Global Campaign on Social Security and Coverage for All.
STEP Programme
CH-1211 Geneva 22
Switzerland
Tel: (+41 22) 799 6544
Fax: (+41 22) 799 6644
Email: [email protected]
http://www.ilo.org/step

Volume 2: Tools
International Labour Office Geneva
Copyright International Labour Organization 2005

First published 2005
Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless,
short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction
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Reproduction Rights Organizations, may make photocopies in accordance with the licences issued to them for this purpose.
ILO / STEP
Health Micro-Insurance Schemes: Feasibility Study Guide
Geneva, International Labour Office, Strategies and Tools against social Exclusion and Poverty (STEP) Programme, 2005
ISBN Volume 1: 92-2-116571-X (print)
ISBN Volume 2: 92-2-116572-8 (print)
ISBN Volume 1 and 2: 92-2-116573-6 (print)
ISBN Volume 1 and 2: 92-2-117471-9 (web pdf)
Guide, health insurance, mutual benefit society, management, evaluation. 02.03.2
Also available in French: Guide pour ltude de faisabilit de systmes de micro-assurance sant
(ISBN volume 1: 92-2-216571-3, ISBN volume 2: 92-2-216572-1, ISBN volumes 1 and 2: 92-2-216573-X), Geneva, 2005
ILO Cataloguing in Publication Data
The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material
therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status
of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers.
The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication
does not constitute an endorsement by the International Labour Office of the opinions expressed in them.
Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour
Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval.
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International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge
from the above address, or by email: [email protected]
Visit our website: www.ilo.org/publns
Cover
Typesetting
Printed in Switzerland
BIP
WEI
SRO
Acknowledgements
(STEP) Programme of the Social Protection Sector of the International Labour Organization. It
is based on the work of national programme experts and the collaboration of numerous actors
involved in the development of health micro-insurance schemes. The STEP Programme warmly
acknowledges their support and contributions.
If you wish to do any comments, observations, to share the findings of your research works,
or to obtain further information, please contact:
ILO/STEP
CH-1211 Geneva 22, Switzerland
Phone (41 22) 799 65 44
Fax (41 22) 799 66 44
E-mail: [email protected]
Internet: www.ilo.org/step
VOLUME 2
FOREWORD
VII
Foreword
Volume 2 provides tools that may be utilized during the various phases and steps involved in
carrying out a feasibility study: definitions, practical examples, lists of questions, lists of information, sample data-collection materials, detailed methods of calculation, sample outlines and
examples of drafted documents.
The purpose of Volume 2 is to serve as illustration. Thus, users may not need some of the
tools that are provided. Alternatively, they may choose to personalize these tools or create
new ones.
Volume 2 is divided into chapters. Chapter 1 contains a glossary of terms. Chapter 2 serves
as support for Chapter 2 of Volume 1; it provides tools that may be used during the initial
phase to prepare for and plan the feasibility study. Similarly, Chapter 3 serves as support for
Chapter 3 of Volume 1 by providing tools that may be used during the data-collection and
analysis phase. Chapter 4 supports Chapter 4 of Volume 1 by offering tools to design the
health micro-insurance scheme. Lastly, Chapter 5 of Volume 2 provides support for Chapter 5
of Volume 1 by providing tools that may be used to prepare for setting up the scheme.
Volume 2 was not designed to be read in linear fashion from beginning to end. It was
constructed along the lines of a tool box that users could browse through to find the tools
they needed, depending on their current concern. Users may quickly look up a specific item
of information in the table of contents or the index. They may also turn to Volume 2 for a fuller
description of certain aspects of Volume 1, by following the links in Volume 1 to the corresponding sections of Volume 2.
VOLUME 2
IX
TABLE OF CONTENTS
Table of contents
List of acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIII

1.
Technical glossary
. . . . . . . . . . . . . . . . . . . . . . . . . .
2.
Tools used to prepare for and plan the feasibility study . . . . . 27
2.1
Discussion sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
2.2
Planning the feasibility study . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
2.3
Preparing the budget estimate for the feasibility study . . . . . . . . . . . . . .
33
3.
Tools used to carry out the data collection and analysis . . . . . 35
3.1
Lists of information to be collected by objective . . . . . . . . . . . . . . . .

3.1.1 Lists of information to be collected for objective 1:
To understand the context. . . . . . . . . . . . . . . . . . . . . . . .
To establish a basis for selecting the target population . . . . . . . .
To establish a basis for selecting the partner health care providers . .
To establish a basis for selecting the health services to be covered . .
To establish a basis for determining methods of coverage:
direct payment or third-party payment . . . . . . . . . . . . . . . . .
To establish a basis for calculating premiums based
on the health expenses of the target population . . . . . . . . . . . .
on the operating costs of health facilities . . . . . . . . . . . . . . . .
To evaluate the target populations willingness to pay . . . . . . . . .
To establish a basis for negotiating with health care providers,
negotiating with transport operators, collaborating with prevention
programmes, and obtaining information on public aid . . . . . . . . .
To establish a basis for defining the organization and operation
of the scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2
35
36
38
41
43
45
45
53
54
55
57
Sample data-collection materials . . . . . . . . . . . . . . . . . . . . . . . . .

3.2.1 Sample data-entry form for collecting data from the annual reports
and registers of health facilities . . . . . . . . . . . . . . . . . . . . . . .
58
59
ILO / STEP
3.2.2 Sample tracking form for a sample of patients . . . . . .

3.2.3 Sample interview form for health care staff and managers
of health facilities . . . . . . . . . . . . . . . . . . . . . .
3.2.4 Sample interview form for health authorities . . . . . . . .
3.2.5 Sample household survey questionnaire . . . . . . . . . .
. . . . . . . .
61
. . . . . . . .
. . . . . . . .
. . . . . . . .
63
66
68
3.3 Size of sample for conducting household surveys . . . . . . . . . . . . . . . . .
73
3.4 Examples of processing collected data to produce usable information . . .

3.4.1 Example of processing the data collected for objective 1:
To understand the context . . . . . . . . . . . . . . . . . . . . .
To establish a basis for selecting the target population . . . . . .
To establish a basis for selecting the partner health care providers
To establish a basis for selecting the health services to be covered
direct payment or third-party payment . . . . . . . . . . . . . . .
on the health expenses of the target population . . . . . . . . . .
on the operating costs of health facilities . . . . . . . . . . . . . .
To evaluate the target populations willingness to pay . . . . . . .
negotiating with transport operators, collaborating with prevention
programmes, and obtaining information on public aid . . . . . . .
To establish a basis for defining the organization and operation
of the scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .
73
. . .
75
. . .
75
. . .
78
. . .
80
. . .
86
. . .
87
4.
. . . 108
. . . 110
. . . 113
. . . 117
Tools used to design the health micro-insurance scheme . . . . . 119
4.0 Working group sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

4.1 Selecting the target population. . . . . . . . . . . . . . . . . . . . . . . . . . . 121
4.2 Pre-selecting the health services to be taken into account
in the various benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
4.3 Selecting the partner health care providers . . . . . . . . . . . . . . . . . . . . 127
4.4 Selecting the services and health care providers to include
in a third-party payment mechanism . . . . . . . . . . . . . . . . . . . . . . . . 128
4.5 Selecting benefit plans and calculating the corresponding premiums . . . . . . . 129
4.5.1 List of co-payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
VOLUME 2
TABLE OF CONTENTS
4.5.2(a) Calculating the pure premium based on the health expenses

of the target population . . . . . . . . . . . . . . . . . . . . . . . . .
4.5.2(b) Calculating the pure premium based on the operating costs
of the health facilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5.3
Adjusting the pure premium . . . . . . . . . . . . . . . . . . . . . . .
4.5.4
Calculating the safety loading . . . . . . . . . . . . . . . . . . . . . .
4.5.5
Sample premium calculation chart . . . . . . . . . . . . . . . . . . . .
4.5.6
Performing premium calculations (practical example) . . . . . . . . . .
4.5.7
Calculating willingness to pay . . . . . . . . . . . . . . . . . . . . . .
XI
131
143
144
147
148
149
157
4.6 Preparing negotiations or agreements with partner organizations

(health care providers and others) . . . . . . . . . . . . . . . . . . . . . . . . . 158
4.7 Defining the schemes organization . . . . . . . . . . . . . . . . . . . . . . . . 159
4.8 Defining the schemes methods of operation . . . . . . . . . . . . . . . . . . . 160
4.9 Preparing the schemes budget estimate . . . . . . . . . . . . . . . . . . . . . . 163
5.
Tools used to prepare for setting up the scheme . . . . . . . . . 169
5.1 Sample outlines of the feasibility study report . . . . . . . . . . . . . . . . . . . 169

5.2 Sample plan of actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
5.3 Contract framework and sample health insurance contract . . . . . . . . . . . . 177
5.4 Agreement framework and sample agreement with a health care provider . . . 182
VOLUME 2
LISTE OF ACRONYMS
List of acronyms
CIDR
Centre International de Dveloppement et de Recherche
DTP1
1st dose of diphtheria-tetanus-whooping cough vaccine
HMIS
ILO
ILO
International Labour Organization
INN
International non-proprietary name
MU
Monetary unit
NFCP
National Federation of Coffee Producers
NGO
Non-governmental organization
NPMC
Non-profit-making Corporation
PNC
STEP
Strategies and Tools against social Exclusion and Poverty
XIII
VOLUME 2
1. TECHNICAL GLOSSARY
1.
Technical glossary
Ability to pay
The amount a person is capable of paying in order to benefit from insurance coverage. A
persons ability to pay is always equal to or greater than his or her willingness to pay.
see Willingness to pay
Access to health care or health services

Refers to the possibility that exists for people to make use of health care or health services. In
order for everyone to enjoy access to health care or health services, steps must be taken to
remove barriers, particularly economic, financial or cultural barriers, as well as those relating to
the supply of health care when the latter is either non-existent or overburdened (and therefore
inadequate to meet demand). Setting up a health micro-insurance scheme facilitates access
to health care and services by removing certain financial barriers, but does not always resolve
problems of geographic or cultural accessibility.
Geographic accessibility
Access to health care of acceptable quality by the inhabitants of a village may be limited by the
distance between the village and health care providers, or by a lack of organized transport.
Cultural accessibility
Access to health care and the selection of treatment options may, to some extent, be influenced
by social perceptions, attitudes towards illness and maternity, or family and community strategies for dealing with illness and maternity.
Accounting period
Refers to the period for which financial statements are prepared. The accounting period is usually determined by law and, in many cases, corresponds to one calendar year.
Adverse selection
A phenomenon according to which persons with a greater-than-average risk of illness or maternity enrol in a health micro-insurance scheme in a higher proportion than that of their share of
the target population and/or choose the highest levels of coverage. When individuals have
no say about whether to be insured or at what level of coverage, adverse selection does not
exist. Such is the case when membership is automatic and schemes offer a single level of coverage. The existence of adverse selection may jeopardize a schemes financial viability given
that benefit-related expenses risk exceeding forecasts, since they are based on estimates of
consumption for the overall target population.
Synonym: Anti-selection
ILO / STEP
Agreement between a health micro-insurance scheme and a health care provider

An agreement concluded between a health micro-insurance scheme and a health care provider that specifies the services to be covered, fees to be applied, standards of quality to be
respected and the amount and methods of payment for services rendered. Such agreements
must enable the persons protected to enjoy quality health care at a pre-established and
reasonable price.
Anti-selection
see Adverse selection
Association
A group of persons who voluntarily join together for a particular purpose or to defend common interests. Contrary to commercial enterprises, associations are operated on a non-profit
basis.
Examples: Associations of producers, consumers, human rights defenders; sports or
cultural associations, etc.
Aversion to risk
A characteristic of an individual who does not like uncertainty. The greater an individuals aversion to risk, the more he or she will be willing to pay in order to obtain insurance coverage.
Basic health care

Routine treatment provided to patients in health facilities at the first level of the health pyramid.
It includes preventive care and health promotion, simple curative treatment and nutritional
rehabilitation.
Beneciary
A person who, in his or her capacity as a member or dependent, benefits from the services of
a health micro-insurance scheme.
Synonym: Covered person, Protected person
Benet/premium combination
The combination of, on the one hand, the benefits provided by the health micro-insurance
scheme (services covered and levels of coverage + ancillary services) and, on the other,
the corresponding premiums. A direct relationship exists between benefits and premiums: the
greater the number of services covered and the levels of coverage provided, the higher the
corresponding premium.
VOLUME 2
Benet plan
Consists of both the list of covered health services and the level of coverage that corresponds to
each service. A scheme may offer one or more benefit plans from which members may choose:
for example, a basic plan and an extended plan (including a greater number of services, and
in some cases, higher levels of coverage). Each benefit plan has a corresponding premium
level; the premium level of an extended formula is higher than that of a basic plan.
Benets
The health insurance coverage that a health micro-insurance scheme agrees to provide in
exchange for the payment of insurance premiums.
Note: Benefits do not include ancillary services such as health information that the
scheme may also provide to its members.
Board of directors
One of the decision-making bodies in those health micro-insurance schemes that hold a general
assembly and are managed democratically. The board of directors is composed of members
elected by the general assembly and is responsible for implementing the schemes general
policy, as determined by the general assembly. The board of directors may be assisted by the
executive committee, which, in turn, is responsible for implementing decisions and managing
the scheme on a day-to-day basis.
Brand-name drugs
A pharmaceutical substance protected by a patent and sold under a brand name chosen by
the manufacturer.
Capitation
see Global payment
Catastrophic risks
Contingencies that affect a large segment of the covered population, such as epidemics, and/
or those for which the unit costs are high, such as very costly hospitalizations. The occurrence of
catastrophic risks may jeopardize the financial viability of a health micro-insurance scheme.
Code
The set of legislative texts and application decrees governing insurance practices in a
given country.
Examples: Some countries have a mutual benefit insurance code that governs the
practices of mutual organizations or an insurance code that governs those of commercial
insurance companies.
ILO / STEP
Commercial insurance
A system for the provision of coverage against the financial consequences of certain risks, formalized by means of a contract managed by a profit-oriented insurance company. The contract
is concluded between an insurer and an insured party (individual or group). In exchange for
the payment of premiums, the insurer guarantees the insured party that it will provide a specified
level of coverage for expenses resulting from the occurrence of a given risk: fire, flood, theft,
accident, illness, loss of harvest, etc.
Compulsory health insurance

A statutory and compulsory system through which the general community assumes responsibility
for the health care costs of individuals as part of a State-run universal social security scheme.
Compulsory referral
The patients obligation to seek consultation from a health facility at a given level before being
entitled to receive treatment at a higher level. The doctor or nurse at the first health facility refers
the patient to the higher level.
Example: In order to be admitted to a district hospital, covered persons are required
to have undergone consultation at a health centre and to have been referred (or recommended to proceed) to the next higher level.
see also Level of health infrastructure (or level of the health pyramid)
Consolidated invoice
An invoice that a health facility, which has concluded a third-party payment agreement with
a health micro-insurance scheme, sends to the scheme at regular intervals in order to obtain
payment. The consolidated invoice lists the charges for treatment delivered to protected persons during a given period. It enables the scheme to pay the provider, after having checked
that the information on the invoice is consistent with the corresponding guarantee letters and
treatment certificates.
Contractual rule
Rule defining the rights and obligations of the scheme with respect to members and those of
members with respect to the scheme. In the case of a mutual organization or an association,
the contractual rules are contained in the internal rules. In the case of a health micro-insurance
scheme that does not provide for the participation of members in the schemes management,
the contractual rules are contained in the insurance contract.
Cooperative
An autonomous association of persons united voluntarily to meet their common economic,
social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. (Excerpt from ILO Recommendation 193 concerning the Promotion of Cooperatives, 2002.)
VOLUME 2
Co-payment
The portion of the cost or the quantity utilized of a covered health service that is not borne by
Example: If the scheme covers 100 per cent of consultation fees up to a maximum of
400 Monetary Units (MUs) per consultation, and if the cost of a consultation is 600 MUs,
then the amount borne by the scheme is 400 MUs and the amount of the co-payment is
200 MUs.
The introduction of co-payments enables a health micro-insurance scheme to reduce its costs,
provided that the average amount for which the scheme is liable is lower as a result, and
that insured persons, who must pay out of their own pockets, are encouraged to limit their
consumption of health care to what is strictly necessary. Notwithstanding, if the levels of copayment are too high, the scheme may fail at ensuring the financial accessibility of health care
for all persons.
For examples of co-payments see Flat-rate benefit; Numerical deductible; Monetary
deductible; Maximum number of days, cases or sessions; Percentage co-payment
Cost recovery
A policy or practice used to obtain payment from patients for all or part of the cost of the
health services provided to them.
Coverage
The financial compensation provided by the health micro-insurance scheme to insured persons
for contingencies (or risks) defined in the insurance contract or the internal rules up to a prescribed limit. Compensation may be made through the reimbursement of members or through
the application of a third-party payment mechanism.
Covered person see Beneficiary

Synonym: Insured person
Dependent
A person who, though not a member of a health micro-insurance scheme, benefits from the
services it provides as a result of his or her family ties to a member. Some schemes accept
as dependents the members spouse (or spouses) and children up to a specified age; others
also include ascendants (members parents and grandparents) and even siblings (members
brothers and sisters). Members must register dependents upon enrolment in the scheme or, in
the case of marriage or birth, subsequent to enrolment. When a person is no longer a member
of the scheme, coverage is no longer provided to his or her dependents.
ILO / STEP
Episode of illness
A period beginning with the appearance of the first symptoms of an illness and ending with
recovery from the illness. An episode of illness may consist of one or more episodes of treatment.
Illness
Last contact
with care provider
Need for treatment

Symptoms
Request for treatment
Episode of treatment
Recovery
Time
Episode of illness
Episode of treatment
A period beginning with the first contact with a health care provider for a specific health need
and ending with the last contact with the health care provider for the same need.
Essential drug
A medicine selected by the World Health Organization (WHO) for its importance in preventing or treating a disease that occurs with high frequency in a given country. Using the list of
essential drugs helps to improve health care delivery, ensure the proper use of medicines and
reduce health expenses.
Executive committee
The executive body of a health micro-insurance scheme generally consisting of members elected
from among the board of directors. The executive committee is often the most active body in
the scheme, given its responsibility for supervising and organizing all the schemes activities.
Feasibility study
The first step in any project aimed at setting up or further developing a health micro-insurance
scheme. Its objectives are to: (1) verify the relevance of the future health micro-insurance
scheme, that is, to ensure that it offers a suitable response to the problems expressed and takes
into account the particular context under consideration; (2) define the characteristics of the
future scheme that would both ensure the schemes viability and encourage its development;
(3) describe an initial situation and use it for the subsequent evaluation of the schemes impact
on the health context and on access to health care.
Federation of schemes
An association of several schemes or unions of health micro-insurance schemes. Federations
often assume the role of representing the schemes and promoting social protection.
see Union of health micro-insurance schemes
VOLUME 2
Fee-for-service
A method of payment in which the health care provider is paid for each health service delivered
and covered by the health micro-insurance scheme.
see also Methods of payment
Flat-rate benet
A benefit in which 100 per cent of health expenses are covered, up to a prescribed limit, which
is expressed in monetary units.1 The flat-rate benefit can be a maximum amount per prescription,
consultation, session, episode of illness, hospital day, period or year. The amount of the flat-rate
benefit is determined in advance and is independent of the expenses actually incurred by the
patient. The use of flat-rate benefits helps to limit the expenses of the health micro-insurance
scheme and to protect against catastrophic claims, which, owing to their exorbitant cost, could
bankrupt the scheme.
Synonym: Maximum benefit
Example: A Consultations benefit covers 100 per cent of expenses up to a maximum
limit of 600 Monetary Units (MUs) per consultation. If the consultation fee is 500 MUs
(<600 MUs), the scheme covers 100 per cent of expenses, or 500 MUs, and the member pays nothing. If the consultation fee is 800 MUs (>600 MUs), the scheme covers
the maximum amount, or 600 MUs, and the member pays the difference between the
consultation fee and the benefit, or 200 MUs.
Note: Some health micro-insurance schemes utilize the term flat-rate benefit when the
maximum coverage is low that is, far below the average cost of the health service and
the term maximum benefit when, on the contrary, it is relatively high. These two notions
are nevertheless equivalent from the technical standpoint.
Frequency
The average number of cases of illness or utilization of a health service by a particular segment
of the population over the course of a year.
Frequentation (rate)
An indicator that measures access to a health facility by the inhabitants of its catchment area.
The frequentation rate is equal to the ratio of the number of new cases to the number of inhabitants. New cases are new episodes of illness or new pregnancies seen by the staff of the
health facility for the first time. If a patient must return one or more times to undergo treatment in
connection with a single episode of illness or a single pregnancy, these new visits are counted
as old cases and are not taken into account in calculating the frequency rate. However, if a
member uses a health facility five times over the course of a year for five different episodes of
illness, all five visits must be counted.
1
It should be noted that the use of flat-rate benefits in insurance differs from their use in other economic
contexts. An insurance scheme cannot reimburse more than the amount actually spent by the beneficiary, such
as in the case where a flat-rate travel allowance is granted independently of actual expenses.
ILO / STEP
General assembly
Refers to the main decision-making body of a health micro-insurance scheme when the latter
is managed in a participatory fashion. In the case of a mutual organization, cooperative or
association, the general assembly brings together members or their representatives; in the case
of a joint stock company, it brings together shareholders. The general assembly determines the
schemes objectives and overall policy.
Generic drug
A medicine designated by the name of its main active ingredient and not by its commercial
name. In general, the International Non-proprietary Name (INN) established by WHO corresponds to the generic name. Generic drugs are less expensive than brand-name drugs.
Global payment
A method of payment according to which health care providers are paid a fixed, comprehensive fee. It may consist of:
(1) A global fee per cluster of related health services
Example: A fixed daily rate per hospital day may include charges for accommodation, consultations and examinations performed during the hospital stay.
(2) A global fee per episode of illness that includes all health services utilized in connection
with a single episode of illness or maternity case.
Example: A global maternity fee may include all health services utilized before
delivery, during delivery (complicated or uncomplicated) and after delivery (follow-up).
(3) A global fee per head, called a capitation payment. This is a comprehensive fee paid for
each person covered and for a specified period often one year granting entitlement
to unlimited utilization of all or some of the health services of a health facility.
see also Methods of payment
Group contract see Group insurance
Group insurance (or group contract)

An insurance contract concluded between an insurer and a group of beneficiaries, such as the
employees of an enterprise or the members of an association, cooperative, trade union, etc.
Such contracts usually provide insurance coverage in the following areas: health care, retirement pensions, temporary or permanent disability, and death of the breadwinner.
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Guarantee fund
A fund that a health micro-insurance scheme can call upon in the event of financial difficulty.
Generally speaking, the assistance provided by the guarantee fund takes the form of a loan
to the requesting scheme. The circumstances in which the guarantee fund may be used are
usually specified in detail. The funds assistance may be made conditional upon changes in
the operation of the health micro-insurance scheme. Guarantee funds may be financed by
member schemes, the State, financing institutions or support organizations.
Guarantee letter
A document proving that a patient is covered by a health micro-insurance scheme; that is,
that he or she is registered as a member or dependent, is up to date with his or her premiums
and has completed the required waiting period. The guarantee letter also indicates the level
of coverage to which the patient is entitled. In certain schemes, the person protected by the
scheme must obtain a guarantee letter before receiving treatment if he or she wishes to benefit
from third-party payment. The guarantee letter helps to eliminate attempts at fraud, limit overconsumption and guarantee health providers that expenses relating to patients treatment will
be paid by the health micro-insurance scheme (third-party payment principle).
Health
The state of complete physical, mental and social well-being and not merely the absence of
disease or physical disability (definition provided by the World Health Organization).
Health authorities
The public health establishments or officials responsible for a particular geographic area:
province, region, country. Health authorities differ from public health care providers in that
their mandate is not to offer health services, but, generally, to promote health and to regulate
the health sector.
Health benet (or medical benet)

A health service delivered by the staff of a health facility. Such services may be dispensed
in the context of basic health care, specialist treatment, home care, outpatient care, in-patient
care, the provision of medicines, etc.
Health care facility (or medical facility)

An establishment or institution engaged in the field of health as a provider of health care to
individuals: health centre, dispensary, doctors office, hospital, etc.
Health care network

The grouping together of a certain number of health care providers within a particular region
in order to increase the effectiveness of health care. Coordination among the members of the
network allows for improving the transfer of information, in particular, as regards patients medical records, and consequently, for providing more effective treatment for sick persons.
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ILO / STEP
Health care provider

A person or a health facility that provides health care to a patient.
Examples: Doctors, pharmacists, surgeons, midwives, nurses, health centres, district
hospitals, regional hospitals, national hospitals, dispensaries, traditional practitioners, etc.
Health care supply

The set of health services or health care providers available for a given population.
Health credit
A form of credit intended to finance health care expenses whose conditions of grant and repayment deadlines often differ from those of other forms of credit. An organization setting up a
health micro-insurance scheme may also set up a health credit mechanism in order to provide
financing for health costs either not covered by the scheme or whose coverage is subject to
a maximum. It may also set up such a mechanism in order to enable insured persons to prefinance health expenses in the absence of a third-party payment.
Health insurance contract

An agreement concluded between a health micro-insurance scheme and an individual (member) or group of individuals (enterprise, trade union) in which the scheme agrees to cover
prescribed health expenses incurred by the persons concerned in exchange for the regular
payment of a premium. Health insurance contracts are clearly defined, limited in time, renewable and revocable. Only health micro-insurance schemes that do not provide for the participation of insured persons in the schemes management conclude contracts with their members:
schemes managed by health care providers, commercial insurance companies. Conversely,
mutual health organizations do not conclude contracts with their members. Their relations with
members are governed by the rights and obligations set forth in the statutes and internal rules
of the scheme.

An insurance scheme often set up by a civil society organization whose purpose is to provide health insurance coverage to persons excluded from formal systems of social protection
mainly informal economy workers and their families. The term micro does not refer so much
to the size of these schemes as to their social moorings. Even if such schemes are usually small
in size, there are some, notably in Asia, that extend coverage to more than 100,000 persons.
Others participate in networks or unions in which numerous schemes are linked together to
form vast organizations. The term insurance refers to the financial mechanism utilized, which
consists of pooling the risks and resources of an entire group in order to guarantee protection
to all members against the financial consequences of health risks determined on a mutual
basis. ( see D.M. Dror and C. Jacquier: Micro-insurance: Extending Health Insurance to
the Excluded, in International Social Security Review, Geneva, ISSA, 1999, Vol. 52).
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11
Health pyramid
The organization of health services on a national scale, generally including several levels.
see Level of health infrastructure (or level of the health pyramid),
Compulsory referral
Health risk (or risk of illness)

Refers to contingencies that affect the health of individuals (illness, maternity). A distinction is
made between major and minor risks. Major risks are those that entail considerable expense,
such as hospitalizations, dystocic deliveries, surgical operations, etc. Such contingencies are
rare and have a low probability of occurrence. Minor risks are those that entail more moderate
expense, such as consultation with a general practitioner or the purchase of generic drugs.
They are much more commonplace and have a high probability of occurrence.
Probability
Cost
Example
Minor risk
+++
Consultation
Intermediate risk
++
++
Specialist treatment
Major risk
+++
Hospitalization
Health savings
A set of mechanisms that enable members to put aside funds in anticipation of a future health
expense or to pay for future health care at a time when they have sufficient income available.
Examples: Individual health savings, subscription card, anticipated global payment
(prepayment) for certain services, notably, mother and child health care.
These mechanisms can be worthwhile for persons with irregular incomes who, for that reason,
are likely to be confronted with health expenses at a time when they lack sufficient resources
to meet them. In the case of sickness or maternity, such persons would be able to utilize health
services only up to the amount that they had saved or prepaid. Risk management in such
cases is individualized, and, contrary to an insurance plan, there is no pooling of resources
to protect against risks. A health savings scheme may, however, be used to supplement an
insurance plan. It may be applied to minor risks, for example, whereas the insurance plan is
used to cover major risks.
see Prepayment
Health service
A medical service provided by a health care worker (doctor, nurse, pharmacist, etc.) and consumed by a patient. Health micro-insurance schemes may cover individual health services or
clusters of health services, provide flat-rate benefits per episode of illness, etc.
Examples of health services: medical consultations, biological analyses, pharmaceuticals (i.e. the provision of prescription medicines), vaginal deliveries, surgical
operations.
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ILO / STEP
Home care
Refers to health services delivered to the patients residence. In some countries, doctors or
nurses make home visits; however, fees for home care are higher in order to compensate for
travel expenses.
Hospital care
Treatment provided during the hospitalization of a patient, that is, during a hospital stay including at least one night.
Insurance
A mechanism intended to provide coverage against the financial consequences of prescribed
uncertain events, by spreading the anticipated costs resulting from the occurrence of those
events also known as risks among several persons. Insurance is based on (1) the prior
payment of premiums, i.e. before the occurrence of the risks; (2) risk sharing; and (3) the notion
of guarantee. The premiums paid by insured persons are pooled together and used to cover
the expenses of exclusively those persons affected by the occurrence of a certain number of
clearly defined risks. In exchange for the payment of premiums, insured persons obtain the
insurers guarantee to provide this financial compensation. They give up ownership of the premiums paid, and consequently, any claim to them.
Insurance benet
A health service whose utilization is covered by a health micro-insurance scheme, which undertakes to pay, in whole or in part, the expenses incurred in connection with the utilization of that
service. This may refer to an individual health service, a cluster of health services, an episode
of illness, a maternity case or a broader range of health services.
Insured person see Member
Internal rules
A document establishing the rules and operating procedures of an association or mutual
organization that all members agree to follow. The internal rules complement the statutes and
enlarge upon their description.
Juridical personality
Refers to the status of a natural person or legal entity that is the subject of rights and obligations. A
natural person is a human being. A legal entity is a group of individuals to which the law attributes
a juridical personality distinct from that of its members: an association, trade union, church, commercial enterprise, school, hospital, province, department, region, etc. The rights associated with
juridical personality are, among others, the rights to own property, to institute legal proceedings
and to assemble. Obligations include paying ones debts, paying taxes and paying wages to
employees. A natural person acquires juridical personality upon birth and loses it upon death
or disappearance. A legal entity acquires juridical personality upon registration with the competent authorities. Legal entities may be registered under a variety of forms: non-profit organization, cooperative, mutual organization, public limited company, limited liability company, etc.
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Level of coverage
Refers to the level of health expenses incurred in connection with the utilization of a given
health service for which the scheme agrees to assume responsibility. The level of coverage
may be expressed as a percentage of the health expenses actually incurred (for example,
65 per cent of expenses incurred for medical tests) or as a maximum amount or number of
utilizations (for example, coverage of consultations up to a maximum limit of 1,000 MUs for
each consultation). It may also combine the two terms (for example, coverage of 80 per cent
of expenses, up to a maximum of four consultations per person and per year).
Level of health infrastructure (or level of the health pyramid)

All health infrastructures that share the same functions. Dispensaries, health posts, health centres
and doctors offices generally constitute the first level; provincial or area hospitals make up
the second level; and regional or university hospitals account for the third level. A compulsory
referral system often exists for transfers from one level of the pyramid to the next, but is not
applied in the case of emergencies.
see Health pyramid, Compulsory referral
Loss
The difference between income and expenditure for a given accounting period, where expenditure exceeds income. Depending upon legislation and the legal status of the organization,
other terms, such as deficit, may be used.
Major risk
see Health risk
Management
One of the principal functions of a health micro-insurance scheme. It includes:
technical management, which deals with insurance-related activities: enrolment, collection
of premiums and membership fees, claims settlement. It also deals with preventing the occurrence of insurance-related risks or limiting their effects: adverse selection, moral hazard, etc.
Another of its functions is to establish relations with certain external actors, in particular with
health care providers;
internal control, which consists of verifying whether decisions have been implemented and
whether the schemes operating procedures and obligations, as defined in the statutes,
internal rules, contracts, etc., have been properly respected;
monitoring, which consists of monitoring the progress of the schemes activities, and making
adjustments if necessary;
evaluation, which consists of assessing the schemes operations, and determining whether
its initial objectives have been met;
internal organization, human resources management, accounting and financial management.
Maximum benet
see Flat-rate benefit
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ILO / STEP
Maximum number of days, cases or sessions

A condition placed on a benefit in which coverage is limited to a maximum number of days,
cases or sessions per person and per year.
Example: A Prenatal consultation benefit covers 100 per cent of expenses incurred,
up to a maximum limit of three prenatal consultations per pregnant woman per year. If
the patient undergoes two prenatal consultations, the scheme covers 100 per cent of the
expense and the patient pays nothing. However, if the patient undergoes four prenatal
consultations, the scheme covers 100 per cent of the expenses corresponding to the first
three consultations and the patient pays for the fourth.
Medical adviser
A physician who works for the health micro-insurance scheme and provides advice to the
scheme, as well as to its partner health providers and to patients. He or she advises the scheme
concerning the conclusion of agreements with health providers, analyses requests for prior
agreement and issues authorizations or refusals for coverage. The medical adviser monitors the
appropriateness of the health services provided and the validity of and compliance with the
rules of reimbursement. He or she may also play a role in activities relating to health education.
Member
A person who enrols in a health micro-insurance scheme, agrees to pay premiums and comply
with the statutes and internal rules (in the case of a mutual organization) or the terms of the
insurance contract (in the case of a health micro-insurance scheme that does not allow for the
participation of insured persons in the schemes management). Members are entitled to benefit
from the services provided by the scheme, and may enable certain members of their family
who depend upon them directly known as dependents to do so as well. Members and
their dependents are the persons covered by the scheme, or its beneficiaries.
see also Dependent
Members may also be referred to as claimants, policy holders or insured persons, depending upon the type of scheme concerned. The term member is most often used by health
micro-insurance schemes that rely on the broad participation of insured persons in the schemes
management. The term insured person is a generic term that encompasses all other designations and is used primarily by commercial insurance companies. For the purposes of risk
pooling, all the above-mentioned terms are equivalent.
Membership card
A document authenticating a persons membership in a health micro-insurance scheme. The
membership card may contain the first and last names, dates of birth and, in some cases,
photographs of the member and his or her dependents. By presenting the membership card,
the person protected may benefit from fee agreements or third-party payment arrangements
with the schemes partner health care providers.
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Membership fee
A sum of money paid to a health micro-insurance scheme by a new member upon enrolment.
The membership fee covers administrative expenses and is not refundable in the event of withdrawal. The membership fee is also referred to as the enrolment, registration or initiation fee.
Methods of payment
The various methods used by the health micro-insurance scheme and/or patients, who are
members of the scheme, to purchase medical services from health care providers. The main
methods of payment are fee-for-service, payment per cluster of health services, payment per
hospital day or per episode of illness and capitation payment (payment of an annual global
fee for each covered person). Other methods involving mixed forms of payment (fee-for-service
plus capitation payment) may also be used.
see also Fee-for-service, Global payment
Minor risk
see Health risk
Monetary deductible
A benefit in which 100 per cent of health expenses are covered, minus a fixed sum, expressed
in monetary units, which is always borne by the member and is not proportional to the expenses
actually incurred. The deductible may be applied to each health service utilized or totalled
on an annual basis.
Example of monetary deductible applied to each health service utilized:
A Surgery benefit covers 100 per cent of expenses incurred, minus a deductible of
2,000 Monetary Units (MUs). If surgery expenses are 1,500 MUs (<2,000 MUs), the
scheme pays nothing and the member pays 1,500 MUs. If surgery expenses are 3,000
MUs, the scheme pays 1,000 MUs (3,000 2,000 MUs), while the amount of the
deductible (2,000 MUs) is borne by the member.
Example of an annual monetary deductible: A Consultations and treatment benefit covers 100 per cent of expenses incurred, minus an annual deductible of
3,000 MUs. So long as the expenses accumulated over the year by the person protected
are less than 3,000 MUs, the scheme pays nothing. However, the scheme covers 100 per
cent of the patients accumulated annual expenses in excess of 3,000 MUs.
Moral hazard (or risk of over-consumption)

A phenomenon according to which insured persons take undue advantage of the health
services covered by the scheme because they know they are insured against the cost of such
services. Their utilization of health care exceeds the standard used as an input for determining
premiums. Some authors consider moral hazard also to include prescription abuse by health
care providers, or the risk of over-prescription.
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ILO / STEP
Mutual health organization

A health micro-insurance scheme characterized by the broad participation of members in the
schemes management. Mutual health organizations are democratic institutions founded on the
principles of mutual assistance and solidarity. They are set up and managed by and for their
members. The members of mutual health organizations participate in management through
general assemblies and the election of officers. Mutual health organizations are the collective
property of their members; the latter are at once the insurers and the insured. For this reason,
no contract is concluded to formalize relations between mutual health organizations and their
members (since one cannot conclude a contract with oneself). Rather, they are governed by
the rights and obligations set forth in the statutes and internal rules of the organization. Mutual
health organizations pursue objectives aimed at the promotion of social and individual wellbeing. They seek to reconcile the achievement of these objectives with the financial viability
and competitiveness of the scheme as compared to other forms of health care financing, such
as prepayment schemes, health micro-insurance schemes set up and managed by health
providers, commercial insurance companies, etc.
Network
A grouping together of actors in the field of health micro-insurance (schemes, trade unions,
support organizations, etc.) for the purpose of carrying out activities relating to information,
training, promotion, etc.
Example: The Concertation entre les acteurs du dveloppement des mutuelles de
sant en Afrique de lOuest et du Centre (Coordination network between actors involved
in the development of mutual health organizations in Western and Central Africa) maintains an Internet site (www.concertation.org) that lists support organizations which may be
contacted by local promoters. The site also provides numerous bibliographical references,
accounts of experiences and ongoing information on major events in the field of microinsurance, including the organization of training courses.
Numerical deductible
A benefit in which 100 per cent of health expenses are covered, minus a specified number of
sessions, cases or days, the cost of which is always borne by the member.
Example: A Hospital accommodation benefit covers 100 per cent of expenses
incurred, excluding the first day of hospitalization, which is never covered. If the patient
is hospitalized for three days, the expenses corresponding to the first day are borne
entirely by the member, while the second and third days are covered by the health microinsurance scheme.
Observation period, probationary period see Waiting period

Outpatient care
Treatment provided in a hospital or clinic, but without involving hospitalization of the patient.
The patient returns home after receiving treatment.
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Patient
An individual who utilizes health services: medical consultations, medicines, laboratory tests,
surgical operations, deliveries, etc.
Percentage co-payment
The share of the cost of a covered health service that is not borne by a health micro-insurance
scheme and is always expressed as a percentage. The percentage co-payment helps moderate the consumption of health care and reduces the schemes expenses. It is an effective means
of combating moral hazard, but, when too high, may have the effect of limiting the accessibility
of health care.
Premium
A fixed sum paid periodically by a member of a health micro-insurance scheme in order to
benefit from the services provided by the scheme and to enable his or her dependents to
benefit from them. The amount of the premium paid by a family may depend upon the number
of persons protected, their characteristics (age, sex, place of residence, occupation) and the
level of their family income. Premiums constitute the chief financial resource of the scheme and
must enable it to cover its costs. These include expenditures related to the coverage of health
expenses, operating costs, accumulation of financial reserves, etc.
The premium paid by a member is equal to the sum of the premiums calculated for each
health service. The individual premium corresponding to a given health service is itself the sum
of several elements, including the adjusted pure premium, the safety loading, the unit operating
costs and the unit surplus.
Premiums (pure premium, risk premium, commercial premium, total premium)

The following terminology will be used in this guide:
the term pure premium refers to the average amount of health expense, that is, the statistical cost of the risk before applying the safety loading;
the term risk premium refers to the sum of three elements: the adjusted pure premium, the
safety loading and unit operating costs (or management costs);
the term total premium before tax refers to the sum of the risk premium and the unit surplus;
the term total premium inclusive of tax refers to the sum of the total premium and taxes.
Inasmuch as health micro-insurance schemes generally do not pay taxes on insurance, the
total premium inclusive of tax is equal to the total premium before tax.
Unit surplus
Management costs
Safety loading
Probability Average unit cost
Average quantity or
Frequency Average unit cost
Risk
premium
Pure
premium
Total
premium
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ILO / STEP
Prepayment
A set of mechanisms enabling individuals to pay for future health services at a time when they
have sufficient resources available.
see Health savings
Prevalence rate
The number of cases of a given disease as compared to all cases of disease and expressed
as a percentage.
Example: If 15 per cent of the cases of disease registered by a health facility correspond to cases of malaria, then the prevalence rate of malaria is 15 per cent.
Primary health care

A health development strategy based on improving the quality of health services at the first
level of the health pyramid, extending health services (from curative treatment to prevention
and promotion) and encouraging the public to participate in the management and cost of
health services.
Prior agreement
A control mechanism applied prior to the receipt of health services by patients who are
members of a health micro-insurance scheme. Before receiving care, patients must ask health
providers to complete a request for prior agreement, which specifies the type of care and its
cost. Patients must then submit this request to the health micro-insurance scheme, which considers the case and issues either an agreement or a refusal to provide coverage. This procedure
enables schemes to exercise a degree of control over the services provided and the fees
charged by health care providers, inasmuch as schemes reserve the right to refuse requests.
The prior agreement is generally used for costly but non-urgent services, such as the provision
of eyeglasses or planned surgical operations.
Probability
The odds that an individual in a given population will fall ill at least once in the course of a
year (probability of falling ill) or of using a particular health service at least once in the course
of a year (probability of utilizing a service). The probability of an occurrence is always greater
than or equal to zero and less than or equal to one. The closer the probability of an event is
to zero, the more rare the event (illness, utilization of a health service). Conversely, when the
probability of an occurrence approaches one, that occurrence is commonplace. A probability
of one corresponds to a certain occurrence.
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Procedure
A rule or a set of rules followed in order to conduct all or part of a process. There are different
types of procedures, including management and monitoring procedures.
Example of a management procedure: Prior to accepting an application for
membership, it is important to verify that the applicant, that is, the future member, has not
already been terminated by the health micro-insurance scheme in the past.
Process
An operation involving several steps.
Example: The process of enrolment may include the following steps: application for
membership, acceptance or rejection of the application, payment of membership fees and
the first premium, completion of the membership sheet, entering the new member and his/
her dependents in the membership register, collection of membership fees and the first
premium, recording the payment in the premiums register and issuing a membership card.
Pure premium
The estimated average health expenses covered by a health micro-insurance scheme that
correspond to each individual. The pure premium is used as an input in determining the insurance premium.
The pure premium may be calculated by applying the following general formula:
Pure premium (health service) = Probability of using the service Average quantity covered Average unit cost. It may also be calculated by applying the specific formula: Pure
premium (health service) = Frequency of utilization of the service Average unit cost.
Qualifying period see Waiting period
Quality assessment
The act of periodically evaluating the objective quality of health facilities on the basis of standards established by the national health policy in terms of equipment, staffing, compliance with
treatment protocols, availability of medicines, etc.
Reinsurance
A mechanism through which an insurer obtains insurance from a third party (the reinsurer) for
all or a part of the risks it has undertaken to cover, in exchange for the payment of a premium.
The contract concluded between an insurer and a reinsurer is called a reinsurance contract and
may be thought of as the insurers insurance coverage, or second-degree insurance. Reinsurance allows for the diversification of risks and their redistribution over a broader base, thereby
reducing the insurers risk of bankruptcy.
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ILO / STEP
Representative sample
A group of persons belonging to a segment of the population that displays the same characteristics as the overall population: same proportion of men and women and the same proportion
of young, elderly, actively employed and unemployed persons, etc. The size of the representative sample must conform to minimum requirements, which depend upon the size of the target
population and its homogeneity.
Reserve fund
Own capital accumulated by the health micro-insurance scheme to meet future expenses, particularly those arising from unforeseen circumstances. The level of such funds is usually subject
to regulatory provisions.
Synonym: Reserves
Reserves
see Reserve fund
Risk
Refers to the probability that an uncertain event will occur, and, by extension, to an uncertain
event that, when it does occur, may have adverse financial consequences. This is why individuals seek insurance against the financial consequences of certain risks. Insurance cannot prevent
risks from occurring, but it can reduce their financial impact. The main social risks are sickness,
disability, old age, unemployment, death, etc.
Risk management
An approach that consists of taking certain precautionary measures and organizing oneself in
order to deal with the future occurrence of a risk.
Example: Stocking food supplies in anticipation of a drought or a shortage, saving for
a wedding, etc.
Risk of over-prescription
A phenomenon according to which health providers adjust their prescriptions to correspond
to patients maximum level of coverage, without opposition from patients, given the fact that
the latter know they are covered. Health providers may have a tendency to prescribe more
medicines than necessary, lengthen hospital stays, systematically use diagnostic services, such
as laboratory tests, X-rays, etc.
Risk pooling
The principle according to which the financial consequences of individual risks are not borne
by each individual but by an entire group. Risk pooling refers to the sharing of risks, which is
the basic premise underlying insurance mechanisms.
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Risk portfolio
The whole group of covered persons, whose individual levels of coverage and consumption of
health services vary from one person to the next and represent costs for the scheme. Schemes
must ensure that their risk portfolio is well-balanced, that is, that the presence of high risks
(persons who consume more health services than the average) is compensated by low risks
(persons who consume fewer health services than the average).
Risk selection
A measure or a set of measures that consist of giving priority to persons who represent a low
risk of illness and excluding those with a high risk of illness. Risk selection may be practiced by
certain insurers, particularly when they are unable to set rates that reflect individual risks.
Example: When an insurer establishes an age limit on enrolment or when it excludes
members who have reached a certain age, it is practising risk selection.
Within the context of a capitation system ( see Global payment) some providers may
have a tendency to give priority, in terms of treatment, to patients who represent a low risk of
illness, who they know will not consume excessive amounts of health care, and to discourage
those who represent a high risk. Health micro-insurance schemes must, of course, see to it that
such practices do not arise.
Scope of a health facility

Refers to the persons actually served by a health facility. The scope or radius of a health
facility is to be distinguished from its catchment area (or administrative area), within which it is
responsible for administering curative, preventive and promotional health care.
Example: In theory, a district health centre covers all the inhabitants of the villages and
hamlets in the district. In practice, the inhabitants actually served by the centre make up
only part of the total population of the district and/or sometimes extend beyond its limits,
owing mainly to geographic factors and to users perception of the health centre.
Social control
An internal control mechanism arising from the existence of social relations between members.
Example: The fact that members know each other and live in close proximity to one
another helps to limit fraud and abuse, as well as to reduce the unjustified consumption
of health care.
Social movement
An organized social group that carries out actions to benefit its members and society in general.
Examples: Associations of individuals, trade unions, trade union federations, groupings,
mutual organizations, cooperatives, etc.
22
ILO / STEP
Social protection
A generic term covering all guarantees against reduction or loss of income in cases of illness,
old age, unemployment or other hardship, and including family and ethnic solidarity, collective or individual savings, private insurance, social insurance, mutual benefit societies, social
security, etc. (Excerpt from ILO Thesaurus, Geneva, 1991.)
Social security
The protection which society provides for its members, against the economic and social distress
that otherwise would be caused by the stoppage or substantial reduction of earnings resulting
from sickness, maternity, employment injury and occupational diseases, unemployment, invalidity, old age and death. To this must be added the provision of medical care and the provision
of subsidies for families with children.
Such protection may be provided by different mechanisms: statutory social insurance
schemes, universal benefits and services financed from the general budget, social assistance,
insurance schemes and micro-insurance schemes. (Adapted from Social security: A new consensus, Geneva, ILO, 2001).
Consultations with specialist physicians (gynaecologists, paediatricians, surgeons, etc.) and
technical medical procedures (X-rays, clinical biology, etc.).
Statutes
A reference document describing, in particular, the aim and organization of the health microinsurance scheme, and the relationship between the various internal bodies and their functions. Once approved by the competent authorities, the statutes confer a legally recognized
juridical personality upon the scheme. Moreover, they determine the rhythm of its activities,
such as the frequency with which general assemblies are held, annual reports and financial
statements are submitted and approved and officials stand for re-election, etc. Depending
upon the legal nature of the scheme, they may also lay down the rights and obligations of
members (in the case of mutual organizations) or of shareholders (in the case of commercial
insurance companies).
Steering committee
The team responsible for determining the strategic and technical guidelines of a project and
monitoring its progress.
Supervisory committee
The supervisory body of a health micro-insurance scheme responsible for overseeing the
schemes administration and compliance with procedures, as well as for reporting on these
matters to other bodies within the scheme.
Note: Oversight may also be carried out by an external body: commissioner of audits,
external auditor, etc.
VOLUME 2
23
Supplementary health insurance

An optional scheme that assumes responsibility for health expenses not covered by social
security schemes. Supplementary health insurance is organized at private initiative, most often
by a mutual organization or insurance company.
Surplus
The difference between income and expenditure for a particular accounting period when
income exceeds expenditure. Depending upon legislation and the legal status of the organization, other terms, such as profit or earnings, may be used.
Target population
The population that the future scheme plans to cover, including all potential members and
their dependents. The target population may be defined on a geographic basis: the inhabitants of certain neighbourhoods or villages, the catchment area of certain health facilities,
etc. Alternatively, it may be defined on a socio-economic or socio-occupational basis: the
members of a trade union, trade union federation or agricultural cooperative; the clients of a
micro-finance institution; the employees of an enterprise, etc.
Third-party guarantor
A mechanism according to which patients covered by a health micro-insurance scheme pay
the total amount of health expenses at the time services are utilized, subsequently claiming
reimbursement for the share covered by the scheme. The health micro-insurance scheme guarantees reimbursement of the expenses paid.
Opposite: Third-party payment
Third-party payment
A mechanism according to which patients covered by a health micro-insurance scheme
are not required at the time health services are consumed to pay for health expenses
covered by the scheme; they pay only the co-payment, if any. The health micro-insurance
scheme (the third party) subsequently pays the health facility for the expenses it incurred on
behalf of the patient.
Opposite: Third-party guarantor
Treatment certicate
A document issued to a patient by a health care provider certifying that the patient was treated
and indicating, in particular, the amount paid by the patient and the amount covered by the
health micro-insurance scheme. The treatment certificate is used by the health care provider
in the context of a third-party payment mechanism as proof that treatment was delivered to
the patient and that the patient benefited from third-party payment for the portion of health
expenses covered by the health micro-insurance scheme.
24
ILO / STEP
Treatment protocol
A standardized procedure of treatment, defining, for each type of pathology, the diagnostic
interventions (laboratory tests, X-rays or others), medical care and medicines to be prescribed.
When followed, treatment protocols make it possible to deliver health care to patients at the
lowest cost and with a guaranteed level of quality. The use of treatment protocols also makes
it easier to estimate the cost of benefits.
Union of health micro-insurance schemes

An association of several health micro-insurance schemes that pool part of their resources in
order to provide and/or finance a number of services. These may include support and advice;
training; financial services, such as establishing a guarantee fund; and the promotion of social
protection with regard to health care. Several unions may form a federation.
Unit of service
The parameter (day, session, prescription, etc.) used to describe the quantity of a health service
utilized. The selection of a particular unit is the basis for calculating the average number of units
consumed in a given year and the average unit cost, and thus for calculating premiums.
Example: If it is assumed, in the case of a hospitalization, that the unit of service is the
number of hospital days, then the relevant information is the number of hospital days and
the cost of one hospital day (not the total cost of hospitalization). Additional example: in
the case of the provision of medicines, the unit of service employed is often the number of
prescriptions. Thus, the relevant information is the number of prescriptions issued (not the
number of medicines) and the cost of each prescription (not the individual cost of each
medicine).
Utilization (rate of)

An indicator used to measure the utilization of health services over the course of a single episode of illness or a single pregnancy, and to determine whether patients are receiving proper
treatment as compared to standard practices.
Example: A utilization rate of 3.5 for prenatal consultations means that, on average,
pregnant women undergo 3.5 prenatal consultations per pregnancy. Additional example:
a utilization rate of 1.1 for consultations means that, on average, patients undergo 1.1
consultations over the course of a single episode of illness.
The utilization rate is equal to the number of new cases plus the number of old cases divided
by the number of new cases. New cases may be defined as new episodes of illness or new
pregnancies seen by the health facility staff for the first time. If a patient must return one or
more times to undergo treatment in connection with a single episode of illness or pregnancy,
these new visits fall under the category of old cases.
see Episode of illness
VOLUME 2
25
Waiting period
A period of one or more months following enrolment, during which new members pay premiums to the scheme but are not entitled to receive benefits, whether for themselves or for their
dependents. The waiting period is primarily aimed at discouraging opportunistic behaviour
in persons who might enrol only in time of need (such as immediately prior to a delivery or
planned surgical operation) and subsequently withdraw from the scheme. The waiting period
also enables health micro-insurance schemes to accumulate financial reserves as from the
schemes inception. The length of the waiting period often varies depending upon the type of
health services covered.
Example: The waiting period for maternity benefits may be nine or 10 months, but only
one to three months for consultation, hospitalization and medicines.
Synonyms: Qualifying period, Observation period, Probationary period
Willingness to pay
The amount a person is willing to pay in order to obtain insurance coverage. An individuals
willingness to pay depends both on his or her level of income and perception of the risks
involved: the greater a persons aversion to risk, the greater will be his or her willingness to
pay to obtain insurance coverage for a particular risk. Willingness to pay is always less than
or equal to ability to pay. However, in the case of poverty, ability to pay and willingness to
pay are both very weak and tend to be indistinguishable from one another.
see Ability to pay
27
VOLUME 2
2.1 DISCUSSION SESSIONS
2.
Tools used to prepare for and plan

the feasibility study
The tools used to prepare for and plan the feasibility study include:
Tool 2.1
Recalls the objectives of discussion sessions,
provides suggestions for organizing the sessions
and proposes topics for discussion
An example of planning
a feasibility study
Tool 2.2
Describes the components and process
of planning using a practical example
A sample budget estimate

of a feasibility study
Provides a sample format and the line items
Guidelines for conducting

discussion sessions
2.1
Tool 2.3
of a budget estimate
Discussion sessions
Objectives of the discussion sessions
The discussion sessions are used for actions 1, 2, 3 and the ongoing action of the initial phase.
They also serve to prepare for the next phase, which is the data-collection and analysis phase.
Action 1: Verify that the preconditions for setting up the scheme have been met
The discussions may be used to collect information concerning the risk of sickness, the quality of
health facilities, the level of economic dynamism and traditions of risk management and mutual
aid. This information is used to verify that the preconditions have been met.
Action 2: Confirm the possibility of establishing a health micro-insurance

scheme and begin the feasibility study
Once the preconditions have been met, the start-up of the feasibility study may be announced
during the discussion sessions.
Action 3: Set up a steering committee

The discussion sessions also provide an opportunity to identify key actors who might play an
active role in conducting the feasibility study and possibly serve on the steering committee.
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ILO / STEP
Ongoing action: Enter into dialogue with the target population and the other actors
The discussions provide a means of entering into dialogue with the various actors concerning
problems related to health and access to health care. They may be used to encourage actors
to examine the current health situation, engage in reflection and undertake actions to address
the problems identified.
Prepare for the subsequent data-collection phase

Lastly, the discussions provide a means of collecting data concerning the characteristics of
families, the organization and operation of the health services and the difficulties associated
with illness. These data will be helpful for developing the collection materials to be used during
the data-collection phase.
The order of these actions is provided for information purposes. In practice, some actions
may overlap, be repeated or be carried out in a different order.
Organization of discussion sessions

A number of successive sessions may be held, depending on the objectives sought. In particular, it is recommended that sessions aimed at verifying that preconditions have been met should
be held prior to those organized in order to announce the start-up of the feasibility study.
The discussion sessions may involve encounters with individuals, small groups or larger
bodies.
Talks with individuals or small groups are usually held with those concerned in their place
of residence or work: neighbourhood or village talks; encounters with grassroots organizations
and associations; or individual interviews with health care providers and local authorities. Holding talks with individuals or small groups encourages all participants to express themselves
freely; however, it is time-consuming.
Collective talks held at a large meeting with all the actors have the advantage of increasing the visibility of the start-up of the study and accelerating talks with the various interlocutors.
However, such talks do not allow for hearing everyones point of view. Moreover, they run the
risk of turning into formal presentations.
Regardless of the form that the discussion sessions take, it is important:
to avoid allowing these sessions to become extravagant affairs, which may lead people
to believe that the promoters have access to substantial resources (schemes will have to
rely principally on the premiums paid by members in order to ensure their operation and
sustainability);
to hold these talks during a period when the actors notably the target population
are available. Efforts should be made to ensure that the establishment of a health microinsurance scheme is not perceived as a constraint at a time when the objective is to get
these actors involved.
Sample topics of discussion

These topics are presented in the form of questions in order to emphasize the fact that these
meetings are aimed at fostering dialogue; they should therefore not be seen as an opportunity
for the facilitator or for one of the participants to give a formal presentation.
VOLUME 2
2.1 DISCUSSION SESSIONS
29
Topic 1: Risks perceived by families

Sample questions to be put to the population:
What are you especially fearful about? Not having enough money for food? Housing? Childrens schooling? Health? Childbirth? Ceremonies (marriage, baptism, etc.)? Clothing?
Topic 2: Difficulties related to access to health care

What did you do the last time someone in your family was ill? Did you have trouble getting to
the health facility you had chosen? Did the facility have the necessary staff and equipment?
Did you find all the medicines you needed? Did you have any trouble paying for treatment?
or medicines? Where did the last childbirth in your family take place? At the hospital/health
centre/at home? What were the reasons for this choice?
Sample questions to be put to local authorities, health authorities or health care providers:
What difficulties do people encounter when faced with sickness or maternity? Do people have
trouble paying for medical care? Are all the necessary health infrastructures available?
Topic 3: Main illnesses and most difficult periods in terms of health
What are the most frequent illnesses affecting adults and those affecting children? What do
you do to deal with these illnesses: seek consultation at a health centre, seek consultation
with a private doctor, self-medicate, etc.? Are there certain periods of the year when you are
more frequently ill?
Sample questions to be put to health care providers:

What are the most frequent illnesses affecting adults and those affecting children? What means
of treatment are habitually used to deal with each illness? What are the most difficult periods
of the year in terms of health?
Topic 4: Financial difficulties related to health (sickness, maternity)
Do you sometimes have trouble finding the money needed for health care in the event of
sickness or maternity? What types of health care or treatment do you find to be particularly
expensive? Where do you purchase your medicines and why? Do you ever put off a consultation or a hospital stay because you are short of money? Are these difficulties more acute at
certain times of the year? What do you do when you do not have enough money?
Sample questions to be put to health care providers:

Do certain users sometimes find it difficult to pay for health care? Which treatments or health
services in particular? What solutions are considered in such cases: credit, putting off certain
treatments, mutual aid, etc.?
Topic 5: Existence of health care providers and how they are perceived
What health care providers do you call upon? Are these providers located near your home
or place of work? Are their fees affordable? Do medicine stock shortages ever occur? Are
30
ILO / STEP
there sufficient numbers of staff? Are staff members available and present? Are they sufficiently
competent? Do you have to wait a long time before you can get an appointment or be seen
for consultation? Are there health care providers you never call upon? Why not?
Sample questions to be put to the local authorities and the health authorities
What health facilities does the population use at different levels of the health pyramid? How
is the staff of the hospital/health centre/clinic/maternity ward perceived from the standpoint
of competency, availability, kindness, honesty?
Topic 6: Mutual aid practices

What do you do when you have trouble finding the money needed to obtain health services? From whom do you request help? Is the help provided always sufficient? Are there
associations that have set up a mutual aid fund in the event of sickness? If yes, how does
this fund work?
Sample questions to be put to the health authorities and to the local authorities:
What do families do when they encounter difficulty paying for health services? Do mutual aid
practices exist in the event of sickness? Is this mutual aid spontaneous? Is there an organized
form of mutual aid? Do you know of any associations that have set up a provident fund?
Topic 7: Previous experience with projects to pool resources

Sample questions to be put to the local authorities or to the population:
Have other projects based on the collection of funds already been undertaken in the region:
savings and credit funds, cooperatives, etc.? Have these projects met with success or failure?
Have there ever been any problems concerning the misappropriation of funds?
Topic 8: Examples of existing health micro-insurance schemes

and the principles of insurance
Are you aware of any health micro-insurance schemes that have been organized by hospitals,
cooperatives, associations, etc.? Have you heard of the NAME scheme? Have you met any
members of these schemes?
Note: If the facilitator is asked to speak more specifically about an existing scheme, he
or she may mention the promoter of the scheme, the date of the schemes inception and
the number of members and dependents it accounts for. He or she may also briefly explain
the principles governing the functioning of this type of scheme, but should refrain from
talking too much about its operating rules or giving details about its benefits or its premium
levels so as to avoid proposing ready-made solutions that may limit the input of the actors.
VOLUME 2
2.2 PLANNING THE FEASIBILITY STUDY
31
Topic 9: Launching the study once the preconditions have been met
Once the preconditions have been met, the facilitator may announce the launch of the feasibility study, indicating the date of its start-up and its expected duration. He or she must also
recall the objective of the study: to design the health micro-insurance scheme and to prepare
for setting it up. It is also a good idea to specify how the process of conducting the study
will be organized: who will be in charge and what the role of the population will be (active
participation in working groups, consultation for certain decisions, role in terms of surveys).
2.2
Planning the feasibility study

Practical example: The National Federation of Coffee Producers (NFCP)
The NFCP has decided to set up a health insurance scheme for its members. The NFCP covers the entire country and is subdivided into regional branches, which, in turn, cover several
community-based cooperatives and savings and credit funds.
The NFCP wishes to carry out an in-depth feasibility study at one of its regional branches
for the purpose of setting up a pilot health micro-insurance scheme. The latter will then be
replicated in the other regions after any necessary adjustments have been made.
Identification of the various phases, activities and tasks of the study

The NFCP, with the support of an external technical partner, has identified the following activities as needed for carrying out this study and implementing the pilot project:
hold information sessions and talks with members of cooperatives, local authorities and
health care providers, and enter into dialogue with the various actors concerning problems
related to access to health care;
set up a steering committee;
conduct a survey of members of cooperatives in order better to understand their problems
and needs in terms of financing health care expenses, and collect information that may be
used to calculate premiums;
interview health care providers in order to ascertain, in particular, the cost of health services;
analyze the data collected and summarize the findings;
organize working groups and working group sessions with members of cooperatives in
order to define the various aspects of the health micro-insurance scheme: services covered,
partner health care providers, benefit/premium combination(s);
define the operating rules and organization of the health micro-insurance scheme, and draft
the procedures manual;
prepare agreements with selected health care providers;
organize a general assembly of cooperatives that are members of the branch in order to
confirm the results of the feasibility study and officially launch the health micro-insurance
scheme;
sign agreements with health care providers;
train the various actors: supervisors, managers, providers;
32
ILO / STEP
carry out an information campaign aimed at members of cooperatives;

begin the process of enrolment and the collection of premiums.
The activities presented above have been summarized. In reality, each one consists of a set
of tasks whose details are not specified here.
Estimate of the length of time needed for each activity and each task
The steering committee estimates that efforts to raise awareness among actors will be carried
out over the course of two weeks. The task of setting up a steering committee and training its
members will be completed in one week. The household surveys will be spread out over the
course of three weeks, etc.
Organization of the activities and tasks in a timetable

The start-up of the schemes activities should be planned for the period of the year when coffee
producers have the highest incomes and are thus particularly inclined to paying membership
fees and premiums. The feasibility study must be carried out before this period and at a time
when cooperative members are available to participate in working group sessions and surveys.
The agricultural calendar provides the following information: the harvest and sale of coffee
takes place from late January to early February, and the period of low liquidity and agricultural
activity is from June to September. Consequently, the feasibility study may be conducted from
September to January. The scheme could start up operations in early February. If the scheme
plans to institute a waiting period, this could be scheduled for the period from February to
April/May, which would place it before the beginning of the low liquidity period.
Sep.
Oct. Nov. Dec.
Jan.
Feb. Mar. Apr. May
Raise awareness among actors

Set up steering committee
Household surveys
Talks with health care providers
Summary of ndings
Design scheme
Management tools and manuals
Prepare agreements
GA of regional branch
Sign agreements
Train actors
Information campaign
Begin enrolment process
tu
Collection of premiums
tu
Begin providing coverage

Waiting period
VOLUME 2
2.3
33
2.3 PREPARING THE BUDGET ESTIMATE FOR THE FEASIBILITY STUDY
Preparing the budget estimate for the feasibility study

Sample budget estimate of a feasibility study
Expenses
Income
Amount
(MUs)
Allowances
Researchers
Amount
(MUs)
Funding
230 000
Travel expenses
Local
60 000
Regional
80 000
Cooperative
232 000
NGO
150 000
Ofce supplies
Photocopies
Paper, pencils
Total
10 000
2 000
382 000
Total
382 000
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VOLUME 2
3.1 LISTS OF INFORMATION TO BE COLLECTED BY OBJECTIVE
3.
Tools used to carry out

the data collection and analysis
The tools used to carry out the data collection include:
Suggestions of information to be
compiled in order to meet the various
data-collection objectives (objective 1,
objective 2 objective 10)
Sample data-collection materials
Examples of the minimum size

of a representative sample
Examples of processing collected data

to produce usable information
3.1
Tool 3.1 (3.1.1, 3.1.2, )

List of data to be collected for
objective 1

Tool 3.2 (3.2.1, 3.2.2, )

Data-entry forms
Survey questionnaires
Interview forms
Tool 3.3
Size of sample for conducting
household surveys
Tool 3.4 (3.4.1, 3.4.2, )

Processing data
Raw
u
(if
necessary) to u Utilization
data
produce indicators
Lists of information to be collected by objective

Description of the lists of information to be collected by objective: content and purpose
There are ten lists of information by objective, one for each objective: list 3.1.1 corresponds to
the first objective: To understand the context; list 3.1.2 corresponds to the second objective:
To establish a basis for selecting the target population and so forth.
Each list provides suggestions of information to be collected and the sources from which
this information may, a priori, be obtained, regardless of whether the sources are static (census,
study, fee schedules, etc.) or dynamic (households, health care staff, etc.).
The lists of information by objective assist in defining the data-collection procedure and,
more specifically, in drawing up the data-collection strategy chart. The strategy chart contains
three columns. The first column is used to record the objectives sought; the second, to record
the information to be collected; and the third, to record the sources from which the information
sought may be obtained. For more details concerning the strategy chart, please refer to:
u Action 1: Complete the strategy chart, Step 1: Define the data-collection procedure,
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ILO / STEP
Certain items of information are common to several lists and have been repeated in each of
the corresponding lists. This manner of presentation obviates the need to refer the reader from
one list to the other and is consistent with the tool-box format of Volume 2.
PRECAUTIONS FOR USE
Precaution No. 1: All the lists are not useful to the steering committee. In most
cases, the steering committee pursues only a few of the 10 objectives. Moreover, if it
chooses to carry out the data collection in several stages, each stage will consist of compiling the information needed to meet even fewer objectives. The steering committee will
therefore use only a small number of lists.
Precaution No. 2: All the information listed does not necessarily have to be
searched. Each list provides a large quantity of information. This does not mean that, in
order to meet a particular objective, all of it must be collected. In certain cases, the information listed is not relevant to the context in question, or is simply not available. One or two
items of information may sometimes be sufficient to meet certain objectives. The steering
committee may select from the lists only that information that it finds useful or necessary.
Precaution No. 3: The lists are by no means exhaustive. They would benefit by
being enlarged. Each user may personalize the lists and modify them by adding objectives
and information, with the sole condition that the information added be helpful, usable and
no more than sufficient in quantity.

This objective is of interest primarily to promoters who are unfamiliar with the context, such as
international non-governmental organizations (NGOs), cooperation programmes, etc.
Note: Efforts to become familiar with the context should not take too much time, inasmuch
as the information collected is mainly intended to provide a background for analysis.
Information
Size and growth rate of the population in the

area
Breakdown of the population in the area
according to age bracket and gender
Percentage of the population living in urban,
peri-urban and rural areas
Existence of migratory movements
Average number of members per family
or per household
Composition of families: men, women,
children, other dependents
Sources
National or regional censuses taken

by the State or other institutions: producer
support centres, NGOs, etc.
VOLUME 2
37
Information
Sources
Principal sectors of economic activity of the population

in the area, and employment generating sectors
Unemployment and underemployment rates
in the area, and their relation to national rates
Percentage of jobs in the informal sector, and mobility
between the informal and formal sectors
Average income per inhabitant, income disparities
between rural and urban areas and between the various
sectors of economic activity
Seasonal variations in income
Contributions from nationals living abroad
Projects under way in the region
National or regional censuses

Interviews with local authorities
Evolution of purchasing power: trend, examples, inflation

rate

Economic yearbooks and reports
Minimum wage in the region, if legally established
Economic yearbooks and reports
Information on the health care supply

Information
Sources
Organization of health care supply: health pyramid, role

of regulatory bodies
For each level of the pyramid: number of health care
providers available; types of care dispensed; share
of public or private health care supply, or set up
under special programmes
Geographic distribution of the health care supply:
districts, distances between providers
Health coverage plan

Studies concerning the health
situation
How the various providers are perceived by the

population
Adequacy or inadequacy of health care supply

Interviews with health authorities
Health context
Information
Sources
Health indicators: life expectancy; mortality rate overall

and by disease; morbidity rate overall and by disease;
infant and maternal mortality rates; undernutrition rate
Main diseases and causes of death in general,
and according to age and sex for men, women,
adolescents and children
Problems relating to sanitation, access to drinking water
Seasons that are the most difficult in terms of health
Problems concerning access (whether geographic,
cultural or financial) to health care
Health costs: methods of functioning and financing
Health care financing initiatives

situation
Interviews with health care staff
and managers of health facilities
38
ILO / STEP
Social aspects
Information
Level of education and literacy

Types of organization of the population: associations,
tontines, groupings, cooperatives, etc.
Examples of the most representative recently
established organizations
Practices of mutual aid and solidarity, particularly
those intended to address health problems; their extent
(whether they reach the entire population) and their
trend (increasing or decreasing)
Sources
Political and institutional environment in terms of health and social protection

Information
Main features of national health policy: privatization

of health care supply, health sector financing, role
accorded to population, medication policy
Extent to which this policy is applied
Mechanisms set up by State to monitor and improve
quality of health care at local level, improve financial
accessibility of health care services
Existence of mutual benefit insurance code, insurance
code, social security code
Current organization of social protection: percentage
of population covered, characteristics of persons
covered (conditions of access), instruments and
institutions involved; health care benefits, contribution
levels, existence of social security reform, etc.
Legal framework governing contractualization with
health care providers
Sources
Political and legal framework: texts

of acts, decrees, codes

To establish a basis for selecting the target population
This objective will be of interest, in particular, to promoters responsible for selecting the target
population of the future scheme. The target population may be defined on a geographic basis:
the inhabitants of certain neighbourhoods or villages, the catchment area of certain health facilities, etc. It may also be defined on a socio-economic or socio-occupational basis: members
of a trade union or agricultural cooperative, clients of a microfinance institution, employees of
an enterprise, etc.
Selecting the target population generally involves taking into account both the needs of
various population groups (by giving priority to those whose needs for coverage are greatest)
and the projects likelihood of success (by giving priority to population groups that offer the
project the best chances for success). A compromise is often made, given that, these criteria
may to some extent be contradictory. All feasibility criteria must be taken into account. Only
the main ones are included here.
VOLUME 2
39
The information collected also aids in understanding the means of treatment sought in terms of
health services and the means used to finance health care expenses prior to the establishment
of the health micro-insurance scheme. This information on the initial situation may be used later
to measure the impact of the scheme.
Objective quality of the health facilities utilized by the target population
It is preferable for the selected target population to have access to a health care supply of
acceptable quality. The quality of the health facilities must conform to the standards set by the
national health policy.
Information
Extent to which condition of buildings, equipment and

qualifications of health care staff conform to standards
Actual coverage = Percentage of patients treated
in accordance with flowchart
Availability of medicines = Percentage of days without
stock shortages of essential drugs
Opening hours
Existence of an on-duty system outside of opening
hours
Average waiting time
Overload for a given service = Percentage
of time spent by physicians on a given service relative
to total time spent on all services
Average bed occupation rate = 100 Number
of hospital days / (Number of beds Number
of days in period under consideration)
Sources
Quality assessment
Access to the health facility

Access to the health facility is measured by the frequentation rate for each residential zone.
This is calculated on the basis of the number of new cases attributable to users from a given
residential zone and the total number of people in this residential zone who fall within the
catchment area of the health facility.
Information
Sources
Number of new cases by residential zone
Annual reports or registers of health

facilities
Size of the population of each zone
Regional censuses
Trend of socio-economic development among the target population

Information
Monetary income generating activities: marketing

of agricultural products, trade, etc.
Income levels
Sources
40
ILO / STEP
Social and organizational aspects

Information
Sources
Levels of education and literacy

Types of organization of population: associations,
tontines, groupings, cooperatives, etc.
Examples of the most representative recently
established organizations
For each organization identified:

Size: number of members and dependents
Existence (or lack) of a system of contributions or
premiums
Existence (or lack) of a common fund
Interviews with leaders of civil

society organizations
Practices of mutual aid in the event of illness

Information
For each organization or group identified:

Existence of a form of mutual aid in the event of illness
Type of resource pooling carried out in the event
of illness: spontaneous, systematic or organized
Type of assistance: donation, interest-free loan, loan
with interest
Amount of assistance: obligation extends to means
available or to amount needed by recipient
Methods of supplying the provident fund, when the
latter exists: contributions or premiums, replenishment
after each outlay, interest rates
Sources

Means of treatment sought and methods of financing access to health care 2

Information
Means of treatment sought in terms of health services

Methods of financing health expenses
Sources
Household surveys
Understanding the means of treatment sought by the population (self-medication, use of traditional practitioners, etc.) prior to the start-up of the health micro-insurance scheme allows subsequently for measuring the
impact of the scheme on these responses. Likewise, understanding peoples means of financing health care
expenses (liquidation of savings, sale of possessions, reliance on family assistance, reliance on credit, etc.)
allows for measuring the schemes impact on financial problems related to health. Nevertheless, these data on
the initial situation are not, a priori, utilized as criteria for selecting the target population.
VOLUME 2
41

To establish a basis for selecting the partner health care providers
This refers to providers whose health services will be covered by the scheme.
This objective will be of interest to promoters who wish to conclude agreements with health
care providers: fee agreements, patient reception procedures for insured persons, treatment
protocols, methods of payment (fee-for-service or global payment) or third-party payment
agreements.
This objective is also of interest to promoters who, without concluding any particular agreement with providers, wish to select those whose services will be covered by the scheme. This
prior selection helps to avoid the escalation in costs that occurs when insured persons give
precedence to the most expensive providers and to ensure that the health services covered by
the health micro-insurance scheme are of acceptable quality.
In a situation in which several health facilities are in competition with one another, the
selection of partner health care providers is generally made on the basis of criteria relating to
availability, quality and cost.
Note: When there is a monopoly on the health care supply, the question of making a
selection does not arise. When the health care supply is inadequate, the organization promoting the scheme or the support structure may consider setting up new health facilities.
The information collected may also be used to take a quick inventory of the health care supply,
which may serve as a basis for measuring the subsequent impact of the scheme.
Information on the health care supply

Information
Sources
Geographic distribution of health care supply: districts,

distances between providers

situation
Monograph of each health care provider:

Level of the health pyramid
Type: public or private health care provider,
or set up as part of a special programme
District
Type of care dispensed
Fees

situation
Objective quality of health facilities

The objective quality of health facilities must respond to standards set by the national health
policy.
Information

qualifications of health care staff conform to standards
Actual coverage = Percentage of patients treated in
accordance with flowchart
Sources
Quality assessment
42
ILO / STEP
Objective quality of health facilities (continued)

Information
Sources
Availability of medicines = Percentage of days without

stock shortages of essential drugs
Opening hours
Existence of an on-duty system outside of opening hours
Overload for a given service = Percentage of time spent
by medical staff on a given service relative to total time
spent on all services
Average bed occupation rate = 100 Number of
hospital days / (Number of beds Number of days in
period under consideration)
Quality assessment
Rationalization of treatment protocols

Perceived quality of health facilities

This refers to the quality of health facilities as perceived by users; it may differ significantly from
the objective quality.
Information
Quality of patient reception

Medical staff: competency, ability to listen
and empathize, existence of female medical staff
General staff: honesty, confidentiality
Opening hours
Actual presence of staff during opening hours / sufficient
numbers of staff
Availability of medicines
Sources
Household surveys
Patient surveys
Frequentation
The higher the frequentation of a health facility, the more likely it is that the health services of
that facility are accessible, of good quality and well regarded by users.
The frequentation of a health facility is measured by means of the frequentation rate, which
is calculated on the basis of the number of new cases and the size of the population of the
catchment area: Frequentation rate = 100 Number of new cases / Population.
Information
Sources
Number of new cases
Annual reports or registers

of health facilities
Size of population in catchment area
Regional censuses
VOLUME 2
43
Setting up selected health services in the event

of an inadequate health care supply
When the supply of certain services is inadequate, the organization promoting the scheme or
the support organization may consider taking a role in setting up selected health services, if the
latter correspond to real or expressed needs on the part of the target population: establishment
of a pharmacy, purchase of an ambulance, etc.
These activities do not, strictly speaking, pertain to the field of micro-insurance. They require
specialized skills and a considerable financial investment. It is therefore preferable for them to
be managed by a legal entity that is separate from the health micro-insurance scheme and for
their establishment to be financed through specific mechanisms.
Information
Estimated cost of setting-up and operating

health services
Local resources; in particular, available
health care staff
Administrative aspects (authorizations)
Sources
This Guide does not address efforts to set up

this type of operation. For more information,
please refer to the following guide and manual:
u Evaluer la viabilit des centres de sant,
co-published by Afvp, CIDR, ReMeD,
Medicus Mundi and the Ministry of
Cooperation of France, 1997

To establish a basis for selecting the health services
to be covered
This objective is of interest to all types of promoters. The selection criteria may vary depending
upon the type of organization in question. Civil society organizations and their support structures often give precedence to services that meet the health needs of households regardless
of whether or not such needs are felt or expressed and whose utilization may pose financial
difficulties. These organizations must strive to take into account the general needs of the population, but also the specific needs of the various groups that make up this population: women,
men, children, adolescents, workers in certain sectors, residents of certain villages, etc. Health
care providers may give precedence to the services that pose the most problems from their
perspective in terms of cost recovery and/or financing.

Information
List of services dispensed by health facilities

Official fees
Sources
Fee schedules of health facilities
44
ILO / STEP
Priority health services in terms of health needs (real, felt)

and services difficult to access for financial reasons
Information
Sources
Real needs: preventive and curative health services

that contribute significantly to lowering morbidity rates
of certain illnesses and mortality rates
Current means of evacuating patients to higher levels,
and needs in this area

situation
Needs expressed by population: preventive and

curative services, but also transport fees, purchase
of minor medical supplies, etc.
Difficulties expressed by population: temporary,
partial or total exclusion from a particular health
service
Difficulties expressed by population regarding
differing levels of health expenses
Household surveys
Specific needs of certain sub-groups of the population

A scheme may provide optional coverage for certain services if these services are of interest
to only a segment of the target population.
Example: The service of evacuating patients to the nearest hospital is of interest, a priori,
to people living far from the hospital.
Information
Sources
Identification of sub-groups of the population with

specific needs

Identification of the specific needs of these sub-groups

Identification of priority services for homogeneous
groups, such as residents of a particular village,
individuals in a particular age bracket, etc.
Household surveys
Example of findings: The emergency transport

service registers a particularly high score among
persons living more than 15 kilometres from the
hospital.
Health services considered a priority because of problems they pose

in terms of cost recovery and/or financing
Information
Problems regarding outstanding payments

Under-utilization of certain services or equipment
Sources
Annual reports or registers

VOLUME 2
45

direct payment or third-party payment
This objective is of interest to all types of promoters. A system of third-party payment is certainly
more convenient for patients, but it presupposes the establishment of specific management
mechanisms. Moreover, it contributes to raising patients medical consumption: inasmuch as
patients are required to disburse less, they are tempted to consume more. This results in a higher
premium level. In order to keep premiums at an acceptable level, schemes may offer third-party
payment for only a limited number of services.
The health services to be covered by third-party payment may be selected on the basis of
criteria relating to the cost of these services and to the degree of urgency and/or unpredictability characterizing their utilization.
Example: The hospitalization of a wounded person following an accident is at once
urgent and unpredictable.
Selection criteria for services to be covered by third-party payment

Information
Sources
Real needs: cost of services, degree of urgency and /

or unpredictability characterizing utilization of these
services

Needs expressed by population
Household surveys

on the health expenses of the target population
In order to be covered by a health micro-insurance scheme and to enable their dependents to
benefit from such coverage, members must pay premiums. In order to calculate an individuals
total premium, the individual premium corresponding to each covered service must first be calculated. These premiums are then added together to obtain the total premium corresponding
to an individual.
The individual premium corresponding to a given service is the sum of several components:
the pure premium (for the service)
the safety loading (for the service)
the unit operating costs
the unit surplus
For more details, please refer to:
u Premium calculation diagram, Step 5: Select the benefit plans and calculate the
corresponding premiums, Volume 1, Chapter 4, page 55.
46
ILO / STEP
The data collection is aimed exclusively at obtaining information to be used in calculating the
pure premium. There are two formulas for calculating the pure premium: the general formula
and the specific formula. These formulas are as follows:
General formula
Specific formula
Pure premium
=
Average unit cost
Pure premium
=
of this service
Average unit cost
This tool (3.1.6) lists the information to be collected in order to calculate, for each health service,
the indicators to be used as inputs in calculating the pure premium:
Useful if applying
the general formula
for calculating the pure premium

Useful if applying
Comparative advantages of the two formulas

The general formula may be used to calculate the pure premium regardless of the level of
coverage: 100 per cent of expenses incurred, percentage co-payment, deductible, maximum
benefit, etc. The specific formula may not be used to calculate the pure premium when the
benefit places a limit on the quantity of health services covered, such as a prenatal consultations benefit subject to a maximum of three consultations per person per year, or a hospital
accommodation benefit subject to a deductible for the first hospital day. On the other hand,
the specific formula is easier to apply.
The general formula is based on the probability of consuming the health service in question.
As will be seen, probability is also used as an input in making a precise calculation of the safety
loading. Consequently, the use of the general formula presents the additional advantage of
being able to calculate the safety loading precisely.
Important. The collected data relate to the past utilization of health services by
a population, which, in most cases, does not enjoy any health insurance coverage.
If the collected data are used as is, the figure obtained for the pure premium runs the risk
of being undervalued in the first year. For this reason, when calculating the probability or
the frequency of utilization of a health service, the input used is the proportion of patients
expected to use the health facility not the current proportion.
VOLUME 2
47
List of information needed to calculate probability

( useful if applying the general formula)
1. Recommended method of data collection and calculation: Based on household surveys
and data supplied by health facilities
The probability of utilizing a given health service is equal to the number of persons utilizing
the health service at least once in the course of the year, divided by the reference population
= Ps/Pr.
The probability ratio (Ps/Pr) may, in reality, be broken down in the following manner:
Ps/Pr = Pi/Pr Pf/Pi Ps/Pf
Pi/Pr is the number of persons who fall ill at least once in the course of the year, divided by
the reference population. It thus expresses the probability of falling ill. Pi/Pr is always less
than or equal to 100 per cent;
Pf/Pi is the expected proportion of patients that will use the health facility. (Note: The
expected proportion is higher than the current proportion when it is assumed that the establishment of a health micro-insurance scheme helps to reduce financial exclusion.);
Ps/Pf is the proportion of health facility users who use the health service.
Reference population: Pr
Persons who fall ill at least
once in the course of the year:
Pi (Pi < Pr)
Persons who use the health
facility at least once in
the course of the year: Pf
Persons who use the health
service at least once in
the course of the year: Ps
In order to calculate the probability of using a given health service, the following information
must be collected:
the probability of falling ill (Pi/Pr);
the current proportion of sick persons who have used the health facility. (An analysis of
the means of treatment sought or not sought in response to illness may be used to estimate
the expected proportion on the basis of the current proportion.);
the proportion of health facility users who use the health service (Ps/Pf).
Sources of information:
the probability of falling ill may be determined on the basis of household surveys containing a question on the number of family members who fall ill at least once in the course of
a given period;
likewise, the current proportion of sick persons who have used the health facility may be
obtained from household surveys containing a question on the means of treatment sought
in response to illness;
the proportion of health facility users who use the health service may be obtained from the
registers or annual reports of the health facilities.
48
ILO / STEP
Summary table of information and sources

Information
Sources
Probability of falling ill (Pi/Pr), i.e. the number

of persons who fall ill at least once in the course
of the year, divided by the size of the population
surveyed
Household surveys
The current proportion of sick persons who have used

the health facility
The proportion of health facility users who have used
the service (Ps/Pf)
Annual reports and registers

2. Alternative method of data collection and calculation of probability: Based

on the management data of pre-existing health micro-insurance schemes
The probability of using a given health service may also be obtained from the management
data of pre-existing health micro-insurance schemes, when the latter have been set up to serve
similar target populations.
The probability of using a given health service is equal to the number of persons utilizing
the health service at least once in the course of the year, divided by the number of persons
covered by the scheme (members and their dependents) = Ps/Pc
Population covered by the scheme: Pc
Population utilizing the health service at
least once in the course of the year: Ps
In order to calculate the probability of consuming the health service, the following information
must be collected:
size of the total population covered by the scheme (Pc);
number of persons who have used the health service at least once in the course of the
year (Ps).
Sources of information: information system of the health micro-insurance scheme; in particular,
registers and indicators relating to claims and membership.
Information
Total population covered by the scheme (Pc)

Number of persons who have utilized the health
service at least once in the course of the year (Ps)
Sources
Information system of a pre-existing

health micro-insurance scheme
VOLUME 2
49
List of information needed to calculate the average quantity covered

Among the persons who use the health service at least once in the course of the year, some
use it once, others twice, others three times, etc.
In order to calculate the quantity consumed, it is necessary to determine the number of times
the service was utilized by each patient.
This information may be obtained by:
analyzing the registers and annual reports of the health facilities; or

tracking a sample of patients; or
examining the management data of a pre-existing health micro-insurance scheme.
Regardless of the source of information, a summary table indicating on one row, either the
number of times the service was utilized (once, twice, etc.) or the number of units consumed
(one hospital day, two hospital days, etc.), and on the other, the number of patients concerned
is drawn up during the data collection.
Number of times the service was utilized
Number of patients concerned
This form of detailed presentation, indicating the number of patients concerned for each number
of times the service was utilized, makes it possible to calculate the average quantity covered.
The average quantity covered is calculated when determining the pure premium during the
scheme design phase (see 4.5.2(a), page 132).
Information
Number of utilizations of the health service per user

and per year
Sources

of the health facilities or
Tracking a sample of patients or
List of information needed to calculate the average unit cost

( useful regardless of which formula is applied)
The cost of utilizing a particular health service may vary. Thus, the cost of a consultation at a
public health facility (generally low in cost) may differ from that of a consultation with a private
provider. The cost of a medical prescription may also vary, depending upon the number of
medicines prescribed and the price of each.
In order to calculate the average unit cost, it is therefore necessary to collect the unit cost
corresponding to each utilization of the health service.
This information may be obtained by:
analyzing the registers and annual reports of the health facilities; or

tracking a sample of patients; or
examining the management data of a pre-existing health micro-insurance scheme.
50
ILO / STEP
Regardless of the source of information, a summary table containing the cost of the service
(1,000 monetary units (MUs), 1,200 MUs, 1,500 MUs, etc.) and the number of times this cost
was noted is drawn up at the time of the data collection:
Cost of the service
1000
1200
1500
1800
2000
10
25
50
10
Number of utilizations
This form of detailed presentation, indicating the number of utilizations for each cost level (or
increment), allows for calculating the average unit cost covered, regardless of the benefit terms
used (including flat-rate benefits/maximum benefits and monetary deductibles).
When the prevalence rate* for each pathology and the cost of the service for each pathology are known, the following summary table may be drawn up (the figures used are entirely
fictitious):
Pathology
Malaria
Respiratory problems
Diarrhoea
Prevalence rate
10%
15%
9%
Average cost of a consultation
500
500
500
Average cost of a prescription
700
1 000
300
Average cost of laboratory tests
500
600
500
This form of presentation does not, however, allow for calculating the average unit cost for all
benefit terms (it is ill-suited to flat-rate benefits/maximum benefits and monetary deductibles).
The average unit cost covered is calculated when determining the pure premium during the
scheme design phase (see 4.5.2(a), page 136).
Information
Unit cost of utilizing the health service
Sources

of health facilities or
Tracking a sample of patients or
List of information needed to calculate frequency

( useful if applying the specific formula)
1. Recommended method of data collection and calculation: Based on household surveys
and data supplied by health facilities
The frequency of utilization of a given health service is equal to the number of times the service
is utilized in the course of the year, divided by the reference population = Ns/Pr.
The information needed to calculate the frequency of utilization may, in principle, be
obtained from the registers and annual reports of the health facilities concerned. In this case,
the reference population is that corresponding to the scope of the health facility, which may,
in fact, be different than the population of its catchment area.
However, the frequency of utilization of a service, calculated on the basis of data supplied
by health facilities, runs the risk of being underestimated. This is because the establishment of
a health micro-insurance scheme will very likely contribute to increasing the utilization of the
VOLUME 2
51
covered services by reducing financial exclusion. In order to estimate the expected frequency
of utilization of the health service, it is therefore necessary to take into account the means of
treatment sought or not sought by the target population in response to illness. This requires that
part of the data be collected from households.
The frequency ratio (Ns/Pr) may, in reality, be broken down in the following manner:
Ns/Pr = Ni/Pr Nf/Ni Ns/Nf where:
Ni/Pr is the number of cases of illness in the year, divided by the reference population,
which equals the frequency of illness among the reference population. Ni/Pr may be less
than or greater than 100 per cent;
Nf/Ni is the expected proportion of cases of illness to be treated by the health facility
relative to the total number of cases of illness. (Note: It is conceivable that the expected
proportion will be greater than the current proportion, given the reduction in financial exclusion resulting from the establishment of a health micro-insurance scheme.);
Ns/Nf is the share accounted for by the health service in the total number of cases treated
by the health facility.
Reference population: Pr
Number of cases of illness
in the course of the year: Ni
(Ni may be > or < Pr)
Number of cases treated
by the health facility
in the course of the year: Nf
of the service in
the course of the year: Ns
In order to calculate the frequency of utilization of the health service, the following information
must be collected:
number of cases of illness among the reference population (Ni and Pr);
current proportion of cases of illness treated by the health facility. (An analysis of the
means of treatment sought or not sought in response to illness may be used to estimate the
expected proportion on the basis of the current proportion.);
share accounted for by the health service in the total number of cases treated by the health
facility (Ns/Nf).
Sources of information:
the number of cases of illness among the reference population may be obtained from
household surveys requesting information on the number of cases of illness among family
members within a given period;
the proportion of cases of illness treated by the health facility may also be obtained from
household surveys containing a question on the means of treatment sought in response to
illness;
52
ILO / STEP
the share of the health service in the total number of cases treated by the health facility may
be obtained from the registers or annual reports of the health facilities.
Information
Sources
Number of cases of illness among the population surveyed

(Ni/Pr)
Household surveys
Proportion of cases of illness treated by the health facility

Share accounted for by the health service in the total
number of cases treated by the health facility (Ns/Nf)
Annual reports and registers of

health facilities
2. Alternative method of data collection and calculation of frequency: Based

The frequency with which a health service is utilized may also be determined on the basis
of the management data of pre-existing health micro-insurance schemes, provided that such
schemes have been set up to serve similar target populations.
The frequency of utilization of a health service is the number of times the service was
utilized in the course of the year by the persons covered by the scheme (members and their
dependents) = Ns/Pc
Population covered by the scheme: Pc
Number of times the health service
was utilized in the course of the year: Ns
In order to calculate the frequency of utilization of the health service, the following information
must be collected:
total population covered by the scheme (Pc);
number of times the health service was utilized in the course of the year (Ns).
Sources of information: information system of the scheme, in particular, registers and indicators
relating to claims and membership.
Information
Total population covered by the scheme (Pc)

Number of times the health service was utilized in the
course of the year (Ns)
Sources
Information system
of a pre-existing health
micro-insurance scheme
VOLUME 2
53

To establish a basis for calculating premiums based on the
operating costs of health facilities
The individual premium must enable the scheme to cover (in whole or in part) the share of
the health facilities operating costs that correspond to each individual. This is determined
by estimating the total operating costs of the health facilities and dividing these costs by the
expected number of users.
Note: In some cases, it is possible to estimate the operating costs of each branch of
activity of a health facility. Estimating costs according to branch allows for more refinement
and a greater number of possibilities when choosing the health services to be covered. The
scheme may thus decide to cover only some of the services offered by a health facility.
Example: In the case of a hospital, it is possible to estimate the operating costs of the
following services: Maternity/obstetrics, Surgery, Outpatient consultations, etc.
Estimated fixed costs of a health facility

Estimated fixed costs are determined on the basis of current fixed costs and any additional
expenses contemplated for the next accounting period: investments, recruitments, etc.
Information
Current fixed costs: amortization of equipment, maintenance

of buildings and equipment, payroll costs, training costs, etc.
Sources
Accounting data of health

facilities
Estimated variable costs of a health facility 3

Estimated variable costs are determined on the basis of current variable costs, estimates of the
schemes population penetration rate and various growth rates linked to the establishment of
the scheme.
Information
Current variable costs, i.e. those related to the number

of users: purchase of medicines, consumable supplies, etc.
Sources
Accounting data of health

facilities
Estimated number of users

Premiums are calculated on the basis of the estimated fixed and variable costs, and the
expected number of users. The expected number of users is based on the number of current
users (each user being counted only once, even if he or she uses the health facility several times
in the course of the year) and the estimated growth rate in the number of users.
Information
Number of current users, each user being counted only once
Sources

In health micro-insurance schemes set up by health care providers, insurance coverage is, in many cases,
not provided for variable costs such as medicines or consumable supplies, which remain at the users expense.
54
ILO / STEP

To evaluate the target populations willingness to pay
This objective is of interest to all promoters. The target populations willingness to pay (in other
words, what individuals are prepared to pay) may be used to define a maximum premium
amount not to be exceeded. When income is seasonal in nature, peoples willingness to pay
may be high at certain times of the year and little or nothing at others. It is preferable to adapt
premium payments to these variations. Taking the level of willingness to pay into account in
choosing the amount and periodicity of premium payments is a determining factor in the success of the scheme as far as enrolments and the collection of premiums are concerned.
Note: The goal at this point is not to determine the amount of the premium. Rather it is to
identify a range of premium amounts that could serve as a reference when defining various scenarios within the context of financial feasibility. Moreover, the stated intentions of
the target population regarding premium levels must be treated with precaution. Thus, the
fact that 90 per cent of the persons surveyed suggest a premium of 50 MUs per person
per month does not mean that they would necessarily join an insurance scheme whose
premiums were set at that level. Other factors also have a bearing on individuals enrolment in a particular scheme, such as the advantages offered by the proposed services,
the level of understanding of the scheme, the quality of the covered health services, the
degree of confidence, etc.
Premium level and seasonal nature of willingness to pay

Information
Sources
Stated intentions of population regarding premium

levels
Seasonal nature of willingness to pay in relation to
seasonal nature of income
Homogenous groups, in terms of willingness to pay,
including level of willingness to pay of each group
Household surveys
Current contribution or premium levels in civil society

organizations functioning on the basis of periodic
contributions or premiums (cooperatives, associations,
health micro-insurance schemes) and periodicity
of the payment of these contributions or premiums
(monthly, during harvest season, etc.)
Other health micro-insurance
schemes
VOLUME 2
55

negotiating with transport operators, collaborating
with prevention programmes, and obtaining information
on public aid
This objective is of interest to promoters who plan to negotiate partnership agreements with
health care providers. These may concern fees, patient reception procedures for insured persons, treatment protocols or the method to be used to pay for health services (fee-for-service or
global payment). They may also concern third-party payment agreements. In the case of the
latter, an understanding must also be reached regarding verification procedures to be followed
and rules pertaining to invoicing and payment. Experience has shown that such agreements
are often informal; they may be formalized through written agreements. This requires knowing
who the interlocutors of the scheme will be at the time the agreements are prepared and what
specific aspects the agreements will address: fees, quality standards, etc.
This objective is also of interest to promoters who plan to finance patient evacuations from
one level of the health pyramid to another and who consequently wish to conclude a fee
agreement with an association or trade union of transport operators.
Lastly, this objective is of interest to promoters who wish to promote health education and
prevention among their members by having them participate in a prevention programme organized by the State, an NGO or a support organization. Such activities complement the efforts
of micro-insurance, since prevention and health education help to reduce the prevalence of
certain diseases and, consequently, the costs of the health micro-insurance scheme.
In certain countries the State grants financial assistance to health micro-insurance schemes:
premium subsidies, supply of support services at advantageous rates, financing of guarantee
funds *, etc. It is important to obtain information on whatever possibilities may exist.
Legal framework governing contractual arrangements with health care providers
Information
Existence of a legal framework, provisions

of this framework
Sources

Political and legal framework
Identification of interlocutors for concluding agreements with health care providers

Information
Sources
Organisation of the health pyramid

Respective responsibilities of the health facilities
and regulatory bodies in the day-to-day operation
of the health facilities: fee setting, patient reception
procedures, rules concerning procurement
of medicines, treatment protocols, organization
of management

Method used to manage the health facility: existence

of a management committee, self-management, etc.

56
ILO / STEP
Estimation of fees with a view to defining contractual fees

Information
Sources
Official fees
Current method of fee-setting for health services: feefor-service; fee per cluster of health services (including
one or more health services depending on patients
needs); per hospital day
Estimates of overcharging, if any
Patient surveys
Interviews with local NGOs
working to eliminate corruption
Fees negotiated by other health micro-insurance

schemes in the region with comparable health
facilities: discounts, advantageous rates

schemes
Levels of quality and operations of health facilities

with a view to defining quality standards
Information
Sources
Condition of infrastructure and equipment, needs

for equipment
Average waiting time (objective, perceived), actual
presence of medical staff (perceived), sufficient
numbers of staff
Availability of medicines (objective, perceived)
Quality assessment
Patient surveys
Procedures applied to ensure confidentiality

of medical records
Patient surveys

Treatment protocols utilized

Methods of payment of health care providers

Information
Sources
Current method of fee-setting for health services:

fee-for-service, fee per cluster of health services;
per hospital day, etc.
Method of payment preferred by health facility: feefor-service, fee per cluster of health services,
per hospital day, per episode of illness, capitation
(annual global fee for each insured person)
Preferred frequency of payment in the context
of a third-party payment mechanism

VOLUME 2
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Agreements with transport operators

Information
Possibility of an agreement
Estimated fees for journeys to evacuate patients
Possibility of a third-party payment mechanism
Sources
Interviews with transport operators
Participation in health education and prevention programmes

Information
Existence of health education and prevention

programmes, programmes to provide medicines
and screening
Activities carried out by programmes (screening,
prevention, access to treatment) and diseases involved
(HIV infection, tuberculosis)
Methods of collaboration
Sources

Interviews with officials in charge
of prevention programmes
Existing public financial aid and grant conditions

Information
Survey of financial aid available

Conditions of grant (conditions to be met)
Sources
Political and legal framework

To establish a basis for defining the organization
and operation of the scheme
This objective is of interest to all types of promoters.
It involves identifying among the existing civil society organizations including health microinsurance schemes, if applicable intelligent forms of organization or effective systems of
management. It also involves assessing the extent of any networks that may have been set up
by these organizations.
Moreover, information concerning the population penetration rates achieved by other
health micro-insurance schemes or concerning the percentages of management costs may
be used as references when calculating premiums or drawing up the budget estimate of the
health micro-insurance scheme.
The idea is therefore to take advantage of local know-how and experience.
Formation of networks
Information
Existence and characteristics of the network, number

of branches and locations, activities of branches,
numbers of staff at each branch
Sources

58
ILO / STEP
Methods of organization
Information
Legal status of organization

Decision-making, executive and supervisory bodies
Role of members in organization
Sources

schemes
Principal rules of management

Information
Membership rules
Mechanism used to collect premiums, level of premium
collection obtained
Sources

schemes
Other indicators
Information
Population penetration rates, percentage

of management costs
3.2
Sources

schemes
Sample data-collection materials

Suggested procedure for developing data-collection materials
Before developing the data-collection materials for a particular source of information, it is
essential to have first identified the information to be collected from that source.
In determining the list of data to be collected from each source, the steering committee
may refer to the implementation chart that was drawn up during the definition of the datacollection procedure. The first two columns of this chart contain, for each source of information
the steering committee plans to consult, the list of data to be collected from this source. For
more information on the implementation chart, please refer to:
u Complete the implementation chart, Step 1: Define the data-collection procedure,

Once it has been determined which data are to be obtained from each source, data-collection
materials may be developed. In developing these materials, the steering committee may refer
to the sample data-collection materials provided below.
VOLUME 2
3.2 SAMPLE DATA-COLLECTION MATERIALS
59
Description of sample materials

Five samples (tools) are provided:
3.2.1 Sample data-entry form for collecting data from the annual reports and registers of
health facilities;
3.2.2 Sample tracking form for a sample of patients;
3.2.3 Sample interview form for health care staff and managers of health facilities;
3.2.4 Sample interview form for health authorities;
3.2.5 Sample household survey questionnaire.
A brief reminder of the steering committees objectives and the data it wishes to collect in order
to meet these objectives is included for each sample.
PRECAUTIONS FOR USE
The sample data-collection materials provided are tools that the steering committee may
use to develop its own data-collection materials.
Precaution No. 1: They should not, in any circumstances, be used as models. The
samples provided here meet some (but not all) of the objectives and make it possible to
collect a selection of useful and pertinent data in a given context. In order to develop
appropriate data-collection materials, it is therefore preferable not to copy existing datacollection materials and/or those that have been used with success, but rather to begin by
listing the data one wishes to collect (see above-mentioned procedure).
Precaution No. 2: They are not exhaustive. Only five samples of data-collection
materials (corresponding to five sources of information) are provided. All the other necessary materials may be devised in a similar fashion.
3.2.1 Sample data-entry form for collecting data

from the annual reports and registers of health facilities
Objectives of the steering committee
The annual reports and registers of health facilities may be used to collect data that meet various objectives: objective 2 (to establish a basis for selecting the target population); objective 3
(to establish a basis for selecting the partner health care providers); objective 4 (to establish a
basis for selecting the health services to be covered); objective 6 (to establish a basis for calculating premiums based on the health expenses of the target population); and objective 7 (to
establish a basis for calculating premiums based on the operating costs of health facilities).
In the following sample, the steering committee pursues only objectives 3 and 6. It has not
yet pre-selected the schemes partner health care providers and is seeking data to be used
in making this selection (objective 3). It wishes to establish a basis for calculating premiums
based on the health expenses of the target population (objective 6). It does not yet know which
formula for calculating the pure premium (general formula or specific formula) it will use.
60
ILO / STEP
SAMPLE DATA-ENTRY FORM

Source: Annual reports and registers
Health facility:
District, Address:
Date of collection:
Frequentation and utilization of health facility
Calculate frequentation
rates to use in preparing
selection of partner health
facilities (objective 3)
Reference population
Year
Number of new cases
Year
Total number of utilizations
Year
Number of users
(each one counted once)
Year
Probability, frequency and average quantity covered
Name of service
Number
of utilizations
Number of users
(each one
counted once)
Calculate the frequency

of utilization of the
health service (objective 6
specic formula)
Calculate the probability

of consuming the health
service (objective 6
general formula)
Calculate the average

quantity covered
(objective 6 general
formula)
Calculate the average

unit cost of each service
(objective 6 regardless
of which formula is used)
Average unit cost

Names
of pathologies
Prevalence rate
Average cost
of a consultation
Average cost
of a prescription
Average cost of
laboratory tests
Number of units
consumed
VOLUME 2
61
List of information to be collected

If the steering committee has already drawn up an implementation chart, the list of information
to be collected from the annual reports and registers of the health facilities has already been
established.
The various items of information to be retrieved from the annual reports and registers may
be used to calculate the frequentation rates of the health facilities. These rates may serve as
criteria to be applied in the process of selecting the health facilities (objective 3). The following information is required:
the number of new cases registered by the health facility;

the population of the catchment area of the health facility (if unavailable from the health
facility, this item of information may be obtained from the health coverage plan).
The annual reports and registers may be used to collect various items of information that will
serve as inputs in calculating the probability, average quantity covered, average unit cost and
frequency of utilization of each health service.
In order to calculate the probability, the following information must be collected:
the proportion of health facility users who use the service.
In order to calculate the average quantity covered, the following information must be collected:
the number of utilizations of the health service (or number of units consumed) per user and
per year.
In order to calculate the average unit cost, the following information must be collected:
the average unit cost of utilizing the health service for each pathology, and the prevalence
rate of each pathology.
In order to calculate the frequency of utilization, the following information must be collected:
the share accounted for by the health service in the total number of cases treated by the
health facility, i.e. the number of utilizations of the health service divided by the number of
utilizations of the health facility.
3.2.2 Sample tracking form for a sample of patients

Tracking a sample of patients is a means of collecting data that may, in turn, be used to calculate the average quantity covered and the average unit cost (objective 6).

to be collected from tracking a sample of patients has already been established. The information to be collected is as follows:
the number of utilizations of the health service per user and per year (which may be used
to calculate the average quantity of units consumed);
the unit cost of utilizing the health service (which may be used to calculate the average
unit cost).
62
The patient being

tracked consumed one
consultation. He or she
was also hospitalized for
three consecutive days.
ILO / STEP
SAMPLE TRACKING FORM

Source: Tracking a sample of patients
Health centre:
District, Address:
The patient did not

purchase all the
prescribed medicines and
consumables. In order to
calculate the average unit
cost of the Medicines and
medical consumables
service, the cost of
the prescribed items
not the actual purchase
amount must be taken
into account.
Two medical prescriptions

were issued, one for
medicines available at the
health centre, the other for
medicines available only
from private pharmacies.
In many cases, providers
do not limit their
prescriptions to products
available from the
pharmacy of their health
centre, adding speciality
items or brand-name
products that patients must
purchase from private
pharmacies, in particular.
This form may be used
to estimate the share
accounted for by these
products in the total
average expenses of
patients. A health microinsurance scheme may
provide coverage for
these products, but any
decision to do so must
be examined carefully,
as it may lead to the
over-prescription (most
often at the request of
the patient) of brandname as opposed to
generic products.
Date of collection:
Service concerned
Curative consultation
Minor hospitalization
Minor surgery
Post-natal consultation
Delivery
Care for children aged 0-5 years
Health services
Curative consultation
Quantity consumed
Unit cost
400 MUs
3 days
800 MUs per day
Post-natal consultation
Minor surgery
Minor hospitalization
(number of days/cost of
one day)
Care for children aged 0-5
Delivery
Medicines and medical consumables

Medicines purchased at the health centre pharmacy
Number of prescriptions
Cost of prescribed items
Purchase amount
1,000 MUs
800 MUs
Medicines and medical consumables to be purchased

outside the health centre (private pharmacies)
Cost of prescribed items
Purchase amount
3,000 MUs
VOLUME 2
63
Note: In the case of medicines and medical consumables, the cost of the prescribed
items may be distinguished from the actual purchase amount. This makes it possible to
determine the percentage of patients who do not purchase all the medicines listed on the
prescription owing to a lack of money or for other reasons (for example, if they consider
certain medicines to be unnecessary). Nevertheless, the calculation of the average unit
cost is based on the cost of the prescribed items.
Tracking a sample of patients

A sample of patients may be tracked through registers kept by the health facility. A sample
of patients may be selected from the consultations register, while their consumption history
is retrieved from the registers of the other services (pharmacy, laboratory, etc.) of the health
facility.
If these registers are not sufficiently detailed and if the health facility keeps medical records
for each patient, the necessary data may be collected from the medical records of the patients
in the sample. As in the above case, a sample of patients is selected and the medical consumption of each patient over the course of a given period is recorded.
Lastly, if medical records are non-existent or incomplete, the necessary data may be collected by filling out a tracking form each time a patient in the sample utilizes the service.
The sample tracking form provided here is based on this last option, since the registers and
medical records do not contain all the information sought.
3.2.3 Sample interview form for health care staff

Interviews with the health care staff and managers of health facilities may be used to collect
the data needed to meet various objectives.
In the following sample, the steering committee pursues only a few objectives: it wishes
to increase its understanding of the health context (objective 1); it seeks to obtain information
that will help guide its selection of the health services to be covered by the scheme (objective 4); and it wishes to establish a basis for negotiating agreements with health care providers
(objective 9).

If the steering committee has already set up an implementation chart, then the list of information
to be collected through interviews with the health care staff and managers of the health facilities
has already been established. This involves information on the health context and problems
relating to access to health care. It also involves identifying the health services that correspond
to the populations priority health needs and those that pose problems in terms of cost recovery
or financing. Lastly, these interviews may be used to collect the information needed to establish
a basis for negotiating agreements with health care providers.
64
ILO / STEP
SAMPLE INTERVIEW FORM

Source: Health care staff, Manager of health facility
Health centre:
Interlocutor(s):
District, Address:
Date of collection:
Data that may be used to understand the context (objective 1)
Health situation, problems relating to access to health care

1.
What are the main diseases affecting the population?

Among children:
Among adult women:
Among adult men:
2.
Which ones cause the greatest number of deaths?

Among children:
Among adult women:
Among adult men:
3.
Are there problems in your district relating to sanitation or to drinking water?
4.
What are the worst periods of the year in terms of health?
5.
Do users nd it difcult to pay for health services?
6.
At what periods of the year most particularly?
7.
Do you sometimes receive requests for credit from patients who cannot pay for
health expenses?
8.
Have initiatives been taken to make it easier for patients to pay for health services
(mutual aid funds, credit plans, etc.)? If so, which ones?
9.
Do some users come from far away? From which villages?
10.
Do they nd it difcult to reach the health centre?

Data that may be used in selecting the health services
to be covered by the scheme (objective 4)
Priority health services

11.
In your opinion, what health services (preventive, curative) are essential for reducing
mortality rates and the morbidity rates of certain diseases?
Among children:
Among adult women:
Among adult men:
12.
Which health services pose the greatest problems for you in terms of cost recovery
or nancing (under-utilization)?
VOLUME 2
Data that may be used to understand the current functioning of the health facility
and to identify the specic aspects to be addressed in agreements
(fees, standards of quality) (objective 9)
Current functioning of the health facility

13.
What patient reception procedures are followed?

Example: Upon arrival, patients must rst go through the health facility counter.
14.
Do patients ever fail to follow these procedures?
14(a)
If yes, in what circumstances?
15.
Are patients required to wait a long time before being seen by the medical staff?
15(a)
If yes, what is the reason for this wait?
15(b)
What steps could be taken to shorten waiting times?
16.
Does the pharmacy of the health facility sometimes have stock shortages of certain
medicines?
16(a)
If yes, to what is this attributable?

Examples: Only one supplier, centralized procurement
16(b)
What steps might be taken to avoid stock shortages?
17.
What procedures are followed in order to respect the privacy of the doctor-patient
relationship and the condentiality of medical records?
18.
Do you use treatment protocols that are predened according to pathology?
18(a)
If yes, who denes these protocols?
18(b)
Can you develop them further?
19.
How are fee schedules established? And what is the current method of invoicing
(fee-for-service, per episode of illness, etc.)?
20.
Do you know whether patients sometimes offer tips to staff members in order to be
cared for more quickly?
20(a)
If yes, do you know the amount of such tips? (range)
Data that may be used to identify the interlocutors for the agreements (objective 9)
Interlocutors for the agreements

21.
We plan to set up a health micro-insurance scheme.

The purpose of this scheme is to make it easier for users to pay for health services.
This scheme could conclude agreements with certain health facilities in order to
establish specic operating rules or fees that differ from the ofcial fees.
Are you in a position to conclude this type of agreement?
If not, to whom should we speak?
65
66
ILO / STEP
3.2.4 Sample interview form for health authorities

Interviews with the health authorities may be used to collect the data needed to meet various
objectives.
In the following sample, the steering committee wishes to improve its understanding of the
context (objective 1). It also wishes to establish a basis for concluding agreements with health
care providers (objective 9).

to be collected through interviews with the health authorities has already been established.
These include information on the health context and the health care supply, as well as information on the political and institutional environment relating to health and social protection. These
interviews also allow for the collection of data to be used as a basis for setting up agreements
with health care providers.
SAMPLE INTERVIEW FORM

Source: Health authorities
Interlocutor(s):
Organization:
Date of collection:
Data that may be used to understand the context (objective 1)
Health context, problems concerning access to health care

1.
What are the main health problems of the population?

Among children:
Among adult women:
Among adult men:
2.
Which ones cause the most deaths?

Among children:
Among adult women:
Among adult men:
3.
What are the main health indicators?

Mortality rate =
Infant mortality rate =
Maternal mortality rate =
Undernutrition rate =
4.
Are there problems in the region relating to sanitation or to drinking water?
5.
What are the worst periods of the year as far as health is concerned?
VOLUME 2
6.
6(a)
6(b)
Do the users of the health facilities nd it difcult to pay for health services?
If so, which services in particular?
At what time of the year in particular?
7.
Have initiatives been developed to make it easier for patients to pay for health
services (mutual aid fund, credit plans, etc.)? If so, which ones?
8.
8(a)
Do the users of health facilities nd it difcult to access the health facilities?

In which districts is this problem particularly pronounced?
Data on the health care supply

9.
How is the health care staff of the following establishments perceived by users:
the <NAME> hospital?
the <NAME> health centre?
the <NAME> clinic?
10.
10(a)
Is the quality of the health services at these establishments sometimes inadequate?

What are the main problems encountered?
Examples: Long waits, health care staff absenteeism, stock shortages of medicines,
poor condition of equipment, etc.
11.
Do programmes exist for prevention, distribution of medicines and free screening

(particularly for HIV infection, tuberculosis)?
Political and institutional environment

12.
What are the main components of the national health policy?

In particular, as concerns:
privatization of the health care supply?
level of autonomy in managing health care facilities?
sector financing (cost recovery)?
role accorded to the people?
policy regarding medicines?
prevention strategies?
12(a)
What is the status of the application of each component of this policy?
13.
Have specic mechanisms been set up by the State to:

monitor and improve the quality of health care at the local level?
improve the financial accessibility of health services?
14.
Does a special legal environment exist for health micro-insurance schemes?

For example, existence of a mutual benet insurance code, an insurance code, a
social security code.
Is there a legal framework that enables health micro-insurance schemes to conclude
agreements with the health care supply? Does the health care supply benet from a
degree of administrative, nancial and/or managerial autonomy? If so, which one?
14(a)
15.
When was the social security sickness insurance branch established?
16.
Are reforms of the sickness insurance branch under way?
17.
What percentage of the population is covered by the social security sickness

insurance branch?
18.
What are the qualifying conditions for the sickness insurance provided by social
security?
67
68
ILO / STEP
Sample interview form (cont.)

19.
What type of coverage does sickness insurance offer in terms of health expenses?
20.
How much are sickness insurance contributions (approximately)?

Share paid by employers (as % of wages):
Share paid by employees (as % of wages):
21.
Are there any mechanisms of social protection for disadvantaged persons?

How do these work (types of beneciaries, benets, etc.)?
Data that may be used to identify the interlocutors for the agreements (objective 9)
Interlocutors for the agreements

22.
We plan to set up a health micro-insurance scheme. The purpose of the scheme is

to make it easier for users to pay for health services. This scheme could conclude
agreements with certain health facilities in order to establish specic operating rules
or fees that differ from the ofcial fees.
Do you consider this type of agreement to be possible?
Who has the authority to conclude this type of agreement: The managers of the
health facilities? The regional board of health inspectors? The health ministry?
3.2.5 Sample household survey questionnaire

Household surveys may be used to collect the data needed to meet various objectives.
In the following sample, the steering committee wishes to establish a basis for selecting the
partner health care providers (objective 3); establish a basis for selecting the priority health
care services to be covered (objective 4); identify the services for which a third-party payment
is particularly important (objective 5); evaluate the level of the target populations willingness to
pay (objective 8) and the possible seasonal variations in the latter. It also wishes to establish a
basis for calculating premiums (objective 6), but does not yet know which formula for calculating the pure premium it will use (the general formula or the specific formula).

to be collected through household surveys has already been established.
These surveys may be used to collect information needed to:
evaluate the perceived quality of the health facilities;

identify the health services that the health micro-insurance scheme may cover as a matter
of priority because they correspond to the expressed health needs of the population or
because they pose the greatest financial difficulty to the population;
determine the services for which third-party payment is a priority;
calculate premiums, and in particular, to calculate the probability of consuming each health
service (useful if applying the general formula for calculating the pure premium) and the
frequency of utilization of each health service (useful if applying the specific formula);
VOLUME 2
69
estimate the target populations willingness to pay;

ascertain peoples responses to illness in terms of the means of treatment sought (self-medication, traditional pharmacopoeia, purchase of medicines from sidewalk vendors or from
the pharmacy, hospital consultation, etc.) and their means of financing health expenses
(liquidation of savings, borrowing money, help from a close friend or relative, etc.), prior to
the establishment of the health micro-insurance scheme. The same questions may later be
put to scheme beneficiaries. A comparison of responses pertaining to the initial situation and
those pertaining to beneficiaries covered by the scheme will allow for an initial estimation
of the impact 4 of the health micro-insurance scheme.
SAMPLE SURVEY QUESTIONNAIRE

Source: Household survey
Questionnaire No.:
Name of person surveyed:
Village/neighbourhood:
Date of survey:
Information that may be used to compare different health facilities
on the basis of quality (perceived by users) and to establish a basis for
selecting partner health care providers (objective 3)

Have you already used the health facility
?
Yes No (If no, please proceed to question No. 10)
1.
Please rate the quality of patient reception:

Very good Good Average Poor Very poor
2.
Please rate the competency of the medical staff:

Adequate Inadequate
3.
Did the medical staff take the time to listen to you?

Yes No
4.
Are women treated by female medical staff?

Yes No
5.
At the time of your last consultation or hospitalization did you have to pay tips to
certain members of the medical staff?
Yes No
Nevertheless, an accurate measurement of the impact would require studying control populations not
covered by the scheme, since improvements noted by beneficiaries might be attributable to factors that affect
other population groups as well (in other words, the impact of the scheme must be isolated from other potential
improvement factors).
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ILO / STEP
Sample survey questionnaire (cont.)

6.
How long did you have to wait the last time before you were treated?
More than 7 hours Between 4 and 7 hours Between 1 and 4 hours
Less than 1 hour
6(a)
How long did you have to wait the last time before you were given an appointment?
More than 1 month Between 1 week and 1 month Less than 1 week
Never made an appointment
7.
Are the opening hours of the health facility compatible with your working hours?
Yes No
8.
Are certain members of the health care staff sometimes absent during opening hours
for reasons not related to their work?
Yes No
9.
The last time a physician at the health facility issued you a medical prescription:
All the medicines were available at the health facility pharmacy
Some medicines were not available
Information that may be used to calculate probability and frequency (objective 6)
10.
Composition of the respondents family

Men
Women
Children (< 15 years)
Number
Information that may be used to calculate the probability of consuming
the various health services at least once in the course of the year
(objective 6 when using the general formula for calculating the pure premium)
If the general formula for calculating the pure premium has been chosen
11.
Since <DATE, RELIGIOUS HOLIDAY>, has anyone in your family been ill
(excluding childbirth)?
Yes No
If yes, how many persons were ill at least once?
Note: Persons who were ill several times should be counted only once.
Children
Adult women
Adult men
12.
Since <DATE, RELIGIOUS HOLIDAY >, have there been any births in your family?
Yes No If yes, how many women have given birth?
Information that may be used to calculate the frequency of utilization of the health
services (objective 6 when using the specic formula for calculating the pure premium)
If the specic formula for calculating the pure premium has been chosen
11.
Since <DATE, RELIGIOUS HOLIDAY>, has anyone in your family been ill
(excluding childbirth)?
Yes No
If yes, how many cases of illness have there been?
Children
Adult women
Adult men
12.
Since <DATE, RELIGIOUS HOLIDAY >, have there been any births in your family?
Yes No If yes, how many women have given birth?
VOLUME 2
71
Question No. 13 may be used to calculate probability or frequency (objective 6). It may also
be used to understand the means of treatment sought and the means of nancing used
prior to the start-up of the scheme (useful for measuring the impact of the scheme)
Regardless of the calculation formula used: general or specic

13.
During the last episode of illness in your family, what means of treatment
did you seek? (Several replies possible.)
No treatment sought
Healer and traditional pharmacopoeia
Purchase of medicines from sidewalk vendors from pharmacy
Consultation at dispensary
Hospitalization at health centre
Consultation at health centre
Hospitalization at public hospital
Consultation at public hospital
Hospitalization at clinic
Consultation at private practice
Other:
Consultation at clinic
And how did you nd the money to pay for this treatment?
Money set aside at home
Sale of possessions (cattle, jewellery, tools, means of transportation)
Loan from friends/neighbours/relatives
Loan from a savings and credit fund
Loan from a merchant
Collection taken up from coworkers
Gifts from friends/neighbours/relatives Tontine
Other:
Information that may be used to identify the health services that pose nancial difculties
and to establish a basis for selecting the health services to be covered (objective 4)
Priority health services

14.
The last time a physician issued a medical prescription (to you or to a member of
your family), did you purchase all the medicines listed on the prescription?
Yes No
If No:
We purchased only the medicines that were necessary
We purchased only some of the medicines because the pharmacy was out
of certain medicines
We purchased only some of the medicines because we did not have
enough money
We did not purchase any medicines owing to a lack of money
15.
Were you or any member of your family required to forego, at least once in the
course of last year, one of the following services, owing to a lack of money?
(non-exhaustive list)
Pharmacy
X-ray
Laboratory
16.
Starting at what level of medical expenses are you required to resort to outside
assistance (loan, gift, credit) or to the sale of a possession? (non-exhaustive list)
500 MUs
1,000 MUs
2,000 MUs
3,000 MUs 10,000 MUs
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ILO / STEP
Sample survey questionnaire (cont.)

Information that may be used to identify the health services considered
to be the most useful, and to establish a basis for the selection
of the health services to be covered (objective 4)
Willingness to join scheme and priority health services

17.
Would you be interested in joining a health insurance scheme?

Yes No
Briey explain what this would entail.
18.
If you answered yes to question 17, which health services would you prefer that this
scheme cover as a matter of priority?
Please check no more than 4 services maximum
Pharmacy
X-rays
Laboratory
Maternity (prenatal care, delivery, post-natal care)
Hospitalization at dispensary
Other (please specify)
Emergency transportation
Information that may be used to evaluate the amount and seasonal variation
of willingness to pay, as it relates to variations in income (objective 8)
Income and ability to pay

19.
During which months of the year is your income the highest?

January
February
March
April
May
June
July
August
September
October
November
December
20.
If you were to join a health micro-insurance scheme, with what frequency would you
be able to pay premiums and at what times of the year?
Once per year (best months:
)
Once every six months (best months:
and
)
Once every three months
Once a month
Once a week
21.
What premiums amount would you be prepared to pay per person and per period?
Once per
Amount for each person in the family:
22.
For how many persons would you wish to pay premiums?
VOLUME 2
3.3
73
3.4 EXAMPLES OF PROCESSING COLLECTED DATA TO PRODUCE USABLE INFORMATION
Size of sample for conducting household surveys

The following table provides indicative values for the minimum size of a sample (based on a
proportion of p = 0.5, a confidence interval of P0.95 and a margin of error of 5 per cent).
3.4
Size of target
population
1 000
3 000
Minimum size
of sample
278
341
5 000 10 000 20 000 30 000 40 000 50 000

357
370
377
379
381
381
Examples of processing collected data

to produce usable information
Suggested procedure for processing and utilizing collected data
The steering committee may use the implementation chart to process the collected data into
usable information. This information may subsequently be used in designing the health microinsurance scheme. The last two columns of the chart facilitate the analysis and utilization of the
collected data by specifying the purpose of each item of information sought. For more details
on the implementation chart, please refer to:
u Complete the implementation chart, Step 1: Define the data-collection procedure,

The steering committee may also be aided by the examples of processing the collected data
and suggestions for its use, which are presented in the following tools.
Description of the tools

Section 3.4 actually contains 10 tools, each of which corresponds to one of the 10 datacollection objectives. The tool presented in section 3.4.1 corresponds to objective 1, the tool
presented in section 3.4.2 corresponds to objective 2, and so forth.
These tools describe how to make the information usable: in some cases, the information collected may be utilized directly without being processed; in others, it must be processed in order
to produce an indicator, in which case the formula for calculating the indicator is provided.
Suggestions on how to use the information and indicators in order to meet the various objectives are also provided. However, the information and indicators are utilized primarily in the
next phase when defining the characteristics of the future health micro-insurance scheme.
Methods of calculating indicators and suggestions for using the data are illustrated in
numerous practical examples.
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PRECAUTIONS FOR USE

Precaution No. 1: The suggested methods of calculating indicators are not absolute. The data used to calculate indicators are often collected from interviews or surveys. A
question may, in fact, be phrased in a number of different ways to obtain the same indicator.
Example: In order to find out what premium level households are willing to pay,
researchers may pose a direct question: What premium amount would you be prepared to pay each year for yourself and your family? Respondents may also be
asked to choose between several contribution brackets: Would you be prepared to
pay, for yourself and your family, premiums ranging between: 1,000 and 2,000
MUs per year? 2,001 and 3,000 MUs per year? etc. Alternatively, respondents
may be asked to indicate a maximum contribution amount: What maximum premium
amount would you be prepared to pay for yourself and your family: 500 MUs per
year? 1,000 MUs per year? 2,000 MUs per year? etc. Lastly, respondents
may be asked to indicate the average yearly amount they spend on health: How much,
on average, is your annual health budget for yourself and your family: 500 MUs
per year? 1,000 MUs per year? 2,000 MUs per year? etc.
The data obtained will differ depending upon the type of question asked; thus, the use
made of the replies will also differ. For this reason, the methods of calculating indicators
suggested below are only a few of the many possible, and are directly related to the way
in which the questions are phrased.
Precaution No. 2: The suggested indicators are provided for information purposes only. When several indicators are suggested for the same objective, the steering
committee may decide to calculate only some of them.
Example: With respect to the perceived quality of health facilities, a few of the suggested indicators are sufficient.
Precaution No. 3: The suggestions for utilizing the information are optional. The
sections entitled Utilization provide suggestions for utilizing the information or the indicators. These suggestions are included solely by way of illustration.
Example: An analysis of the results of household surveys may point to the need for
an emergency transport service for the inhabitants of certain villages. This specific need
may be taken into account when defining benefits. One possible solution is to offer
an optional emergency patient evacuation service in exchange for the payment of an
additional premium.
Precaution No. 4: The suggestions for utilizing the information are not exhaustive. The sections entitled Utilization offer points for consideration, as well as solutions
and mechanisms, but others no doubt exist! This section could thus be enlarged and personalized by each user.
Precaution No. 5: The practical examples provided are particularly helpful for
assimilating the methods of calculating, processing and utilizing the data. Generally speaking, they are based on real-life situations.
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No processing
The information collected for the purposes of this objective is utilized directly without being
processed.
Utilization
The information may be used to gain an understanding of the context from the economic,
demographic, social, health, health care supply, political and legal perspectives.

To establish a basis for selecting the target population
Objective quality of the health facilities used by target population
No processing
Information concerning the objective quality of the health facilities, derived from quality assessments, consists of raw data that may be used without processing. Examples include the
physical condition of buildings and opening hours. It also consists of processed data, known
as indicators.
These indicators have usually already been calculated as part of the quality assessment.
Consequently, the steering committee is not required to perform any particular calculations in
order to utilize the data.
Utilization
Information concerning the objective quality of health facilities may serve as criteria for selecting the target population insofar as it is preferable for the latter to have access to a quality
health care supply.
Access to the health facility

Processing
The information collected is used to calculate the frequentation rate for each residential zone.
Methods of calculating indicators
The information collected includes the number of new cases in each residential zone and the
size of the population of each zone.
The frequentation rate is calculated according to the following formula:
Frequentation rate 100 Number of new cases in residential zone
of residential zone =
Total population of this zone
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Utilization
The frequentation rate makes it possible to measure the level of access to the health facility
enjoyed by people living in each residential zone. It may thus be used to identify those zones
in which access is easy and those in which access is complicated by geographic factors,
financial factors, etc.
The health micro-insurance scheme could initially be set up primarily in areas where the
health facility exerts a strong attraction, i.e. where there are high frequentation rates. The
scheme could also take specific steps to increase the attraction of areas where frequentation
rates are low, such as assuming responsibility for transport charges, charging lower premiums
for people living farther away, etc.
PRACTICAL EXAMPLE
A private non-profit regional hospital wishes to establish a health micro-insurance scheme.
Although the hospitals services are of very good quality, its frequentation by the population of its catchment area remains low for reasons relating to geographic and financial
accessibility.
The various services of the hospital register their patients place of residence, and these
data are compiled by the statistics service.
Based on data provided by the statistics service, a table showing the hospitals frequentation
rates has been drawn up. This table summarizes the data according to district; however, a
more detailed breakdown according to village was used to produce the map.
Districts
Population
Number of hospitalizations
Frequentation
rate
Kaye Sante
30 900
2441
7.9%
Courliant
12 200
817
6.7%
Bienta
17 500
700
4.0%
Petite Mare
30 700
1167
3.8%
Medesar
23 600
826
3.5%
Sacplat
23 400
749
3.2%
Petite Morne
17 500
473
2.7%
Grande Morne
11 400
217
1.9%
Pelachat
23 300
396
1.7%
Dorme
16 200
227
1.4%
Peirond
14 100
85
0.6%
9 500
48
0.5%
230 300
8146
3.5%
Terrenette
Total
Zone 1
Zone 2
Zone 3
On the basis of the calculated frequentation rates, three broad zones within the hospitals
catchment area may be distinguished. Displaying these three zones on a regional map
allows for a better understanding of the reasons for this unequal frequentation.
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Petite Mare
Courliant
Petite Morne
HOSPITAL
Kaye Sante
Sacplat
Grande Morne
Dorme
Bienta
Medesar
Peirond
Terrenette
Zone 1
Zone 2
Zone 3
Roads
Mountainous region
Pelachat
Hilly region
This map shows that the frequentation rate decreases as the distance increases: people
living in mountainous, isolated areas have the lowest frequentation rate. This problem of
geographic accessibility is exacerbated by the fact that the hospital is not centrally located
within its catchment area.
Trend of socio-economic development among the target population,

Social aspects, Practices of mutual aid in the event of illness
No processing
The information collected under these headings is utilized directly without being processed.
Utilization
Among the factors contributing to the success of a health micro-insurance project are: the level
of literacy, economic dynamism, a certain degree of experience with community-based organization, the existence of persons capable of managing premiums, the existence of practices
of mutual aid in the event of illness, etc. This information may be used as criteria for selecting
the target population.
Means of treatment sought and methods of financing access to health care

Processing
A calculation is made of the percentage of replies for each means of treatment and each
method of financing.
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Information concerning the means of treatment sought
Sample question: During the last episode of illness in your family, what means of
treatment did you seek?
No treatment sought Purchase of medicines from sidewalk vendors
Consultation at dispensary (non-exhaustive list)
A calculation is made of the percentage of No treatment sought replies, the percentage of
Purchase of medicines from sidewalk vendors replies, etc.
Information concerning methods of financing
Sample question: With regard to the most recent episode of illness in your family,
how did you find the money to pay for treatment?
Money set aside at home Gifts from friends/neighbours/relatives
Sale of possessions (non-exhaustive list)
A calculation is made of the percentage of Money set aside at home replies, the percentage
of Gifts from friends/neighbours/relatives replies, etc.

To establish a basis for selecting the partner health
care providers
This refers to the providers whose health services will be covered by the scheme.
Information concerning the health care supply
No processing
The information collected geographic distribution of the health care supply, monograph for
each provider is utilized directly without being processed.
Utilization
The monographs for each provider presented in summarized form may be used to facilitate
a comparison of providers and to establish a basis for selecting partner health care providers.
Objective quality of the health facilities
No processing
Please refer to:
u 3.4.2 above.
Utilization
Information concerning the level of objective quality may be utilized as criteria for selecting
health facilities. The health micro-insurance scheme may, as a matter of priority, conclude agreements with the health facilities that have the highest levels of objective quality.
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Perceived quality of the health facilities

Processing
Information concerning the perceived quality of health facilities, derived from household and
patient surveys, may be used to calculate indicators of perceived quality.
The calculation of the indicators and their utilization depend upon the questions addressed
to households and patients. Included below are merely one sample question and method of
calculation for each indicator.
Information concerning the quality of patient reception
Sample question: Please rate the quality of patient reception:

Very good Good Average Poor Very poor
The quality indicator is calculated in terms of the percentage of Very good, Good, Average, etc. replies.
Information concerning the medical staff: competency,
ability to listen and empathize, existence of female medical staff
Sample question: Please rate the competency of the medical staff:

Adequate Inadequate.
The quality indicator is calculated in terms of the percentage of Adequate replies.
The same method is used for the other indicators.
Utilization
The indicators of perceived quality for the various health care providers may be presented in
a summary table, which helps to facilitate comparison among providers. The providers whose
perceived quality is highest are those whose quality indicators show the highest percentages.
The perceived quality must be taken into account when selecting providers, as it will account
for a large part of the schemes attractiveness to beneficiaries.
Frequentation
Processing
The information collected may be used to calculate the frequentation rate of the health facility.
Information concerning the number of new cases and the size
of the population of the catchment area
The frequentation rate = 100 Number of new cases/Population
Utilization
The frequentation rate may be used as a criterion for selecting partner health facilities. The higher
this rate, the greater is the likelihood that the health services in question are accessible, of good
quality and well regarded by users. The health micro-insurance scheme may, as a matter of
priority, conclude agreements with health facilities that have the highest rate of frequentation.
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PRACTICAL EXAMPLE
A district health centre covers a population estimated at 15,000 inhabitants in 2000.
Women of childbearing age accounted for 4.5 per cent of the population, or 675 persons.
Children aged 0 to 1 year accounted for 4 per cent of the population, or 600 persons.
Among the services provided in the year 2000, the health centre registered:
3,500 new cases of curative consultation;
350 initial prenatal consultations (PNCs);
410 DTP1 vaccinations (first dose of the diphtheria-tetanus-pertussis vaccine).
The frequentation rates for these three services were thus as follows:
Curative consultations: 23.3 per cent (3,500/15,000);
PNCs (initial consultations): 51.9 per cent (350/675);
DTP1 vaccinations: 68.3 per cent (410/600).
Note: Frequentation rates are calculated on the basis of new cases, i.e. each new
episode of illness or case of pregnancy seen for the first time at the health centre. If a
patient must return one or more times for treatment in connection with the same episode
of illness, these new visits are counted as old cases and are not taken into account in
calculating the frequentation rate. On the other hand, if, over the course of the year, a
patient utilizes the health facility in connection with five different episodes of illness, these
are counted as five new cases.
Establishment of certain health services in the event

of an inadequate health care supply
Processing/utilization
The establishment of such services falls outside the scope of this Guide. Consequently, the
utilization of the data is not discussed in this case.

To establish a basis for selecting the health services
to be covered
Overview of the health services
No processing
The information collected is utilized directly without being processed.
Utilization
This information helps to provide an idea of the health services offered by each health facility
and the method of invoicing used for these services. This information may be used as a basis
for selecting the health services to be covered by the scheme.
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Example: If the health centre bills each health service separately, the scheme will be
able to offer varying levels of coverage, depending upon the health service in question. It
might, for example, offer the following: 80 per cent of expenses incurred for each Consultation service; 65 per cent of expenses incurred for each X-ray service; a flat-rate
benefit for each Laboratory service; etc.
If the health centre bills health services in clusters (for example, a global fee that includes
consultations, and if necessary, medicines and examinations), the scheme will have to
offer identical coverage levels for all health services included in the cluster (for example,
80 per cent of expenses incurred for consultations, medicines, laboratory tests, X-rays) or
even a comprehensive fee for this cluster (for example, a flat-rate benefit of 1,500 MUs
for the consultation/pharmacy/laboratory/X-ray cluster).
Priority health services in terms of real health needs

No processing
The information derived from studies concerning the health situation and interviews with the
health care staff are used directly without being processed.
Utilization
This information gives an indication of the health needs of the population: preventive and curative health services that contribute to reducing significantly both the morbidity rates of certain
illnesses and mortality rates; a patient evacuation system. These real needs may be taken
into account when selecting the health services to be covered by the scheme.
Priority health services in terms of felt and expressed health needs
Processing
Information collected from household surveys (felt and expressed needs) may be used to
identify the health services that are considered to be a priority by a large majority of the target
population. Included below are merely one sample question and method of identifying these
priority services.
Information concerning the populations felt and expressed health needs
Sample question: Would you be interested in joining a health insurance scheme?

Yes No
If yes, which services would you prefer that this scheme cover as a matter of priority?
(Please check no more than 4 services maximum)
Pharmacy X-rays Laboratory
Maternity (prenatal care, delivery and post-natal care)
Consultation at dispensary etc. (non-exhaustive list)
A calculation is made of the number of times each service is ticked on all the questionnaires.
Utilization
The health services considered to be a priority are those that are ticked the most number of
times. These services may be proposed first and foremost when selecting the services to be
covered by the scheme.
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Health services difficult to access for financial reasons

Processing
The information collected on the financial difficulties encountered when using the health services and with respect to various levels of health expenses may be used to calculate the
following indicators: rates of total, partial or temporary exclusion; rates of difficulty.
Included below are merely one sample question and method of calculating each indicator.
Information concerning total exclusion from a health service
Sample question: Were you or any member of your family required to forego, at least
once in the course of last year, one of the following services owing to a lack of money?
Pharmacy X-ray Laboratory Consultation at dispensary
Hospitalization at dispensary etc. (non-exhaustive list)
The rate of total exclusion for each health service on the list is then calculated according to
the following formula: Rate of total exclusion (service) = Percentage of respondents who ticked
the service.
Information concerning partial exclusion from a health service
Sample question (concerning the Pharmacy service): The last time a

physician issued a medical prescription (to you or to a member of your family), did you
purchase all the medicines listed on the prescription? Yes No
If no, please tick one of the following:
We purchased only the medicines that were necessary.
We purchased only some of the medicines because the pharmacy
was out of certain medicines.
We purchased only some of the medicines because
we did not have enough money.
We did not purchase any medicines owing to a lack of money.
The partial exclusion rate (pharmacy) is calculated in terms of the percentage of replies indicating
the following: We purchased only some of the medicines because we did not have enough
money or We did not purchase any medicines owing to a lack of money.
Information concerning temporary exclusion from a health service
Sample question (concerning the Hospitalization service): The last

time someone in your family was hospitalized, did you have to wait some period of time
before being able to hospitalize the person concerned? No Yes
If yes, please tick one of the following:
We waited several hours in order to get the necessary funds together (< 24 hours).
We did not have enough money and had to go about collecting it, which took more
than 24 hours.
The rate of temporary exclusion (hospitalization) is then calculated in terms of the percentage of
replies stating that We did not have enough money and had to go about collecting it, which
took more than 24 hours.
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Note: This type of question may be asked in regard to other health services.
Difficulties expressed by the population when confronted
with a particular level of health expense
This involves asking households to indicate the amount at which they begin to have difficulty
meeting health expenses.
Sample question: Starting at what level of medical expenses are you required to
resort to outside assistance (loan, gift, credit) or to the sale of a possession?
500 MUs 1,000 MUs 2,000 MUs 10,000 MUs
The rate of difficulty corresponding to the various levels of expense is calculated as follows:
Rate of difficulty (500 MUs) = Percentage of persons who ticked the box 500 MUs.
Rate of difficulty (1,000 MUs) = Percentage of persons who ticked the box 1,000 + Percentage of persons who ticked the box 500 MUs. Logically, those who have difficulty
meeting medical expenses in the amount of 500 MUs will also have difficulty meeting
higher expenses.
Etc.
Utilization
The rate of total exclusion is used to identify the services that pose genuine problems in terms
of financial accessibility. These services may then be proposed, as a matter of priority, when
selecting the services to be covered by the scheme.
The rate of partial exclusion helps to identify a lack of follow-up or a failure to observe
treatment protocols for financial reasons: the patient fails to purchase all the medicines he or
she needs, to carry out follow-up visits or to complete regular check-ups.
The services that present a high rate of partial exclusion may be selected as a matter of priority. Moreover, specific solutions to these problems may be sought when defining benefits.
Example: The scheme may plan to offer a flat-rate benefit per episode of illness that
includes one or more consultations, laboratory tests and medicines.
The rate of temporary exclusion helps to identify those services for which a patients lack of
available funds causes a delay in treatment and thus contributes to worsening his or her health
status. Services that demonstrate a high rate of temporary exclusion may be selected as a matter of priority. In addition, specific methods of coverage aimed at reducing delays in obtaining
health services such as setting up a third-party payment mechanism may be envisaged.
The rates of difficulty corresponding to respective levels of expense may be used to identify
the health services that constitute a minor financial risk for a large share of the population.
When defining benefits, removing such services from the benefits to be provided will no doubt
help to reduce premiums while simultaneously meeting the needs of the majority in terms of coverage. For details on the procedure to follow, please refer to the practical example below.
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PRACTICAL EXAMPLE
A management committee of a rural health centre wishes to set up a health insurance
scheme for its users. With the support of an NGO, it conducts a household survey in the
catchment area of the health centre. One of the questions concerns the level at which
households begin to experience difficulty meeting their health care expenses.
The replies to this question were as follows:
Amount (MUs)
Percentage
of replies
Cumulative percentage
= Rate of difculty
1000
3%
3%
2000
31%
34% (3% + 31%)
3000
10%
44%
4000
4%
48%
5000
18%
66%
6000
2%
68%
7000
0%
68%
8000
2%
70%
9000
0%
70%
10 000
14%
84%
According to the survey, 3 per cent of households begin to experience difficulty at

1,000 MUs. Starting at 4,000 MUs, a cumulative percentage of nearly 50 per cent of
households reach the limit of their ability to provide their own financing.
After analyzing the fee schedules of the health centres, the steering committee notes that
expenses less than or equal to 1,000 MUs correspond to consultations for minor ailments.
If this service is not considered to be a priority from the standpoint of other indicators and
elements of selection (visibility of the scheme, for example), it could possibly be withdrawn
from the benefits offered by the scheme. This would make it possible to offer lower premiums,
while at the same time responding to the needs of the majority in terms of coverage.
Identification of population sub-groups with specific needs

No processing
Information collected from the health care staff and managers of health facilities is utilized
directly without being processed.
Examples: The population of a remote village needs a transport service to evacuate

patients in case of emergency; a particular socio-occupational group has a particularly
high risk of employment accidents, requiring more emergency hospitalizations than the
average for the target population; a womens association is particularly interested in health
education services.
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Utilization
The identification of these target groups and the determination of their specific needs may be
confirmed by the results of household surveys (see below).
This information may be used when defining the benefits to be offered by the scheme.
Services responding to specific needs may be proposed as options, in exchange for the payment of an additional premium. Nevertheless, the introduction of several benefit plans makes
management more complex and may constitute an insurmountable difficulty when management records are not computerized.
Determining the specific needs of these sub-groups

Processing
This involves further breaking down the replies to questions concerning the felt and expressed
needs of the target population on the basis of the characteristics of the respondents. Respondents are divided into homogenous sub-groups according to place of residence, type of occupation, etc. The number of times each service is ticked for each sub-group is then counted again.
A comparison of the results obtained for the different sub-groups with those obtained for the
total population surveyed (all questionnaires) will help to determine whether there are specific
needs among certain sub-groups of the population.
First example: Need for a patient evacuation service
on the part of the inhabitants of certain villages
A calculation is made of the percentage of respondents from among the population of
the village concerned and from among the entire population surveyed who considered
an Emergency transport service to be a priority. A comparison is then made of these two
percentages.
Example: The Emergency transport service is ticked on 30 out of 40 questionnaires

(75 per cent) for respondents from village A, whereas it is ticked on 50 out of 200 questionnaires (25 per cent) for all respondents.
Second example: Need for an Unplanned hospitalization service
on the part of driver mechanics
A calculation is made of the percentage of respondents from among both the driver mechanics sub-group and the entire population surveyed who considered an Unplanned hospitalization service to be a priority. A comparison is then made of these two percentages.
Note: In this case, the questionnaire must include a question on the respondents
occupation.
Utilization
If the percentages corresponding to these services are very high among the inhabitants of certain districts or among certain population sub-groups, such as occupational groups, the services
may be offered as optional benefits in exchange for the payment of an additional premium.
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Health services considered to be priorities owing to the fact

that they pose problems of cost recovery and/or financing
Processing
The information collected may be used to identify for each health service problems regarding outstanding payments and/or problems regarding under-utilization.
Information concerning outstanding payments
A calculation is made of the percentage of users who have not paid their last invoice, whether
in whole or in part.
Information concerning the under-utilization of certain services or equipment
A calculation is made of the percentage of health facility users who use the service or equipment in question.
Utilization
The identification of problems relating to outstanding payments is of particular interest to health
care providers that wish to set up a health micro-insurance scheme in order to improve cost
recovery. It is also of interest to other types of promoters, insofar as problems relating to outstanding payments indicate problems of financial accessibility. The health services concerned
may be proposed as a matter of priority when selecting the health services to be covered by
the scheme.
In addition, when certain equipment is under-utilized, its coverage by the health microinsurance scheme must allow for increasing its utilization and securing a return on the capital
invested in it.

direct payment or third-party payment
Real needs
No processing
The information collected from interviews with members of the health care staff is utilized directly
without being processed.
Utilization
This information may be used to identify the services for which a third-party payment mechanism
is, a priori, particularly appropriate. Such services include costly services and those related to
urgent and/or unpredictable cases. These objective priority criteria may be taken into account
when selecting the services for which third-party payment is provided.
Needs expressed by the population
Processing
The information collected from household surveys (felt and expressed needs) may be used to identify the health services for which the population considers third-party payment to be particularly
useful. Provided below are merely one sample question and method of identifying these services.
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Needs expressed by the population
Sample question: For which services would you be interested in a mechanism, known
as third-party payment, which, in exchange for the payment of a premium, would exempt
you from paying for health services at the time of delivery? (maximum 3 services)
Pharmacy X-ray Laboratory Consultation at dispensary
Hospitalization at dispensary etc. (non-exhaustive list)
A calculation is made of the number of times each service is ticked on all the questionnaires.
Utilization
The health services for which third-party payment is considered to be the most useful or necessary are those ticked the most often. When designing the health micro-insurance scheme,
third-party payment may be proposed for these services as a matter of priority.

Processing the collected data in order to calculate probability
Reminder: There are two basic methods for collecting the data to be used in calculating probability: (1) Recommended method: Based on household surveys and data supplied by health facilities; (2) Alternative method: Based on management data of existing
health micro-insurance schemes. Using data supplied by other schemes is simpler and less
costly. Nevertheless, such data must be treated with precaution since the target populations served by these schemes do not necessarily share the same characteristics, and the
methods of operation (benefit/premium combinations, for example) of these schemes affect
peoples behaviour and therefore the value of the data.
1. Recommended method of data collection and calculation: Based on household

surveys and data supplied by health facilities
Processing
The recommended method consists of obtaining from household surveys the number of persons
who were ill at least once in the course of the year, as well as information on the means of
treatment they sought. These data may be used to calculate two indicators: the probability of
falling ill and the proportion of sick persons who used the health facility.
This method also involves collecting, from annual reports or registers of health facilities, the
number of users of the service in question and of the health facility. These data are used in
calculating a third indicator: the proportion of health facility users who use the health service.
The probability of utilizing the health service is then obtained by multiplying the three indicators by each other (see section 4.5.2(a), page 131).
The calculation of these indicators and their utilization depend upon the questions put to
households. Provided below are merely one sample question and method of calculation.
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Information on the number of persons who fall ill at least once
in the course of the year or during a given observation period
Sample question
Composition of the respondents family
Men
Women
Children (<15 ans)
Number
Since <DATE, RELIGIOUS HOLIDAY>, has anyone in your family been ill (excluding
childbirth)? Yes No
If yes, how many persons fell ill at least once?
Note: Persons who fell ill several times should be counted only once
Number of adults who fell ill at least once
Number of children who fell ill at least once
Based on all questionnaires, a calculation is made of:
the total number of adults who fell ill at least once;
the total number of adults in the families surveyed: sum of the Men and Women fields
from the family composition table.
If the length of the observation period is three months, i.e. if three months have transpired
between <DATE, RELIGIOUS HOLIDAY> and the date of the survey, the probability of falling
ill for an adult is:
Probability
1
(illness) =
1
Number of adults who fell ill at least

once in the course of the period
Total number of adults
12
3
The same formula may be used to calculate the probability of falling ill for children.
Note: Calculating a probability for adults and a probability for children is particularly
useful when the scheme plans to charge differing premiums for adults and children. Other
parameters, such as age or sex, may also be taken into account in calculating probabilities
and premiums.
Sample question
During the last episode of illness in your family, what means of treatment did you seek?
(Several replies possible)
No treatment sought Healer or traditional pharmacopoeia
Consultation at dispensary Hospitalization at dispensary
(non-exhaustive list)
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the number of times each means of treatment is ticked;
the total number of episodes of illness, i.e. the number of persons surveyed who replied to
this question.
The current proportion of sick persons for each means of treatment is:
Number of times the means of treatment is ticked
Current
proportion =
Total number of surveyed respondents
Example: If the means of treatment Consultation at dispensary is ticked on 53 out of

120 questionnaires, the proportion of sick persons for this means of treatment is equivalent
to: 53/120 = 44.2 per cent.
Important. The establishment of a health micro-insurance scheme is likely to lead

to an increase in the frequentation of health facilities whose services are covered
by the scheme. In order to take this impact into account, the formula for calculating probability should include not the current proportion of sick persons who have been treated
at these health facilities but rather the expected proportion, which is higher. Estimating the
expected proportion of such persons on the basis of the current proportion is explained in
the practical example provided below.
Information concerning the number of users of the health service and of the health facility,
each one being counted only once
The proportion of health facility users who use the health service may be expressed as:
Number of users of the health service
(each one counted only once)
Proportion
of users = Number of users of the health facility
(each one counted only once)
Note: It is assumed here that the expected proportion of health facility users who use the
health service is equivalent to the current proportion, i.e. that the establishment of a health
micro-insurance scheme will not alter this proportion.
Important. Each user must be counted only once so as not to confuse the two
notions of the probability of utilizing the service and the quantity consumed, i.e. the
number of times the service is utilized.
Utilization
These three indicators may then be used to calculate the probability of utilizing the health
service, as may be seen later on (Chapter 4, Tool 4.5.2(a)). The probability of utilizing the
health service serves as an input in calculating the pure premium of the health service when
applying the general formula of calculation.
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PRACTICAL EXAMPLE CALCULATING THE PROBABILITY

OF UTILIZING VARIOUS HEALTH SERVICES
Step 1: Calculating the probability of falling ill
based on a household survey
A survey is carried out of a sample of 300 households, representing a total of 1,500 persons.
The number of persons who fell ill at least once in the course of the year was 1,200.
The probability of falling ill is equal to the number of persons who fall ill at least once in the
course of the year (1,200), divided by the total number of persons (1,500) = 0.8.
Probability (illness) = 80 per cent ( 1)
Step 2: Calculating the current proportion of sick persons
for each type of health facility
The results of the household surveys indicate that, prior to the establishment of a health microinsurance scheme, out of 100 sick persons (all illnesses combined), the number accounted
for by the various types of health facility was as follows:
Type of health facility
Number out of 100,

prior to start-up of HMIS
Hospital (hospitalization)
Private clinic (hospitalization)
Hospital (outpatient care * )
12
Health centre (outpatient care)
40
Private modern physician
15
Traditional practitioner
Self-medication
No treatment sought
Total
8
12
9
100
For the sake of simplicity, it was assumed that each respondent had ticked only one box
(only one means of treatment), which explains why the total number of means of treatment
is 100. In practice, it often happens that a person will use several means of treatment during
the same episode of illness.
Step 2(a): Estimating the expected proportion of patients
for each type of health facility
It is assumed that:
the health micro-insurance scheme covers only outpatient care at health centres, outpatient care and hospitalization at hospitals;
insured persons will modify the means of treatment they use in order to optimize their
coverage and will seek treatment only at health facilities covered by the scheme.
Consequently, out of 91 persons, each of whom uses one means of treatment:
hospitalization at the hospital will account for all hospitalizations (public and private), or
four cases;
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outpatient care at the hospital and outpatient care at the health centre will account for all
outpatient care and self-medication (or 87 cases), in proportion to the share accounted
for by each in the initial outpatient care provided in the public sector (40/52 for the
health centre and 12/52 for the hospital):
outpatient care at the health centre: 40/52 87 = 67 cases;
outpatient care at the hospital: 12/52 87 = 20 cases.
The number of sick persons who seek no treatment will be zero. Thus, out of 100 ill
persons:
hospitalization at the hospital will account for 4/91 100 persons, or 4 per cent
(rounded figure);
outpatient care at the health centre will account for 67/91 100 persons, or 74 per
cent (ditto);
outpatient care at the hospital will account for 20/91 100 persons, or 22 per cent
(ditto).
Number out of 91,

within the context of an HMIS
Expected proportion
Hospital (hospitalization)
4%
Private clinic (hospitalization)
0%
Hospital (outpatient care)
20
22%
67
74%
0%
0%
Self-medication
0%
No treatment sought
0%
91
100%
Total
Step 3: Calculating the proportion of health facility users

who use a given health service, each user counted only once
The annual reports for the previous year of the health centre in question reveal the following totals:
Consultations and outpatient care: 35,630 users, consisting of:
outpatient curative consultations: 28,500 users, of which 25,650 purchased prescribed
medicines and 17, 100 underwent laboratory tests;
outpatient care: 7, 130 users.
The proportion of all health centre users who used each service is as follows:
Number of users
Curative consultations
Consultations
Prescriptions
Laboratory tests
Treatments
Total (consultations + treatments)
The same procedure is used for the hospital.
Proportion
28 500
25 650
17 100
80%
72%
48%
7 130
20%
35 630
100%
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CALCULATING THE PROBABILITY OF UTILIZING

VARIOUS HEALTH SERVICES (cont.)
Step 4: Final calculation of the probability of utilization of each health service
Next, each of the indicators obtained in steps 1, 2(a) and 3 are multiplied by each other
in order to obtain the probability of using each health service:
Probability (consultation at health centre) = 80% 74% 80% = 47%
Probability (health centre pharmacy) = 80% 74% 72% = 43%
Probability (laboratory tests at health centre) = 80% 74% 48% = 28%
Probability (outpatient care at health centre) = 80% 74% 20% = 12%
Probability
Consultations
Prescriptions
Laboratory tests
47%
43%
28%
Treatments
12%
59%
The same procedure is used for hospital.

No processing
The management tools (registers, indicators, etc.) of a pre-existing health micro-insurance
scheme may be used to determine:
the total population covered by the scheme;

the number of covered persons who used a particular health service at least once in the
course of the year. This involves counting the number of users of the service by eliminating
all duplicates, i.e. all beneficiaries who used the service more than once during the year.
This task is easy if the management tool identifies each member or dependent individually
(for example, in a Beneficiary ID number field).
Warning. The term covered persons means persons who are effectively entitled
to receive benefits for the period in question; it does not include persons undergoing
a waiting period or those ineligible for benefits owing to the fact that they are in arrears
in their premium payments. The tasks involved in making this distinction are quite tedious
without a computerized management system.
Utilization
These two items of information may be used to calculate the probability of using the health
service, as will be seen later (Chapter 4, Tool 4.5.2(a)). The probability of using the health
service may be used as an input in calculating the pure premium when the general formula
is applied. However, data from other health micro-insurance schemes must be used with
precaution inasmuch as each scheme is different (in terms of benefit plans, population
covered, etc.).
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PRACTICAL EXAMPLE CALCULATING THE PROBABILITY

OF UTILIZING THE MEDICAL HOSPITALIZATION SERVICE
A pre-existing health micro-insurance scheme comprises 3,500 covered persons. Over the
course of the last 12 months, 60 of these covered persons were admitted at least once to
the Medical hospitalization service. The probability of using this service = 60/3,500 =
1.71 per cent.
Processing the collected data in order to calculate the average

quantity covered ( useful if applying the general formula)
Reminder: There are three basic methods of collecting data on the quantity consumed:
(1) First method: Based on data supplied by health facilities; (2) Second method: Based
on tracking a sample of patients; (3) Third method: Based on the management data of
pre-existing health micro-insurance schemes.
1. First method: Based on data supplied by health facilities (registers, annual reports,
statistics, testimony of health care staff)
Collected information and processing
For each health service and each user of the service, the quantity of the health service consumed over the course of the year is obtained from health facility registers.
A summary table is then filled out. The first row of the table contains the number of times
the service was utilized (once, twice, etc.) or the number of units consumed (one hospital day,
two hospital days, etc.), and the second row indicates the number of patients concerned
(fictitious data):
50
30
10
Reading the chart: 50 patients utilized the service only once during the observation period.
This method of collection may prove to be lengthy, particularly when the service concerned is
utilized frequently. In such instances, the data collection can be limited to a shorter period of
time (for example, a two-month period) and the yearly results can then be extrapolated.
In addition, this method of collection assumes that health facility registers identify patients
precisely (first name, last name, address, ID number). When identification is not straightforward, it may be preferable to use another method of collection, such as tracking a sample of
patients.
Utilization
The information contained in the summary table may then be used to calculate the average
quantity covered, depending upon the benefit terms: with or without a maximum number of
days, cases or sessions; with or without a deductible.
The average quantity covered is then used as an input in calculating the pure premium
when applying the general formula.
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ILO / STEP
Important. When the average quantity is calculated using this method, it risks
being underestimated. This is because the establishment of a health micro-insurance
scheme and the elimination of financial barriers are likely to contribute to increasing the
average number of times the health services are utilized by beneficiaries. When calculating
the average quantity, it is therefore important to estimate the impact of the benefit on the
consumption patterns of beneficiaries. Moreover, careful monitoring of the risk portfolio
as from the first accounting period will allow for making any necessary adjustments to the
average quantity covered.
PRACTICAL EXAMPLE
The practical example may be found under the paragraph entitled, Processing the collected
data in order to calculate the average unit cost, page 95.
2. Second method: Based on tracking a sample of patients

A sample of patients is selected from among all the patients of a health facility. Each time a
patient in the sample uses a given health service, the number of units consumed is recorded.
Example: If the patient undergoes a consultation, the number of units consumed = 1.

If the patient is hospitalized for five days, the number of units consumed = 5.
For a discussion of the various tracking methods, please refer to:
u 3.2.2 Sample tracking form for a sample of patients, Volume 2,
Chapter 3, page 61.
Next, the data obtained for all patients in the sample is added together for each health service,
and a summary table is completed. The first row of the summary table contains the number of
times the service was utilized (once, twice, etc.) or the number of units consumed (one hospital
day, two hospital days, etc.), and the second row contains the number of patients concerned
(fictitious data):
50
30
10
Utilization
Same as for the first method.
PRACTICAL EXAMPLE
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3. Third method: Based on the management data of pre-existing

health micro-insurance schemes
The management tools of a pre-existing health micro-insurance scheme usually contain a record
of the past utilization of the health services covered by the scheme. For each person protected
by the scheme, it is possible to determine the number of consultations undergone during the
year, the number of hospital days, etc.
This information may be used to complete the summary table of the quantities consumed
for each health service (fictitious data):
Number of covered persons
50
30
10
Note: When the information recorded in management tools is not sufficiently detailed, the
necessary data can always be reconstituted by analyzing a sample of claims and invoices
received from partner health care providers or insured persons.
Utilization
Same as for the first method.
PRACTICAL EXAMPLE
Processing the collected data in order to calculate the average unit cost
Reminder: There are three basic methods of collecting data on the unit cost: (1) First
method: Based on data supplied by health facilities; (2) Second method: Based on tracking a sample of patients; (3) Third method: Based on the management data of pre-existing
health micro-insurance schemes.
1. First method: Based on data supplied by health facilities (registers, annual reports,
statistics, testimony of health care staff)
The following items of information may be collected from the data supplied by health facilities
(reports, registers, statistics) and, in some cases, the testimony provided by health care staff:
the unit cost of the health services for each pathology;

the prevalence rates of the various pathologies: percentage of malaria cases, percentage
of cases of respiratory infection, etc.
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ILO / STEP
Next, the following summary table is completed (fictitious data):

Pathology
Malaria
Respiratory problems
Cost of the service
1000
1500
1200
10%
15%
9%
Prevalence rate
Diarrhoea
Reading the chart: The cost of the health service in the case of malaria is
1,000 MUs. Malaria accounts for 10 per cent of all cases treated at this health facility.
Utilization
The information contained in the summary table may then be used to calculate the average
unit cost for a large number of benefit terms. However, this form of presentation is ill-suited to
maximum benefits/flat-rate benefits or monetary deductibles.
The average unit cost may then be used as an input in calculating the pure premium, regardless of which formula of calculation is applied (general or specific formula).
PRACTICAL EXAMPLE COMPLETING THE SUMMARY TABLES

ON THE QUANTITY CONSUMED AND THE UNIT COST
The information sought is the quantity consumed and the unit cost of each of the following
three health services: Consultations, Pharmacy and Laboratory.
According to the registers, 36,000 adults and 41,000 children underwent consultations
over the course of the year. These were distributed as follows:
For adults
Number of consultations
15 000
5 000
1 500
1 000
500
16 500
6 000
2 000
1 000
500
and for children (0-5 years)

The number of persons who underwent consultation (each person being counted only once,
even if he or she utilized more than one consultation) was 23,000 for adults and 26,000
for children.
According to a member of the nursing staff, 90 per cent of consultations gave rise to a
prescription for medicines, but only 60 per cent to a prescription for laboratory tests.
This information may be used to draw up summary tables listing the quantity consumed
for the services Consultations, Pharmacy and Laboratory (assuming that the rates of
90 per cent and 60 per cent apply uniformly to the number of patients indicated).
For adults
15 000
5 000
1 500
1 000
500
Number of patients prescribed medicines
13 500
4 500
1 350
900
450
Number of patients prescribed laboratory tests
9 000
3 000
900
600
300
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16 500
6 000
2 000
1 000
500
Number of patients prescribed medicines
14 800
5 400
1 850
900
450
9 900
3 600
1 200
600
300
Number of patients prescribed laboratory tests
The health facilitys statistical data indicate that the prevalence rates for five pathologies
(numbered from one to five) are as follows:
For adults
Pathology
Prevalence rate
10%
25%
30%
30%
5%
20%
30%
30%
12%
8%

Pathology
Prevalence rate
The cost of a consultation is identical for adults and for children, regardless of the pathology: 300 MUs.
The cost of a prescription and of laboratory services varies according to pathology and
depending on whether the patient is a child or an adult. An estimate of average costs,
provided by a member of the nursing staff, may be used to draw up summary tables of the
costs corresponding to the Consultations, Pharmacy and Laboratory services.
For adults
Pathology
Prevalence rate
10%
25%
30%
30%
5%
Average cost of consultation
300
300
300
300
300
Average cost of prescription
700
300
700
1 000
800
500
200
300
200
600
Prevalence rate
20%
30%
30%
12%
8%
Average cost of consultation
300
300
300
300
300
Average cost of prescription
600
300
800
700
600
300
200
150
200
300

Pathology
2. Second method: Based on tracking a sample of patients

A sample of patients is selected from among all the patients of a health facility. Each time a
patient in the sample uses a health service, the unit cost of the service is noted.
Example: If a patient undergoes a consultation, the unit cost = the cost of the consultation. If a patient is hospitalized for five days, the unit cost = the cost of one hospital day
= the fixed daily rate.
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Next, the data obtained for all patients in the sample is compiled for each health service
and a summary table is completed. The first row of the table contains the cost of the service
(1,000 MUs, 1,200 MUs, 1,500 MUs, etc.), and the second row contains the number of times
this cost was recorded (fictitious data):
Cost of the service
1000
1200
1500
1800
2000
10
25
50
10
Reading the chart: There were 10 cases in which the unit cost of the service was 1,000 MUs.
Utilization
The information contained in the summary table may be used to calculate the average unit cost
regardless of the benefit terms (including maximum benefits/flat-rate benefits and monetary
deductibles).

In the following practical example, the size of the sample (six patients) is deliberately small
in order to facilitate the presentation of the results. The data to be collected concerns two
health services: Consultations and Pharmacy.
The health facility under study keeps a register for consultations and a register for the
pharmacy. The sample consists of six patients. For each patient, the following information
is retrieved:
the number of consultations undergone during the observation period and the expenses
incurred for each consultation;
the number of prescriptions during the observation period and the expenses incurred for
each prescription.
Number
of consultations
Cost of one
consultation
Number
of prescriptions
Cost of one
prescription
Patient 1
200
500
Patient 1
300
Patient 1
300
Patient 1
300
300
Patient 2
300
Patient 2
300
250
Patient 2
400
Patient 3
300
800
Patient 4
500
350
Patient 4
300
400
Patient 5
300
Patient 6
300
240
Next, the summary tables on the quantity consumed and the unit cost for the two services in
question are completed. The observation period is six months and the costs are expressed
in MUs (monetary units).
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Summary tables for the Consultations service

200
300
400
500
Cost of one consultation

Number of consultations concerned
Reading the chart: One patient underwent four consultations over the course of the observation
period. There were nine instances in which the cost of a consultation was 300 MUs.
Summary tables for the Pharmacy service

240
250
300
350
400
500
800
Cost of one prescription

Number of prescriptions concerned
Note: When calculating the average quantity covered during the scheme design
process, the average quantity must be extrapolated for the year by multiplying the figures
obtained for the observation period (six months) by two.
3. Third method: Based on the management data of pre-existing

health micro-insurance schemes
The management tools of a pre-existing health micro-insurance scheme generally contain a

history of claims (or invoices) received from covered persons (or health care providers). It is
therefore possible to determine precisely the cost of the health services provided by the scheme
and utilized by covered persons.
These data may be used to complete, for each health service, a summary table of unit
costs (fictitious data):
Cost of the service
1000
1200
1500
1800
2000
10
25
50
10
As will be seen in the practical example (below), certain management tools contain detailed
information on unit costs, such as the cost of a consultation or the cost of a hospital day. In
such cases, it is relatively easy to draw up a summary table.
Other tools record costs in a less detailed fashion, such as, for example, the total cost of
hospitalization, including accommodation fees for the entire period of hospitalization. Still others record merely the amount of the coverage provided and do not specify the actual cost of
the service. It is a little more difficult in such cases to reconstitute a summary table.
When the data recorded by information systems are not sufficiently detailed, these data can
always be reconstituted by analyzing a sample of claims or invoices received from covered
persons or partner health care providers.
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ILO / STEP
a waiting period or those ineligible for benefits owing to the fact that they are in arrears
Utilization
Same as the second method.

This example describes four cases, which vary as a function of the level of detail contained
in the claims records of the health micro-insurance scheme:
First case: The records contain a breakdown of the quantities consumed and the unit
costs: number of hospital days, cost of a hospital day.
Second case: The records contain a breakdown of the quantities consumed, but only in
terms of total expenses: number of hospital days, total cost of a hospital stay.
Third case: The records contain a breakdown of the quantities consumed, but only in
terms of the total amount of coverage.
Fourth case: The records do not indicate the quantities consumed, but show only the total
amount of coverage.
First case: The claims records contain a breakdown
of the quantities consumed and the unit costs
Beneciary
ID number
Treatment
date
Service
Quantity
Unit actual
costs
000 451
02-Jan
Medical hospitalization
600
000 546
04-Feb
800
000 765
07-Mar
600
000 876
12-Apr
600
000 024
24-May
800
001 234
27-Jun
600
000 047
04-Aug
800
001 105
07-Sep
600
000 365
19-Nov
600
000 478
20-Dec
600
The Quantity field indicates the number of hospital days for each hospital stay; the Unit
actual costs field indicates the cost of a hospital day.
This information may be used to draw up a summary table of the quantities consumed:
Number of hospital days
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101
and of the unit costs:

Cost of one hospital day
Number of hospitalizations concerned
600
800
Second case: The records contain a breakdown of the quantity consumed,

but only in terms of total expenses
Beneciary
ID number
Treatment
date
Service
Quantity
Total actual
costs
000 451
02-Jan
1 800
000 546
04-Feb
1 600
000 765
07-Mar
600
000 876
12-Apr
3 000
000 024
24-May
6 400
001 234
27-Jun
600
000 047
04-Aug
4 000
001 105
07-Sep
1 800
000 365
19-Nov
3 000
000 478
20-Dec
2 400
The Total actual costs field indicates the total cost of each hospital stay.
It is easy to come back to the first case by dividing the amounts in the Total actual costs
field by those in the Quantity field. The summary tables are then drawn up in the same way.
Third case: The claims records contain a breakdown of the quantities
consumed, but only in terms of the total amount of coverage
Beneciary
ID number
Treatment
date
Service
Quantity
Amount
of coverage
000 451
02-Jan
1 440
000 546
04-Feb
1 280
000 765
07-Mar
480
000 876
12-Apr
2 400
000 024
24-May
5 120
001 234
27-Jun
480
000 047
04-Aug
3 200
001 105
07-Sep
1 440
000 365
19-Nov
2 400
000 478
20-Dec
1 920
The Amount of coverage field indicates the total amount covered for each hospital stay. It
is possible to come back to the second case by reconstituting the expenses incurred based
on the terms of the coverage.
In this example, the benefit covers 80 per cent of expenses, or a percentage co-payment
of 20 per cent. The amount of expenses incurred is therefore 100/80 Amount of
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ILO / STEP
coverage. Thus, the amount of the expenses incurred for the first hospitalization is: 1,440
100/80 = 1,800.
Once the table for the second case has been reconstituted, it is possible to reconstitute the
table for the first case. The summary tables may then be drawn up.
Fourth case: The records do not indicate the quantities consumed,
but show only the total amount of coverage.
Beneciary
ID number
Treatment
date
Service
Amount
of coverage
000 451
02-Jan
1 440
000 546
04-Feb
1 280
000 765
07-Mar
480
000 876
12-Apr
2 400
000 024
24-May
5 120
001 234
27-Jun
480
000 047
04-Aug
3 200
001 105
07-Sep
1 440
000 365
19-Nov
2 400
000 478
20-Dec
1 920
The available information is not sufficiently detailed to allow for drawing up the summary
tables. The only solution in this case is to analyze a sample of invoices. By analyzing a sample
of invoices, a complete table of information can gradually be developed. The table presented
in the first case can be used as a model. The summary tables can then be drawn up easily.
Processing the collected data in order to calculate frequency

Reminder: There are two basic methods of collecting data to use in calculating the frequency of utilization of a health service: (1) Recommended method: Based on household
surveys and data supplied by health facilities; (2) Alternative method: Based on management data of existing health micro-insurance schemes. Using data from other schemes is
simpler and less costly, but calls for precaution.
1. Recommended method: Based on household surveys and data supplied
by health facilities
Processing
The recommended method consists of compiling, based on household surveys, the number of
cases of illness accounted for by the population over the course of the year and information on
the means of treatment sought. These data may be used to calculate the following two indicators: the frequency of illness, i.e. the number of cases of illness accounted for by the persons
surveyed; and the proportion of cases of illness treated at each type of health facility.
It also involves collecting, based on annual reports or registers of health facilities, the
number of cases of illness treated utilizing the health service in question and the total number
of cases of illness treated by the health facility. These data may be used to calculate a third
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103
indicator: the share accounted for by the health service in the total number of cases treated
at the health facility.
The frequency of utilization of the health service is then obtained by multiplying these three
indicators by each other.
The calculation of these indicators and their utilization depend on the questions put to
households. Provided below are merely one sample question and method of calculation.
Information on the number of cases of illness accounted for by the population
over the course of the year or during a given period of observation
Sample question
Respondents family composition
Men
Women
Children (<15 ans)
Number
Since <DATE, RELIGIOUS HOLIDAY>, has anyone in your family been ill (excluding
childbirth)? Yes No
If yes, how many cases of illness were there?
Children
Adult women
Adult men
For all questionnaires, a calculation is made of:
the total number of cases of illness among adults;
the total number of adults in the families surveyed: sum of the fields Men and Women
from the family composition table.
If the observation period is three months, i.e. if three months have transpired between <DATE,
RELIGIOUS HOLIDAY> and the date of the survey, the frequency of illness for an adult is
as follows:
Frequency (illness) =
12
3
Number of cases of illness among adults

Total number of adults
The frequency of illness among children is calculated in the same way.

Note: Calculating a frequency for adults and for children makes sense particularly when
the scheme plans to introduce differing premium amounts for adults and children. Other
parameters, such as age or sex, may also be taken into account in calculating frequencies
and premiums.
Sample question
During the last episode of illness in your family, what means of treatment did you seek?
(Several replies possible.)
No treatment sought Healer or traditional pharmacopoeia
Consultation at dispensary Hospitalization at dispensary (non-exhaustive list)
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ILO / STEP

the number of times each response is ticked;
the total number of episodes of illness, i.e. the number of persons surveyed who replied
to this question. The current proportion of cases of illness corresponding to each means of
treatment is as follows:
Current proportion =
Number of times the means of treatment is ticked

Total number of surveyed respondents
Important. The establishment of a health micro-insurance scheme is likely to

lead to an increase in the frequentation of the health facilities whose services are
covered by the scheme. In order to take this impact into account, the formula for calculating
frequency should include not the current proportion of ill persons who have been treated
at the health facility but rather the expected proportion, which is higher. Estimating the
expected proportion of such persons on the basis of the current proportion is explained in
the practical example below.
Information on the number of utilizations of the health service
and the total number of cases treated by the health facility
The share of the health service in the total number of cases treated by the health facility is
as follows:
Share of health service =
Number of cases in which the health service was used

Total number of cases treated by the health facility
Note: It is assumed here that the expected share of the health service in the total number
of cases treated by the health facility is equivalent to the current share, i.e. that the establishment of a health micro-insurance scheme will not alter the proportion accounted for by the
health service in the health facilitys volume of activity.
Utilization
These three indicators may then be used to determine the frequency of utilization of the health
service, as will be seen later on (Chapter 4, 4.5.2(a)). The frequency of utilization of the health
service serves as an input in calculating the pure premium when using the specific formula.
PRACTICAL EXAMPLE CALCULATING THE FREQUENCY OF UTILIZATION

OF VARIOUS HEALTH SERVICES
Step 1: Calculating the frequency of illness based on a household survey
A survey is carried out of a sample of 300 households, representing a total of 1,500 persons. Over the course of a three-month period of observation, the number of cases of illness
was 450. The number of cases of illness for the year is therefore equal to 12/3 450 =
1,800.
The frequency of illness among the population surveyed is equal to the number of cases of
illness during the year (1,800), divided by the total number of persons (1,500) = 1.2
Frequency (illness) = 1.2
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Step 2: Calculating the current proportion of cases of illness

treated at each type of health facility
The results of the household surveys indicate that, prior to the start-up of the health microinsurance scheme, out of 100 cases of illness (all illnesses combined), the number of times
treatment was sought from the various types of health facility was as follows:
Number out of 100,

prior to start-up of the HMIS
Hospital (hospitalisation)
Private clinic (hospitalisation)
12
40
15
Self-medication
No treatment sought
Total
8
12
9
100
For the sake of simplicity, it was assumed that each respondent had ticked only one box,
meaning that he or she had used only one means of treatment, which explains why the total
number of means of treatment = 100. In practice, it often happens that a person utilizes
several different means of treatment over the course of the same episode of illness.
Step 2(a): Estimating the expected proportion of cases of illness
treated at each type of health facility
It is assumed that:
the health micro-insurance scheme covers only outpatient care at health centres, outpatient care and hospitalization at hospitals;
insured persons will modify the means of treatment they seek so as to optimize their coverage, i.e. they will seek treatment only from health facilities covered by the scheme.
Consequently, out of the 91 cases of illness treated:
hospitalization at the hospital will account for all hospitalizations (public + private), or
four cases;
outpatient care at the hospital and outpatient care at the health centre will account for all
outpatient care and self-medication (or 87 cases), in proportion to the share accounted
for by each in the initial outpatient care provided in the public sector (or 40/52 for the
health centre and 12/52 for the hospital):
outpatient care at the health centre: 40/52 87 = 67 cases;
outpatient care at the hospital: 12/52 87 = 20 cases.
There will be no more cases of No treatment sought. Thus, out of 100 cases of illness:
hospitalization at the hospital will account for 4/91 100 cases, or 4 per cent (rounded
figure);
outpatient care at the health centre 67/91 100 cases, or 74 per cent (ditto);
outpatient care at the hospital 20/91 100 persons, or 22 per cent (ditto).
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OF VARIOUS HEALTH SERVICES (cont.)
Number out of 91,

in the context of an HMIS
Hospital (hospitalisation)
Private clinic (hospitalisation)
Expected
proportion
4%
0%
20
22%
67
74%
0%
0%
Self-medication
0%
No treatment sought
Total
0%
91
100%
Step 3: Calculating the share of the health service in the total number of cases
treated at the health facility
The annual reports for the previous year of the health centre in question yield the following totals:
Consultations and outpatient treatments: 53,445 cases, including:
42,750 outpatient curative consultations, 38,475 medical prescriptions and
25,650 laboratory tests;
10,695 outpatient treatments.
The share of each health service in the total number of cases treated is as follows:
Number of cases
Consultations
Prescriptions
Laboratory tests
Treatments
Proportion
42 750
38 475
25 650
10 695
53 445
80%
72%
48%
20%
100%
The same procedure is used for the hospital.

Step 4: Final calculation of the frequency of utilization of each health service
Each of the indicators obtained in steps 1, 2(a) and 3 are then multiplied by each other to
obtain the frequency of utilization of each health service:
Frequency (consultations at health centre) = 1.2 74% 80% = 71%
Frequency (pharmacy at health centre) = 1.2 74% 72% = 64%
Frequency (laboratory tests at health centre) = 1.2 74% 48% = 43%
Frequency (outpatient care at health centre) = 1.2 74% 20% = 18%
Frequency
Consultations
Prescriptions
Laboratory tests
Treatments
The same method is used for the hospital.
71%
64%
43%
18%
89%
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Processing
The management tools (registers, indicators, etc.) of a pre-existing health micro-insurance
scheme may be used to determine:
the total population covered by the scheme;

the number of utilizations of each health service for which a claim was made by a covered
person.
The number of utilizations of each health service (number of hospitalizations, number of consultations, etc.) is divided by the total number of covered persons to produce the frequency of
utilization of each health service.
a waiting period and those ineligible for benefits owing to the fact that they are in arrears
Utilization
These two pieces of information may then be used to calculate the frequency of utilization of
the health service, as will be seen later on (Chapter 4, 4.5.2(a)). The frequency of utilization
of the health service serves as an input in calculating the pure premium of the health service when applying the specific formula. However, the data of other health micro-insurance
schemes must be used with precaution, given that each scheme is different (benefit plans,
population covered).

OF THE MEDICAL HOSPITALIZATION SERVICE
A pre-existing health micro-insurance scheme provides coverage for 3,500 persons. Of
these (persons who are effectively entitled to benefits), 80 were admitted to the Medical
hospitalization service over the course of the past 12 months. The frequency of utilization
of this service = 80/3,500 = 2.29 per cent.
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To establish a basis for calculating premiums
based on the operating costs of health facilities
Estimated fixed costs of the health facility
Processing
The collected information concerning the current fixed costs of the health facility, as well as an
estimate of the additional costs planned for the next accounting period (investments, recruitments) and non-recurrent costs, may be used to calculate an indicator of estimated fixed costs.
The information collected consists of the current fixed costs, i.e. equipment amortization costs,
building and equipment maintenance costs, payroll costs, training costs, etc.
Estimated fixed costs may be calculated as follows:
Estimated xed costs =
Current xed costs
+ Proposed additional costs for the following accounting period
Non-recurrent costs
Utilization
Health micro-insurance schemes serve, inter alia, to cover part of the operating costs of the
health facilities with which they conclude agreements. In order to calculate the premium, the
health facilitys operating costs are estimated (estimated fixed and variable costs), and this
amount is then divided by the number of expected users. This method is recommended particularly when the scheme intends to set up a subscription plan, i.e. the payment of a global
fee per covered person that grants entitlement to unlimited use of certain services or to all the
services of a health facility.
Estimated variable costs of the health facility

Processing
The information collected on the health facilitys current variable costs and an estimate of the
various rates linked to the establishment of the health micro-insurance scheme may be used to
calculate an indicator of estimated variable costs.
Estimated variable costs are calculated on the basis of current variable costs and an estimate of:
the population penetration rate of the scheme in terms of users of the health facility in the
first year;
the rate of growth in the number of health facility users;
the rate of growth in the medical consumption of the persons covered by the scheme.
(See practical example for more details.)
Utilization
Same as for estimated fixed costs.
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Estimated number of users

Processing
The current number of users and the estimated rate of growth in the number of users may serve
to calculate an indicator of the expected number of users.
Formulas for calculating indicators
The expected number of users may be calculated as follows:
Expected number of users = (1 + Growth rate) Number of current users
Utilization
Same as for estimated fixed costs.
PRACTICAL EXAMPLE
The current fixed costs (CFCs) of a health centre = 2,600,000 MUs per year. Current
variable costs (CVCs) = 1,000,000 MUs per year. The number of users (P) (each user
counted only once, even if he or she used the health facility numerous times during the year)
= 6,000 persons (adults, children).
Step 1: Calculating estimated fixed costs (EFCs)
The health centre does not expect its fixed costs to rise in the first year.
EFCs = CFCs = 2,600,000 MUs.
Step 2: Calculating estimated variable costs (EVCs)
EVCs are calculated on the basis of the variable costs corresponding to insured persons
and the variable costs corresponding to non-insured persons.
Assumptions:
the schemes population penetration rate in terms of users in the first year is estimated to
be x = 25 per cent (one out of four users will be a scheme member or dependent);
the total number of users is expected to rise by y = 5 per cent in the first year;
it is assumed that in the first year, insured persons will consume (in value) = 10 per cent
more than non-insured persons as a result of their insurance coverage.
Calculation of estimated costs:
The total number of users in the first year will be as follows:
P1 = (1+y) P = 1.05 6,000 = 6,300 persons
The number of insured users will be:
x P1 = 25% 6,300 = 1,575 persons
The portion of the variable cost corresponding to each user prior to the establishment of
the scheme shall be called c.
c = CVCs/P = 1,000,000/6,000 = 166.67 MUs
In the first year, insured persons increased their consumption by 10 per cent:
(1+ ) c = (1+10%) 166.67 MUs = 183.33 MUs
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PRACTICAL EXAMPLE (cont.)

The estimated variable costs of the scheme in its first year of operation are thus:
EVCs = ( x P1 (1+ ) c ) + ( (1 x) P1 c )
where c = 166.67 MUs, = 10%, x = 25% and P1 = 6,300
Thus, EVCs = 1,076,272 MUs
Step 3: Calculating the portion of estimated operating costs corresponding to
each individual, referred to as the pure premium, as will be seen in Chapter 4
Pure premium = (EFCs + EVCs) / P1 = (2,600,000 + 1,076,272) / 6,300 = 583.54 MUs
Rounded up, the Pure premium = 584 MUs

To evaluate the target populations willingness to pay
Premium amount and the seasonal nature of willingness to pay
Processing
The information collected the premium amounts the target population intends to pay as
expressed in household surveys, seasonal variations in income, etc. may be used to calculate
the following indicators:
the seasonal nature of willingness to pay;

the score obtained by each premium bracket, i.e. the percentage of persons prepared to
pay a premium within this bracket;
the cumulative score obtained by each premium bracket.
The calculation of these indicators and their utilization depend upon the questions put to households. Included below are merely one sample question and method of calculation. Another
sample is provided and developed in the practical example.
Information concerning the seasonal nature of willingness to pay
as it relates to the seasonal nature of income
Sample questions
During which months of the year is your income the highest?
January February March April May June July
August September October November December
If you were to join a health micro-insurance scheme, with what frequency and at what
times of the year would you be able to pay premiums?
Once per year (best month:
)
Bi-annually (best months:
and
)
Quarterly Monthly Weekly
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When processing the questionnaires, a calculation is made of the percentage of persons

who ticked January, February, etc., in response to the first question, which may be used to
determine whether there is a peak in income during certain months of the year.
Next, a calculation is made of the percentage of persons who ticked Once per year or
Bi-annually, and so forth.
The identification of income peaks during the year must lead to a proposal that premiums
should be paid during the corresponding periods, particularly if that coincides with the wishes
of potential members.
Information concerning the premium amounts the target population says it intends to pay
Sample question
What premium amount would you be prepared to pay per person and per period?
Once per
Amount for each member of the family:
When processing the questionnaires, the annual premium amount per person that respondents
state they are willing to pay, is determined for each questionnaire.
Example: If the respondent indicated Once per month and an amount of 200 MUs
per person, this corresponds to an annual premium of 2,400 MUs per person (fictitious
premium levels).
Next, premium brackets may be defined and their respective scores calculated, i.e. the percentage of persons prepared to pay a premium that falls within each of these brackets.
Example
First bracket: Between 501 MUs and 2,000 MUs
Second bracket: Between 2,001 MUs and 3,000 MUs
Third bracket: Between 3,001 MUs and 4,000 MUs
Fourth bracket: Between 4,001 MUs and 5,000 MUs
Fifth bracket: 5,001 MUs or more
Score (first bracket) = Percentage of persons who indicated a premium amount between 501 MUs
and 2,000 MUs. The scores of successive brackets are calculated in the same way (fictitious
premium levels).
The cumulative score of each bracket may also be calculated.
The cumulative score (first bracket) = Percentage of persons who indicated a premium amount
greater than or equal to 501 MUs.
The cumulative score (second bracket) = Percentage of persons who indicated a premium amount
greater than or equal to 2,001 MUs, and so forth.
Utilization
The scores obtained by each premium bracket make it possible to identify one or more homogeneous groups in terms of willingness to pay.
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ILO / STEP
In this example, it is assumed that the following scores were obtained:

10 per cent of respondents indicated a premium amount of Between 501 MUs and
2,000 MUs;
35 per cent indicated an amount Between 2,001 MUs and 3,000 MUs;
5 per cent indicated an amount of 5,001 MUs or more.
Two main population groups may be identified: the first could accept a premium level
of 2,000 MUs; the second could go up to 3,000 MUs. The identification of these two
groups may lead to offering two ranges of coverage: one would provide coverage for
basic services in exchange for the payment of a modest premium (2,000 MUs); the other
would offer coverage of a larger number of services in exchange for the payment of a
higher premium (3,000 MUs). Nevertheless, the introduction of several benefit plans
would make managing the scheme more difficult, particularly if the management system
is not computerized.
The cumulative scores are used to identify a premium amount not to be exceeded if the scheme
is to appeal to a large majority of the population and not only to an elite segment, and in order
to avoid major difficulties at the time of enrolment and when collecting premiums.
In the above example, the following cumulative scores were obtained:
100 per cent for the first bracket: 100 per cent of respondents indicated a premium
amount greater than or equal to 501 MUs;
90 per cent for the second bracket: 90 per cent of respondents indicated a premium
amount greater than or equal to 2,001 MUs;
55 per cent for the third bracket: 55 per cent of respondents indicated a premium
amount greater than or equal to 3,001 MUs, etc.
Offering exclusively a premium of 3,000 MUs would make it possible to attract only 55 per
cent of the target population; for this reason, it is desirable, either to introduce a lower
premium level (2,000 MUs), or to introduce several benefits with differing premium levels.
Current contribution levels of other civil society organizations that operate on the basis of
periodic contributions such as cooperatives, associations, trade unions or other health microinsurance schemes may be used to confirm the premium levels thus calculated, their seasonal
nature and the identification of homogeneous groups in terms of willingness to pay. This information may be used for purposes of illustration without any particular processing.
PRACTICAL EXAMPLE
A survey is conducted of 50 target population households. Each household consists of
an average of six persons. Questions are addressed to the head of the family and/or to
his/her spouse. The function and purpose of the premium is explained to respondents. The
following question is then asked: What maximum amount would you be prepared to pay
each month for yourself and your family?
200 MUs 400 MUs 600 MUs 800 MUs 1,000 MUs
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A calculation is made of:

the number of positive replies for each maximum premium amount;
the percentage of replies for each amount (for example: given a maximum amount of
600 MUs, the percentage of replies = 21/50 = 42 per cent);
the percentage of cumulative replies (for example: the amount of 600 MUs would be
acceptable to households that had indicated a maximum amount of 600 MUs, as well
as to all those that had indicated a higher maximum amount: 800 MUs, 1,000 MUs,
2,000 MUs, 3,000 MUs. The cumulative percentage = 42% + 36% + 6% + 2% +
2% = 88%).
Maximum amount per
month and per family
Number
of replies
Percentage
of replies
Cumulative
percentage
200
4%
100%
400
8%
96%
600
21
42%
88%
800
18
36%
46%
1 000
6%
10%
2 000
2%
4%
3 000
2%
2%
TOTAL
50
100%
As the proposed premium amounts increase, the number of households prepared to pay
those premiums diminishes. Generally speaking, a ceiling level emerges and the willingness
to pay beyond this level drops sharply.

negotiating with transport operators, collaborating with
prevention programmes, and obtaining information on public aid
Legal framework governing contractual arrangements
with health care providers, Identification of interlocutors
for concluding agreements with health care providers
No processing
Utilization
The legal framework provides information on the extent to which it is possible to conclude
agreements with health care providers, and indicates the rules to be followed when preparing
and implementing such agreements. The other information helps to identify who the interlocutors
of the scheme will be when it is time to prepare the agreements: managers of health facilities,
officials of regulatory bodies or members of management committees. If the health facility has
little autonomy, the agreement should be concluded in close collaboration with the regulatory
body. If, on the other hand, it has a greater degree of autonomy, the agreement could be
concluded by the manager of the health facility in his personal capacity.
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Estimation of fees with a view to defining contractual fees

1. Official fees and negotiated fees
No processing
The official fee schedules and the fees negotiated by other health micro-insurance schemes
with comparable health care providers are utilized directly without being processed.
Utilization
This information serves as a basis for setting fees in the context of agreements between the
future health micro-insurance scheme and health care providers.
2. Overcharging, if any
Processing
Information concerning requests for tips may be used to identify the services affected by such
practices and to calculate various indicators for the services concerned: minimum, average
and maximum amount of tips.
Information that may be used to estimate the extent of overcharging, if any
Sample questions
The last time you had to pay a tip, was it in connection with:
a consultation? a hospitalization?
Please indicate which service was involved
How much did you have to pay (in addition to the posted fees)?
MUs
Processing the replies consists of calculating the average amount overcharged for consultations,
hospitalizations, and, in some cases, for each service.
Utilization
Information on overcharging may be used to identify the services for which this practice is most
widespread. Estimating the amount of the tips requested by the health care staff is particularly
useful if the scheme wishes to put an end to such practices by compensating staff members in
ways as yet undetermined.
Levels of quality and operation of the health facilities

with a view to defining quality standards
1. Objective quality
No processing
Information on the objective quality of the health facilities, derived from quality assessments, is
utilized directly without being processed.
Utilization
These levels of objective quality may serve as a basis for defining quality standards or objectives to be stipulated under the agreements. A health facility may thus commit to respecting a
maximum waiting time or to an improved level of availability of medicines.
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2. The viewpoint of the health care staff

No processing
Information on the current operation of the health facilities, obtained from interviews with the
health care staff of the health facilities, is used directly without being processed.
Utilization
This information helps to gain an understanding of the current operating procedures of the
health facilities, to identify certain problems relating to operations or quality and to explore
avenues for improvement.
Sample questions concerning average waiting time

Are patients required to wait a long time before being seen by medical staff?
If yes, to what is this wait attributable?
What steps might be taken to reduce this waiting time?
Sample questions concerning the procurement of medicines
Does the pharmacy of the health facility sometimes have stock shortages of certain
medicines?
If yes, to what is this attributable?
What steps might be taken to avoid stock shortages?
The solutions to operational problems that are proposed by the health care staff during interviews may be taken into account when preparing future agreements.
3. The viewpoint of the users

Processing
Information on the perceived quality (average length of wait, availability of medicines, confidentiality), derived from patient surveys, may be used to calculate indicators of perceived
quality. The calculation of the indicators and their utilization depend upon the questions put to
patients. Included below are merely one sample question and method of calculation.
Information on the average waiting time
Sample questions
How long did you have to wait the last time before you were treated?
Estimated amount of time:
More than 7 hours Between 4 and 7 hours
Between 1 and 4 hours Less than 1 hour
How long did you have to wait the last time before you were given an appointment?
Estimated amount of time:
More than 1 month
Between 1 week and 1 month
Less than 1 week Never made an appointment
In order to calculate the average waiting time (before being treated, before date of appointment), the times indicated in the Estimated amount of time field are added together and the
total is divided by the number of replies.
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Actual presence of medical staff (perceived)
Sample question
Are certain members of the health care staff sometimes absent during opening hours for
reasons not related to their work? Yes No
An indicator of perceived quality is calculated in terms of the percentage of No replies. The
same procedure is used to obtain the other indicators of perceived quality (perceived availability
of medicines, confidentiality, etc.).
Utilization
An analysis of patient surveys may be used to define current levels of quality. These levels
may be used to define quality objectives or standards, i.e. levels of quality to be attained
by the partner health facilities and stipulated under agreements with the future health microinsurance scheme.
Examples: If the average waiting time for an appointment is two weeks, one of the
quality objectives could be to reduce this average wait to one week. If the level of actual
presence of heath care staff is low (for example, if 70 per cent of the users replied Yes
to the question Are certain members of the health care staff sometimes absent during
opening hours for reasons not related to their work?), one of the quality objectives
could be to reduce absenteeism. Accompanying measures could be envisaged: motivating staff, closer supervision. If the availability of medicines is poor, one quality objective
could be to decrease the frequency of medicine stock shortages. Accompanying measures, such as the establishment of an additional supply circuit, could also be envisaged.
Methods of payment of health care providers

No processing
The information collected on the current method of fee setting, the preferred method of
payment, the preferred frequency of payments may be utilized directly without being processed.
Utilization
The method of payment preferred by health facilities may vary from one health facility to
another: fee-for-service, per cluster of services, per hospital day, per episode of illness, capitation (annual global fee per covered person). The method of payment must, however, be
compatible with the current method of fee setting. For example, payment on a fee-for-service
basis is only possible if the method of fee setting and invoicing used by health facilities involves
invoicing each health service separately. If health facilities invoice health services in clusters, the
scheme may use a method of payment that is also comprehensive in nature: coverage provided
for each utilization or each episode of illness, or an annual global fee per insured person.
The preferred frequency of payments under a third-party payment mechanism may also
vary from one provider to another.
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Agreements with transport operators, Participation in health education

and prevention programmes
No processing
Utilization
The information may be used to determine the possibility of concluding agreements or participating in existing health education and prevention programmes, as well as to identify the
broad outlines of such agreements or collaboration.
Existing sources of public aid and conditions of grant

No processing
Utilization
This information may be used to identify existing mechanisms of financial aid for health microinsurance schemes: premium subsidies, particularly for the most destitute; subsidies for certain
operating costs, such as assistance for hiring salaried staff; the provision of technical assistance
services free of cost or at preferential rates; and the provision of State-funded or subsidized
financial consolidation mechanisms, such as guarantee funds. The information collected also
helps to understand the modalities for the grant of such aid: conditions, procedures to follow.

To establish a basis for defining the organization
and operation of the scheme
Organization in networks, Methods of organization,
Principal rules of management, Other indicators
No processing
Utilization
This information may be used to identify among existing civil society organizations including
any health micro-insurance schemes intelligent methods of organization or effective systems
of management. This information may serve as a source of inspiration when designing the
scheme. The population penetration rates and the percentage of management costs of other
health micro-insurance schemes may be used as references when calculating the budget
estimate and the premiums.
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4. TOOLS USED TO DESIGN THE HEALTH MICRO-INSURANCE SCHEME
4.
Tools used to design

the health micro-insurance scheme
The tools used to design the health micro-insurance scheme include the following:
Guidelines for conducting working
group sessions
Examples, methods, comparative
tables for each step involved in
designing the health micro-insurance
scheme: step 1, step 2
Tool 4.0
Working group sessions
Tools 4.1, 4.2,

Tool 4.1 for step 1

Zoom
in on Tools 4.5
linked to step 5
Zoom
in on step 5
Tools 4.5
4.5.1 List of co-payments
Step 5
Step 5 (selecting benefit plans
and calculating premiums)
calls for tools 4.5.1 to 4.5.7
4.5.2 Calculating the pure premium

using two methods: a) based on
health expenses of the target population; b) based on the operating costs
of the health facilities
4.5.3 Adjusting the pure premium
4.5.4 Calculating the safety loading
4.5.5 Sample premium calculation
chart
4.5.6 Performing premium calculations
(practical example)
4.5.7 Calculating willingness to pay
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4.0
ILO / STEP
Working group sessions

Working group sessions may be directed towards the various actors concerned by the establishment of a health micro-insurance scheme. These include, for the most part, the representatives of the target population, but also other key actors (such as potential partner health care
providers, local authorities, etc.). Depending on the themes of the meetings, however, the
presence of all these actors is not absolutely necessary. Too many participants or too great a
diversity of opinions risks slowing down or complicating the decision-making process. Steps
should therefore be taken to strike the right balance between the desire to bring together a
large number of actors and the difficulty inherent in managing diversity.
One of the objectives of the working group sessions is to consult with the actors in order to
obtain their points of view. It is important to give some attention to the composition of the working groups in order to ensure that all participants will have a chance to express themselves.
For certain decisions such as deciding which services the scheme will cover and in certain
situations, it may be preferable to consult women and men separately, thereby allowing each
party the freedom to make its views known. For the same reason, it is not necessarily desirable
to include local or traditional authorities in all meetings (because participants will be less likely
to express themselves in their presence). If despite all these precautions, it becomes apparent
that some sub-groups, such as women or young persons, have been under-represented in the
decision-making process, their respective opinions can still be gathered at smaller meetings
known as focus groups.
Working group sessions must centre on issues relating to health micro-insurance. The objectives of the meetings must be defined clearly in order to avoid any digressions. In particular, the
establishment of income generating activities often identified as an accompanying measure
of a health micro-insurance scheme must be dealt with in the context of a separate project
and separate working group sessions.
The facilitation of such sessions is a gradual process and requires an investment of time.
Efforts to obtain quick results usually end in failure and reduce the process to one of merely
superimposing a scheme onto a context for which it may not necessarily be the best suited.
At the same time, it is a dynamic process that should not be subjected to undue interruptions.
For this reason, efforts should be made to maintain a certain pace in conducting the process,
not allowing it to drag on too long and thereby risk discouraging the actors.
Facilitators must be well-versed in the subjects being considered, particularly those having
to do with insurance techniques. They must be able to suggest a variety of forms of organization and operation. In this connection, although knowledge of other experiences is valuable, it
should not lead to outright copying. Facilitators should also be careful not to inhibit the creativity
of the actors by forcing them to adopt practices drawn from other experiences.
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4.1
121
4.1 SELECTING THE TARGET POPULATION
Selecting the target population

Sample comparative table
This table may be used to facilitate making a selection from among several pre-identified target
populations that have been defined on a geographic, socio-occupational or socio-economic
basis. It contains the data compiled and indicators calculated for objective 2: To establish a
basis for selecting the target population. Information and indicators listed under demographic
criteria were derived from objective 1 To understand the context/ demographic information.
Those listed under criteria of exclusion from access to health care were derived from objective 4 To establish a basis for selecting the health services to be covered/services difficult to
access for financial reasons.
In this sample, the steering committee wishes to select a village from among the three it has
identified. Each of the three villages (A, B, and C) has a health centre; however, the inhabitants
of all three villages utilize the same reference hospital.
Village A
Village B
Village C
Demographic criteria
Number of inhabitants
Distribution by age bracket
Average number of persons per family
Criteria of exclusion from access to the main health care services
Rate of total exclusion
Rate of temporary exclusion
Rate of partial exclusion
Criteria of objective quality of health facilities
(it is preferable for the selected target population to have access to a quality health care supply)
qualications of medical staff conform to standards
Actual coverage
Opening hours
Existence of on-duty system outside of opening hours
Criteria of frequentation of health facilities
Frequentation rate of each health centre
Frequentation rate of reference hospital
Economic and social criteria
Monetary income generating activities
Income levels
Level of education and literacy
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Village A
Village B
Village C
Economic and social criteria (cont.)

Types of organization of the population (associations,
tontines, groupings, cooperatives, etc.)
Information concerning main civil society organizations (size,
existence or lack of a system of contributions or premiums,
management of a common fund or lack of such a fund, etc.)
Criteria of mutual aid practices
Existence of mutual aid mechanisms in event of illness
Characteristics of mutual aid mechanisms (services, nancing
method, etc.)
4.2
Pre-selecting the health services to be taken

into account in the various benet plans
List of health services usually covered 5
Basic health care
Basic health care consists of the routine treatment usually dispensed at health posts or health
centres. Basic health care includes:
preventive and promotional care, including prenatal and post-natal consultations, care for
healthy infants, vaccinations, family planning, health education and sanitation. A health
micro-insurance scheme has every interest in providing coverage for preventive care in
order to limit the incidence of illness. The coverage of prenatal consultations, for example,
is aimed at preventing dystocic deliveries;
curative care, including, primarily, consultations, nursing services, provision of medicines and
certain laboratory tests. The placement of patients under observation (minor in-patient stay
at the health centre) or assisted deliveries are sometimes added to this list;
treatment of chronic diseases (diabetes, arterial hypertension, HIV infection, heart disease,
haemophilia, etc.) and, in some cases, home care*;
treatment of children suffering from malnutrition and their nutritional rehabilitation using local
food.
Hospital care
Hospital care includes accommodation at the hospital, as well as medical, surgical and technical services, and medicines consumed during the hospital stay.
It is also possible to provide coverage for the services of traditional medicine, provided that there exists
some means of formalizing and monitoring the transactions involved (established fees, invoices, etc.).
VOLUME 2
4.2 PRE-SELECTING THE HEALTH SERVICES TO BE TAKEN INTO ACCOUNT IN THE VARIOUS BENEFIT PLANS
123
Specialist treatment includes consultations with specialist physicians (gynaecologists, paediatricians, surgeons, etc.) and technical medical services, such as X-rays and clinical biology,
performed either during the hospital stay or during an outpatient consultation.
Dental care and prostheses

Dental care and prostheses, dispensed by private practices, usually constitute a separate
service. Certain health micro-insurance schemes provide coverage for dental care (primarily
the treatment of cavities) and sometimes for prostheses (removable appliances, crowns).
Eyeglasses
Some health micro-insurance schemes provide coverage for eyeglasses, provided that they are
listed on a medical prescription issued by an ophthalmologist (a medical specialist who treats
vision disorders). Coverage is usually limited to lenses, frames not being covered. The prices
of frames can vary widely; therefore, when they are covered, frames are often reimbursed on
a flat-rate basis.
Medicines and other medical consumables

As far as medicines are concerned, it is important to establish a list of those to be covered by the
scheme, or to restrict coverage to the list of essential drugs drawn up by the health ministry.
Given the difference in price between brand-name drugs and generic drugs, it is advisable to reimburse only the latter or when no generic drug is available to reimburse the
corresponding brand-name drug based on the price of the generic drug.
Ideally, medicines should be issued only by designated health facilities, such as, for example, public health establishments or certain pre-defined private pharmacies.
It is also advisable to provide coverage exclusively for medicines listed on a medical
prescription.
Medical consumables include minor medical supplies, such as probes, perfusion equipment, syringes, bandages, etc., which patients must purchase before being able to receive
treatment or to continue a treatment at home. The purchase of consumable medical supplies
may constitute a financial barrier that hinders access to care, which is why some schemes
cover them. Once again, it is important to draw up a specific list of consumable supplies that
are covered by the scheme.
Patient transport
Aside from the coverage of health care, a health micro-insurance scheme may cover patient
evacuations from one level of the health pyramid to the next.
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ILO / STEP
Covering major and minor risks

Major risks
These include risks related to serious diseases and, more generally, medical conditions that
entail sizeable health costs: hospitalization, surgery, dystocic deliveries and other specialist
health services. The probability of the occurrence of these events is low; however, the financial
burden they entail constitutes an obstacle for nearly all families. Few individuals, in fact, are
in a position to finance an expensive operation wholly on their own, especially if this requires
obtaining treatment from health care providers located at a distance.
Minor risks
Minor risks involve milder cases which entail more modest costs, but which occur with much
more frequency than major risks. Included in this category are nursing services and outpatient
consultations.
Insurance is particularly well-suited to major risks

Minor risks, such as consultations or the purchase of medicines, are almost certain risks. It is
not unusual to be required to consult a physician or purchase medicines at least once in the
course of a year. Consequently, insurance which consists of pooling premiums to cover the
expenses of exclusively those persons who seek treatment is not much more effective, in
this case, than a savings plan in which each person puts money aside to cover almost certain
future health expenses. The premiums that individuals must pay in order to be insured by a
health micro-insurance scheme are roughly equivalent to the health expenses they would have
incurred if they were not insured.
On the other hand, major risks (such as the utilization of secondary and tertiary health
care services) are related to events with a low probability of occurrence but which entail a
very high cost. Given a large number of members, each of whom pays a small premium, it is
possible to cover the expenses of individuals affected by these risks. The insurance mechanism
provides an effective response by spreading the risks over a large number of individuals . The
premiums that individuals are required to pay are low when compared to the expenses they
would have had to assume had they not been insured when the risk occurred. However, in
order to provide coverage for major risks, the number of insured persons must be sufficiently
large if the solvency of the scheme is to be maintained.
VOLUME 2
4.2 PRE-SELECTING THE HEALTH SERVICES TO BE TAKEN INTO ACCOUNT IN THE VARIOUS BENEFIT PLANS
125
Sample comparative table of health services

This table may be used to facilitate the establishment of a list of health services, in order of
priority, and the identification of those services considered to be priorities exclusively for certain
sub-groups of the population.
It contains the data compiled and indicators calculated for objective 4: To establish a basis
for selecting the health services to be covered.
Name of service (non-exhaustive list)
Criteria
Consultations
Medicines
Lab
tests
PNCs
Real needs
Priority services
Felt needs
Percentage
of persons
who consider
the service
to be a priority
Financial difculties
Rate of total
exclusion
Rate of temporary
exclusion
Rate of partial
exclusion
Problems regarding cost recovery and nancing
Percentage
of outstanding
payments
Under-utilization
(yes/no)
Sub-groups of the population particularly interested (if any)
Characteristics
of sub-group
Among
sub-group:
Percentage
of persons
who consider
the service
to be a priority
Uncomplicated
deliveries
Dystocic
deliveries
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ILO / STEP
Sample benefit plan

The sample benefit plan (below) includes:
a basic plan, consisting of services that correspond to the needs of the majority;
an extended plan, consisting of services included in the basic plan + other important but
not priority health services;
optional services such as an emergency transport service when such services correspond to the needs of only a sub-group of the population.
Among the services:
some correspond to individual health services;
others correspond to clusters of health services: for example, Medical hospitalization covers the fixed daily rate, consultations, treatments, and medicines consumed and diagnostics
performed during the hospital stay;
still others refer to episodes of illness: for example, Maternity includes prenatal and postnatal consultations, as well as delivery, whether uncomplicated or dystocic.
Sample benet plan
Basic
plan
Extended
plan
Consultations at health post/health centre
Treatment at health post/health centre
Generic drugs at pharmacy of health post/health centre
Laboratory tests
Services included
X-rays
Specialist consultation at <NAME> hospital
Specialist consultation in town
Generic drugs at pharmacy (<NAME> hospital)
Unplanned medical hospitalization (<NAME> hospital)
Unplanned surgical hospitalization (<NAME> hospital)
Maternity
Eyeglasses
Optional services
Emergency transport
Possible
Possible
VOLUME 2
4.3
127
4.3 SELECTING THE PARTNER HEALTH CARE PROVIDERS
Selecting the partner health care providers

This table may be used to facilitate making a selection from among two providers (A and B). It
contains the data compiled and the indicators calculated for objective 3: To establish a basis
for selecting the partner health care providers.
Provider A
Monograph for each provider

Level of the health pyramid
Type (public provider, private provider or set up
under a special programme)
District
Types of care dispensed
Fees for the following services:
Objective quality of health facilities

Extent to which buildings, equipment and qualications
of medical staff conform to standards
Actual coverage
Opening hours
Existence of an on-duty system outside of opening hours
Overload for a given service
Average bed occupation rate
SYNTHESIS OF OBJECTIVE QUALITY
Quality of patient reception
Medical staff: competency, ability to listen and empathize,
existence of female medical staff
General staff: honesty, condentiality
Opening hours
Actual presence of staff during opening hours
Sufcient numbers of staff
SYNTHESIS OF PERCEIVED QUALITY
Frequentation
Frequentation rate
Provider B
ILO / STEP
Selecting the services and health care providers

to include in a third-party payment mechanism
This table may be used to identify and to select the health services for which third-party payment is considered to be a priority. It contains figures for the data collected and indicators
calculated for objective 5: To establish a basis for determining methods of coverage: direct
payment or third-party payment.
Name of service (non-exhaustive list)
Criteria
Consultations
Medicines
Laboratory
tests
Prenatal and
post-natal
consultations
Uncomplicated
deliveries
Complicated deliveries
Cost (indicate , + or ++ according to level of cost)
Urgency (indicate , + or ++ according to level of urgency or unpredictability of cases treated)
Needs expressed by population

Percentage
of persons
who consider
third-party
payment
to be a priority
for this service
Sample diagram of various methods of coverage

Direct payment or third-party guarantor
Insured persons pay their health costs,
submit their invoices to the health micro-insurance
scheme (HMIS) and are subsequently reimbursed.
Third-party payment
Insured persons pay nothing or pay only
the co-payment. The provider is paid regularly
by the health micro-insurance scheme (HMIS)
on the basis of a (consolidated) invoice.
Payment
Co-payment
or free services
Health service
Health care
provider
Health care
provider
Health service
me
me
nt
HMIS
Flow of funds
Other flows
HMIS
Invoice
rse
bu
nt
im
Re
Pa
y
4.4
Invoice
128
VOLUME 2
4.5
4.5 SELECTING BENEFIT PLANS AND CALCULATING THE CORRESPONDING PREMIUMS
129
Selecting benet plans and calculating

the corresponding premiums
4.5.1 List of co-payments
The percentage co-payment
When a health micro-insurance scheme covers only a portion of health care costs, the remaining portion to be borne by the member is called the percentage co-payment. The percentage
co-payment provides a means of moderating members health care consumption. (To the extent
that people are required to pay something, they are inclined to limit their consumption.)
Example of benefit with percentage co-payment: A Hospitalization benefit covers 80 per cent of expenses incurred, with a percentage co-payment of 20 per
cent. Thus, if a patients expenses are 100,000 MUs, 80 per cent, or 80,000 MUs,
are borne by the scheme, and 20 per cent, or 20,000 MUs, are borne by the member.
The maximum benefit or flat-rate benefit (= limit on amount covered)

The maximum benefit or flat-rate benefit covers 100 per cent of expenses, subject to a fixed,
flat-rate limit (expressed in monetary units) per case, per session, per day or per year.
Examples of flat-rate benefits: A Consultations benefit covers 100 per cent

of expenses incurred, up to a maximum limit of 600 MUs per consultation. A Hospital
accommodation benefit covers 100 per cent of expenses incurred, up to a maximum
limit of 150 MUs per hospital day. An Optical benefit covers 100 per cent of expenses
incurred, up to a maximum limit of 3,000 MUs per year and per person.
Calculation of the Consultations benefit: If a consultation fee is 500 MUs (< 600 MUs),
the scheme covers 100 per cent of expenses (or 500 MUs), and the member pays nothing. If the consultation fee is 800 MUs (> 600 MUs), the amount of the flat-rate benefit
(or 600 MUs) is borne by the scheme, and the difference between the consultation fee
and the flat-rate benefit (or 200 MUs) is borne by the member.
Maximum number of days, cases or sessions

Benefits subject to this type of co-payment limit coverage to a maximum number of days, cases
or sessions per person and per year.
Examples of benefits subject to a numerical maximum: A Prenatal consultation benefit covers 100 per cent of expenses incurred, up to a limit of three prenatal consultations per pregnant woman per year. A Hospital accommodation benefit
covers 80 per cent of expenses incurred, up to a limit of 12 hospital days per person
and per year.
Calculation of the Prenatal consultations benefit: If a patient undergoes two prenatal
consultations, the scheme covers 100 per cent of the patients expenses, and the member
owes nothing. If the patient undergoes four prenatal consultations, the scheme covers the
first three consultations in full, but the fourth is at the members expense.
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ILO / STEP
Monetary deductibles applied to each health service utilized, annual monetary

deductibles and numerical deductibles (expressed in days, cases, or sessions)
Monetary deductibles applied to each health service utilized
Benefits subject to a monetary deductible applied to each health service cover 100 per cent of
expenses, minus a specified amount expressed in monetary units, known as a deductible. The
latter is always paid by the member and is not proportional to the expenses actually incurred.
This type of co-payment does not promote the accessibility of health care.
Example of monetary deductible: A Surgery benefit covers 100 per cent of

expenses incurred, minus a deductible of 2,000 MUs.
Calculation: If surgery costs are 1,500 MUs (< 2,000 MUs), no coverage is provided
by the scheme, and the member pays 1,500 MUs. If surgery costs are 3,000 MUs, the
scheme covers 1,000 MUs (3,000 2,000 MUs), while the amount of the deductible
(2,000 MUs) remains at the members expense.
Annual monetary deductibles

Benefits subject to a monetary deductible provide coverage only when the health expenses
incurred by the insured person over the course of the year exceed a specified amount (the
deductible), which is always at the insured persons expense. This type of co-payment presents
a major disadvantage: it contributes to the low visibility of coverage.
Example of an annual monetary deductible: A Consultations and pharmacy benefit covers 100 per cent of expenses incurred in excess of an annual deductible of 3,000 MUs.
Calculation: In the course of a year, an insured person is stricken with four episodes
of illness. During the first episode, he or she spends 1,000 MUs for consultations and
medicines, and is not reimbursed. During the second episode, the insured person spends
1,500 MUs. The insured persons cumulative expenses since the beginning of the year
are 1,000 MUs + 1,500 MUs = 2,500 MUs, which are not reimbursed. During the third
episode, the insured person spends 1,200 MUs. Cumulative expenses since the beginning of the year now equal 2,500 MUs + 1,200 MUs = 3,700 MUs > 3,000 MUs.
Consequently, the insured person is reimbursed in the amount of 700 MUs, while the
amount corresponding to the annual deductible (3,000 MUs) remains at his or her
expense. During the fourth episode, the insured person spends 1,500 MUs, the full
amount of which is covered by the scheme.
Numerical deductibles
Similarly, benefits subject to a numerical deductible cover 100 per cent of expenses, minus a
specified number of sessions, cases or days, which are always at the members expense.
Example of a numerical deductible: A Hospital accommodation benefit covers 100 per cent of expenses incurred, excluding the first day of hospitalization, which is
never covered.
Calculation: If a patient is hospitalized for three days, the expenses corresponding to the
first day are borne entirely by the patient. However, the health micro-insurance scheme
covers the second and third hospital days.
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131
4.5.2(a) Calculating the pure premium based

There are two ways to calculate the pure premium:
based on the health expenses of insured persons u discussed below;
based on the operating costs of health facilities u see 4.5.2(b), page 143.
This section explains how to calculate the following indicators for each health service:
Useful if applying
the general formula
for calculating the pure premium

Useful if applying
These indicators are then simply multiplied by each other to produce the pure premium (using
the general formula or the specific formula):
General formula
Pure premium
(for a given health service)
=
Average unit cost
Specific formula
Pure premium
(for a given health service)
=
of this service
Average unit cost
Exception: In the case of benefits subject to an Annual maximum benefit or to an

Annual monetary deductible, the pure premium is equal to the probability of utilizing the
service, multiplied by the average annual cost. An estimate of the distribution of the average
annual cost may be obtained by multiplying the distribution of the unit cost by the average
quantity (see section entitled, Annual maximum benefits and annual deductibles: Calculating the average annual cost, page 140).
Calculating the probability of utilizing a health service

1. Recommended method of data collection and calculation: Based
on household surveys and data supplied by health facilities
When processing the data collected for objective 6, three indicators were calculated: the probability of falling ill, the proportion of sick persons expected to use the health facility and the
proportion of health facility users who use the health service. For more details, please refer to:
u 3.4.6 Example of processing the data collected for objective 6: To establish a

basis for calculating premiums based on the health expenses of the target population,
page 87.
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ILO / STEP
The probability of utilizing the health service is obtained by multiplying these three indicators
by each other:

Probability (health service) =

Probability (falling ill)
Expected proportion of sick persons that will use the health facility
Proportion of health facility users who use the health service

The management data of health micro-insurance schemes are used to establish two indicators:
the number of covered persons who used the health service at least once in the course of the
year and the total number of persons covered by the scheme (see also 3.4.6). The probability
of utilizing the health service is obtained by dividing the first indicator by the second:
Number of covered persons who used the service
in a given year (each one counted only once)
Probability
=
(health service)
Total number of persons covered by the scheme
Calculating the average quantity covered

When processing the data collected for objective 6: To establish a basis for calculating premiums based on the health expenses of the target population (see 3.4.6), a summary table
was completed. The first row of this table contains the number of times the service was utilized
(once, twice, etc.) or the number of units consumed (one hospital day, two hospital days, etc.)
and the second row indicates the number of patients concerned. Below is a sample summary
table (fictitious data):
50
30
10
This table may now be used to calculate the average quantity covered, regardless of the
benefit terms used:
First category of benefit terms (the most common): Benefits not subject to any particular limit
on the quantity of the health service utilized.
Second category of benefit terms: Benefits subject to a limit on the quantity covered.
Third category of benefit terms: Benefits subject to a numerical deductible.
For more details on the methods of collection and the summary table, please refer to:
u 3.4.6 Example of processing the data collected for objective 6: To establish
a basis for calculating premiums based on the health expenses of the target population, Processing the collected data in order to calculate the average quantity covered,
page 93.
VOLUME 2
133
1. First category of benefit terms (the most common): Benefits not subject
to any particular limit on the quantity covered
Examples of benefits
Health service covered
Level of coverage
Consultations
100% of expenses incurred for each consultation,

regardless of the number of consultations per year
Pharmacy
60% of the total of each prescription
Formula for calculating the average quantity covered

Average quantity
=
covered
Number of times the service was utilized in the year

Total number of patients (each one counted only once,
even if he or she utilized the health service more than once)
PRACTICAL EXAMPLE CALCULATING THE AVERAGE QUANTITY

COVERED IN THE CASE OF BENEFITS NOT SUBJECT TO A LIMIT
ON QUANTITY (MOST COMMON CASE)
Data concerning the Consultations service was collected for 98 patients. The summary
table contains the following information:
Number of times the Consultations service
was utilized in the course of the year
50
30
10
The average quantity covered = [(1 50) + (2 30) + (3 10) + (4 5) + (5 3) ] /

(50 + 30 + 10 + 5 + 3) = 175 / 98 = 1.79.
2. Second category of benefit terms: Benefits subject to a limit on the quantity covered
Example of benefits
Level of coverage
Prenatal consultations
100%, limited to three PCs per person and per year
Hospitalization
80%, limited to 12 days per person and per year
Eyeglasses
1,500 MUs, limited to one set per person and per year
The benefit in the first example covers 100 per cent of expenses incurred for prenatal consultations (PCs), up to a maximum limit of three consultations per person and per year. If the beneficiary consumes one, two or three PCs, the latter are covered in full. The fourth consultation,
however, is not covered. This type of limit makes it possible to protect the scheme against the
well-above-average consumption of some insured persons.
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ILO / STEP
The average quantity covered is lower than the average number of health services consumed
by the reference population. See the following practical example for the method of calculation.
PRACTICAL EXAMPLE CALCULATING THE AVERAGE QUANTITY IN
THE CASE OF BENEFITS SUBJECT TO A LIMIT ON THE QUANTITY COVERED
Data concerning the Prenatal consultations service was collected for 150 pregnant
women who had undergone at least one prenatal consultation in the course of the year.
The summary table is as follows:
100
20
20
The benefit covers 100 per cent of expenses incurred, up to a limit of three prenatal consultations (PCs) per pregnant woman and per year. The quantity covered is thus:
the actual quantity consumed by patients utilizing less than three PCs;
three PCs for those utilizing more than three PCs.
100
20
20
Quantity covered
Consequently, the average quantity covered = [(100 1) + (20 2) + ((20 + 5 + 3 +

2) 3) ] / 150 = 1.53.
Note: The average quantity for a benefit covering 100 per cent of expenses incurred,
not subject to a limit, would have been = [(100 1) + (20 2) + (20 3) + (5 4) +
(3 5) + (2 6) ] / 150 = 1.65.
Taking into account the impact of the benefit on beneficiaries health care consumption
It can be assumed that the provision of the Prenatal consultations benefit will contribute to
increasing the number of consultations consumed by women who, until now, consumed one
or two PCs.
Based on a survey of a sample of pregnant women, the following assumptions (among
others) may be formulated: 25 per cent of the women who, until now, consumed one PC will
maintain the same level of consumption; 25 per cent will consume two consultations and 50
per cent will consume three. Fifty per cent of the women who, until now, consumed two PCs
will maintain the same level of consumption, and 50 per cent will consume three PCs. The other
women (three PCs and more) will maintain the same consumption pattern. Consequently, the
quantities of prenatal consultations consumed are likely to be as follows:
Quantity covered
25
35
80
Thus, the average quantity covered will be equal to: [ (25 1) + (35 2) + ((80 + 5 +
3 + 2) 3)] / 150 = 2.43.
VOLUME 2
135
3. Third category of benefit terms: Benefits subject to a numerical deductible

Example of benefit
Level of coverage
Hospitalization
The rst hospital day is not covered. The second hospital

day and all subsequent days are covered at the rate of
80% of expenses incurred
In this case, if the beneficiary is hospitalized only one day, the cost of the hospitalization is
not covered. If the beneficiary is hospitalized for more than one day, the first day remains at
his or her expense. The benefit covers hospital costs beginning only with the second day of
hospitalization.
This type of benefit covers health expenses only when they begin to pose financial problems to insured persons. The deductible for the first day of hospitalization serves to dissuade
insured persons from requesting hospitalization for minor illnesses (requiring only one day of
observation at the hospital).
The average quantity covered is lower than the average number of health services consumed
by the reference population. See the practical example below for the method of calculation.
PRACTICAL EXAMPLE CALCULATING THE AVERAGE QUANTITY

IN THE CASE OF BENEFITS SUBJECT TO A NUMERICAL DEDUCTIBLE
Data concerning the Medical hospitalization service was collected from 200 patients.
The following summary table was drawn up:
Number of
hospital days
10 11 12 13 14 15
Number of
patients concerned
35 15 15 35 30 25 10 10
The benefit covers 80 per cent of expenses incurred, with a deductible consisting of the first
hospital day. The quantity covered is therefore: 0 days for patients hospitalized one day;
the number of hospital days, minus one, for the others.
Number of
hospital days
Number of
patients concerned
Quantity covered
35 15 15 35 30 25 10 10
0
9 10 11 12 13 14 15
5
9 10 11 12 13 14
Thus, the average quantity covered = [ (0 35) + (1 15) + (2 15) + (3 ) ] /

200 = 3.91.
Note: The average quantity for a benefit covering 80 per cent of expenses incurred
without a deductible would have been = [(35 1) + (15 2) + (15 3) + (35
4) + ] / 200 = 4.91.
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ILO / STEP
Calculating the average unit cost

When processing the data collected for objective 6: To establish a basis for calculating
premiums based on the health expenses of the target population (see 3.4.6), a summary
table was filled out.
As regards the first method of collection (based on the data provided by health facilities:
registers, annual reports, statistics, testimony of health care staff), the summary table contains,
for each pathology, the average cost of the service and the prevalence rate. A sample summary table (fictitious data) is provided below:
Pathology
Average cost of the service
Prevalence rate
Malaria
Respiratory
problems
Diarrhoea
1000
1500
1200
10%
15%
9%
This form of presentation does not, however, allow for calculating the average unit cost for all
benefit terms (not suitable for flat-rate/maximum benefits and monetary deductibles).
As regards the other methods of collection (tracking a sample of patients, management
data of pre-existing health micro-insurance schemes), the first row of the summary table contains the cost of the service (1,000 MUs, 1,200 MUs, 1,500 MUs, etc.), and the second row
contains the number of times this cost was noted. A sample summary table (fictitious data) is
provided below:
Cost of the service
1000
1200
1500
1800
2000
10
25
50
10
This form of presentation allows for calculating the average unit cost of the service, regardless
of the benefit terms:
First category of benefit terms (the most common): Benefits covering either 100 per cent of
expenses incurred or Y per cent of expenses incurred, where Y<100 (benefits subject to a
percentage co-payment).
Second category of benefit terms: Benefits subject to a monetary limit (maximum benefit
or flat-rate benefit) that applies to each utilization.
Third category of benefit terms: Benefits subject to a monetary deductible that applies to
each utilization.
For more details on methods of collection and summary tables, please refer to:
Processing the collected data in order to calculate the average unit cost, page 95.
VOLUME 2
137
1. First category of benefit terms (the most common): Benefits covering

either 100 per cent of expenses incurred or Y per cent of expenses incurred,
where Y < 100 (benefits subject to a percentage co-payment)
Examples of benefits
Level of coverage
Consultations
80% of consultation fee (percentage co-payment of 20%)
Delivery at hospital
100% of maternity costs
Formula for calculating the average unit cost of coverage

The average unit cost of coverage of the health service is the amount covered, on average,
for this service.
In the case where the benefit provides full coverage for expenses incurred, the average unit
cost of coverage is equal to the average unit cost (for patients) of the health service as it was
prior to the establishment of the health micro-insurance scheme, i.e. based on the average fee
charged by health providers for this service.
Average unit cost (health service) = Average fee (service)
In the case in which the benefit covers only a percentage of the expenses incurred (percentage
co-payment), the average unit cost of coverage is equal to this percentage multiplied by the
average fee in use prior to the establishment of the health micro-insurance scheme.
Average unit cost (health service) = Y% Average fee (service)
Where Y% is the coverage rate
The establishment of a health micro-insurance scheme does not contribute, a priori, to altering
the average fees of health services unless the scheme concludes a fee agreement with health
care providers aimed at modifying the fees charged.
PRACTICAL EXAMPLE CALCULATING THE AVERAGE UNIT COST
IN THE CASE OF BENEFITS COVERING 100 PER CENT OF EXPENSES
INCURRED, OR SUBJECT TO A PERCENTAGE CO-PAYMENT
First example: The data collection was based on data provided by the health facilities
(registers, annual reports, testimony of staff, statistics). The summary table contains the following information:
Pathology
Prevalence rate
10%
25%
30%
30%
5%
Average cost of a consultation
300
300
300
300
300
Average cost of a prescription
700
300
700
1 000
800
500
200
300
200
600
The benefit covers 100 per cent of expenses incurred for consultations, 80 per cent of
expenses incurred for pharmacy (prescriptions) and 60 per cent of expenses incurred for
laboratory tests.
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ILO / STEP
PRACTICAL EXAMPLE CALCULATING THE AVERAGE UNIT COST (cont.)

Average fee
Y% Average fee
Consultations
300 MUs
100% 300 = 300 MUs
Pharmacy
(prescriptions)
(10% 700) + (25% 300) + etc. =

695 MUs
80% 695 = 556 MUs
Laboratory tests
(10% 500) + (25% 200) + etc. =

280 MUs
60% 280 = 168 MUs
Second example: The data collection was based on tracking a sample of patients. The
summary table contains the following information:
Cost of a consultation
200
300
400
500
Number of consultations concerned

Cost of a prescription
Number of prescriptions concerned
240
250
300
350
400
500
800
The benefit covers 100 per cent of expenses incurred for consultations and 80 per cent of
expenses incurred for pharmacy (prescriptions).
Average fee
Y% Average fee
Consultations
[(1 200) + (9 300) + (1 400)

+ (1 500)] / (1 + 9 + 1 + 1) =
3800 / 12 = 316.67
100% 316.67 = 316.67 MUs
Pharmacy
(prescriptions)
[(240 1) + (250 1) + etc.)] /

(1 + 1 + ) = 2840 / 7 = 405.71
80% 405.71 = 324.57 MUs
2. Second category of benefit terms: Benefits subject to a monetary limit

(maximum benefit or flat-rate benefit) that applies to each utilization
Example of benefit
Consultations
Level of coverage
100% of expenses incurred, up to a maximum limit

of 600 MUs per consultation
If the consultation fee is less than 600 MUs, the consultation is covered in full. If the fee is higher
than 600 MUs, the benefit covers the maximum limit (600 MUs), and the difference between
the fee and the maximum limit is borne by the member.
Example: If a consultation fee is 500 MUs, the benefit covers 100 per cent of expenses
incurred, or 500 MUs, and the member pays nothing. If the consultation fee is 1,000 MUs,
the benefit covers 600 MUs, and the remaining amount, or 400 MUs, is borne by the
member.
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139
Method of calculating the average unit cost of coverage
The average unit cost of coverage is lower than the average fee for the health service. See
the practical example below for the method of calculation.
IN THE CASE OF BENEFITS SUBJECT TO A MAXIMUM BENEFIT
OR FLAT-RATE BENEFIT
Data concerning the Consultations service, drawn from 150 consultation cases, was used
to prepare the following summary table:
concerned
300
400
500
600
700
800
10
20
50
30
20
10
900 1000
5
The benefit covers 100 per cent of expenses incurred, up to a maximum of 600 MUs. The
amount of coverage is 100 per cent of expenses incurred for patients who spent less than
600 MUs, and 600 MUs for the others.
concerned
Amount of coverage
300
400
500
600
700
800
900 1000
10
20
50
30
20
10
300
400
500
600
600
600
600
600
Thus, the average unit cost of coverage = [(10 300) + (20 400) + (50 500)
+ (30 + 20 + 10 + 5 + 5) 600 MUs] / 150 = 520 MUs.
Note: The average unit cost of a benefit covering 100 per cent of expenses incurred,
not subject to a limit, would have been = [(10 300) + (20 400) + (50
500) + (30 600) + (20 700) + (10 800) + (5 900) + (5 1000)] / 150
= 570 UM.
3. Third category of benefit terms: Benefits subject to a monetary deductible

that applies to each utilization
Example of benefit
Surgical operations
Level of coverage
100% of expenses incurred, minus deductible (2,000 MUs)
If surgery costs are less than 2,000 MUs, they are borne entirely by the member, and the
coverage provided is zero. If surgery costs are higher than 2,000 MUs, the benefit covers
the surgery costs, minus the amount of the deductible (2,000 MUs), which remains at the
members expense.
Example: If surgery costs are 1,500 MUs, no coverage is provided, and the member
pays 1,500 MUs. If surgery costs are 3,000 MUs, coverage is 3,000 2,000 MUs, or
1,000 MUs, and the remaining 2,000 MUs (the deductible) is borne by the member.
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Formula for calculating the average unit cost of coverage

In this case as well, the average unit cost of coverage is lower than the average fee for the
health service. See the practical example below for the method of calculation.

IN THE CASE OF BENEFITS SUBJECT TO A MONETARY DEDUCTIBLE
Data concerning the Surgery service, drawn from 150 cases of surgical operation, was
used to prepare the following summary table:
Cost of the operation
Number of cases concerned
500 1000 1500 2000 3000 4000 5000 10 000

10
20
50
30
20
10
The benefit covers 100 per cent of expenses incurred, minus a deductible of 2,000 MUs.
The amount of the coverage is:
0 for patients who spent less than 2,000 MUs;
100 per cent of expenses incurred 2,000 MUs, for patients who spent more than
2,000 MUs.
Cost of the operation
Number of cases concerned
Amount of coverage
500 1000 1500 2000 3000 4000 5000 10 000

10
20
50
30
20
10
0 1000 2000 3000
8000
Thus, the average unit cost of coverage = [((10 + 20 + 50 + 30) 0) + (20 1000) +
(10 2000) + (5 3000) + (5 8000)] / 150 = 633.33 MUs.
Note: The average unit cost of a benefit covering 100 per cent of expenses
incurred without a deductible would have been = [(10 500) + (20 1000) +
(50 1500) + (30 2000) + (20 3000) + (10 4000) + (5 5000) +
(5 10 000)] / 150 = 2233.33 MUs
Annual maximum benefits and annual deductibles: Calculating

the average annual cost ( useful if applying the general formula)
In the case of benefits subject to an annual maximum benefit or annual monetary deductible,
the maximum limit does not apply either to the quantity consumed or to the unit cost, but rather
to the annual cost. It is therefore necessary to determine the distribution of the annual cost in
order to calculate the pure premium. These figures may be obtained directly from a population
sample. In this case, this means determining, for each person in the sample, the cumulative costs
of each utilization of the health service in question. Failing this, the annual cost can be reconstituted from the figures for the unit cost and the quantity consumed (method used here).
1. First category of benefit terms: Benefits subject to an annual maximum benefit

Example of benefit
Optical services
Level of coverage
100% of expenses incurred, up to a maximum limit

of 3,000 MUs per year and per person
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Formula for calculating the average annual cost

The distribution of the annual cost is reconstituted on the basis of the unit cost and the quantity
consumed. Next, a calculation is made of the average annual cost of coverage for the benefit
in question. See the practical example below for the method of calculation.
PRACTICAL EXAMPLE CALCULATING THE AVERAGE ANNUAL COST

IN THE CASE OF BENEFITS SUBJECT TO AN ANNUAL MAXIMUM BENEFIT
Data on the Optical service, collected from 100 persons who purchased optical items
during the year, was used to prepare a summary table containing the following quantities
consumed:
Number of times optical items
purchased over the course of the year
80
18
Two patients made three optical purchases during the year, 18 made two and the vast
majority (80/100) made only one. The average quantity = [(1 80) + (2 18) +
(3 2)] / (80 + 18 + 2) = 1.22.
The unit costs (cost of each purchase) registered were as follows:
Cost of one set
of optical items
Number
of purchases
concerned
1900 2000 2300 2500 2700 3000 3500 3700 4000 4500
30
30
30
The annual cost is reconstituted on the basis of the assumption (for the sake of simplicity) that
each optical consumer purchased 1.22 sets of optical items in the course of the year.
Annual cost
of optical
purchases
Number
of purchases
concerned
2318 2440 2806 3050 3294 3660 4270 4514 4880 5490
30
30
30
The benefit covers 100 per cent of expenses incurred, up to a maximum limit of 3,000 MUs
per person and per year. The annual amount covered is 100 per cent of expenses incurred
for patients who spent less than 3,000 MUs over the course of the year and 3,000 MUs
for the others.
Annual amount
covered
Number
of purchases
concerned
2318 2440 2806 3000 3000 3000 3000 3000 3000 3000
30
30
30
The average annual cost of the coverage is thus: [(2318 5) + (2440 30) + )] /
(5 + 30 +) = 2826.39 MUs.
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2. Second category of benefit terms: Benefits subject to an annual monetary deductible

Example of benefit
Level of coverage
Consultations and pharmacy
100% of expenses incurred in excess of an annual

deductible of 3,000 MUs
Formula for calculating the average annual cost

In this case as well, the distribution of the annual cost is reconstituted on the basis of the unit
cost and the quantity consumed. Next, the average annual cost of coverage for the benefit in
question is calculated. See the practical example below for the method of calculation.
PRACTICAL EXAMPLE CALCULATING THE AVERAGE ANNUAL COST

IN THE CASE OF BENEFITS SUBJECT TO AN ANNUAL MONETARY DEDUCTIBLE
Data concerning the cluster of health services Consultations and pharmacy was collected
from 150 patients who had undergone at least one consultation during the year (with or
without purchase of medicines). The summary table is as follows:
100
20
20
The average quantity of utilization of the service is thus: [(1 100) + (2 20) + )]
/ 150 = 1.65.
The following unit costs (of consultations and, where applicable, medicines) were registered:
Cost of the service
700
1000
3000
5000
Number of cases
concerned
20
25
30
50
7000 10 000 15 000 20 000

50
45
20
The annual cost is reconstituted on the basis of the assumption (for the sake of simplicity)
that each patient utilized the service 1.65 times in the course of the year.
Annual cost
Number of cases
concerned
1155
1650
4950
8250
20
25
30
50
11 550 16 500 24 750 33 000

50
45
20
The benefit covers 100 per cent of expenses incurred in excess of an annual deductible
of 3,000 MUs per person, which is borne by the patient. The annual amount covered is
zero for patients who spent less than 3,000 MUs during the year, and 100 per cent of
expenses incurred, minus the amount of the deductible, for patients who spent more than
3,000 MUs during the year.
Annual amount
covered
Number of cases
concerned
1950
5250
20
25
30
50
8550 13 500 21 750 30 000

50
45
20
The average annual cost of coverage is equal to: [(0 20) + (0 25) + (1950 30)
+ )] / (20 + 25 + 30 + ) = 8,101.22 MUs.
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Calculating the frequency of utilization of a health service

1. Recommended method of data collection and calculation: Based on household
surveys and data supplied by health facilities
When processing the data collected for objective 6, three indicators were calculated: the
frequency of illness, the expected proportion of cases of illness to be treated by the health
facility and the share accounted for by the health service in the total number of cases treated
by the health facility. For more details, please refer to:

Processing the collected data in order to calculate frequency, page 102.
The frequency of utilization of the health service is equal to the product of these three indicators:

Frequency (health service) =

Frequency (illness)
Expected proportion of cases of illness to be treated by health facility
Share of health service in total number of cases treated by health facility

The management data of health micro-insurance schemes (see also 3.4.6) was used to produce two indicators: the number of utilizations of the health service during the year by insured
persons and the total population covered by the scheme. The frequency of utilization of the
health service is obtained by dividing the first indicator by the second:
Frequency (health service) =
Number of utilizations of health service during year

Number of persons covered by scheme
4.5.2(b) Calculating the pure premium based

on the operating costs of the health facilities
Reminder: The second method consists of calculating the pure premium based on the
estimated operating costs of the health facilities. This estimate is made during the datacollection phase in the context of objective 7: To establish a basis for calculating premiums
based on the operating costs of health facilities.
Estimates of fixed costs, variable costs and the expected number of users for each health facility
may be used to calculate the pure premium. For an idea of the method of calculation used,
please refer to the practical example provided in:
u 3.4.7 Exemple of processing the data collected for objective 7: To establish a basis
for calculating premiums based on the operating costs of health facilities, page 108.
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4.5.3 Adjusting the pure premium

Taking socio-economic characteristics into account
Once the pure premium has been calculated for each health service, it is possible to adjust
it according to individual characteristics that have an impact on the medical consumption of
this service.
These concern primarily the following characteristics: age, sex, place of residence (close
to health facilities or not), socio-occupational category (some occupations are more exposed
than others to certain illnesses and thus to the consumption of certain health services).
It should be possible to demonstrate the existence of a correlation between one or more
of these characteristics and the cost of the risk with the help of statistical surveys on medical
consumption patterns.
Example: A study of the scope of a hospital shows the following frequentation rates:
zone 1 (close): 7.5 per cent;
zone 2 (intermediate): 5 per cent;
zone 3 (far): 2.5 per cent.
It is possible to take the distance factor into account in calculating the premiums corresponding to hospital services by making geographic adjustments:
adjusted pure premium (zone 1) = 1.5 reference pure premium;
adjusted pure premium (zone 2) = 1 reference pure premium;
adjusted pure premium (zone 3) = 0.5 reference pure premium.
The values of these coefficients are provided for information purposes. It is also possible
to utilize other coefficients that do not correspond to the ratio of the frequentation rates.
Taking into account the impact of third-party payment and health education
and prevention services
The health micro-insurance scheme may set up:
mechanisms facilitating access to care, such as third-party payment;
services, such as the organization of health information sessions.
Certain services and methods of coverage have a positive impact (inflationary) or negative
impact (deflationary) on medical consumption and, by extension, on the cost of the risk. Thus,
third-party payment mechanisms usually contribute to increasing medicine expenses (overconsumption, over-prescription). Information sessions on generic drugs may, conversely, serve to
lower medicine expenses, as patients become more amenable to the prescription of generic drugs.
The impact of these services or methods of coverage on the pure premium may be taken
into account by making adjustments.
Example: If it is noted that setting up a third-party payment mechanism has the effect
of increasing medicine expenses by 20 per cent, two pure premiums may be calculated
for the category of medicines:
pure premium (with third-party payment) = 1.2 reference pure premium;
pure premium (without third-party payment) = 1 reference pure premium.
A compromise must then be reached between the convenience of a third-party payment
mechanism and its cost.
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Taking into account the impact of the waiting period

The introduction of a waiting period has two effects: it discourages opportunistic behaviour,
such as joining a health micro-insurance scheme in order to meet an immediate need, and it
contributes, a priori, to diminishing the average quantity of services consumed in the first year
of membership, thereby reducing the cost of the risk.
The second impact may be evaluated and taken into account in calculating the pure
premium. The savings accumulated in the first year of membership may be reflected either in
the first year of premium payments, or over several years of premium payments (which makes
it possible to maintain the same premium level in the first year and in subsequent years). The
practical example below illustrates how to take this impact into account.
In practice, the introduction of a waiting period is aimed primarily at discouraging opportunistic behaviour and functions as an additional safety loading. For this reason, an adjustment
is usually not made to the pure premium.
PRACTICAL EXAMPLE TAKING INTO ACCOUNT THE IMPACT

OF THE WAITING PERIOD IN CALCULATING THE PURE PREMIUM
(CONSULTATIONS SERVICE)
Assumptions:
The average quantity covered is 1.2 consultations per year.
A three-month waiting period applies in the first year of membership.
The estimated average length of membership is seven years.
Constant parameters are applied for seven years without applying updates.
The probability of utilizing the Consultations service is 0.45.
The average unit cost of a consultation is 400 MUs.
During the first three months (waiting period) the insurance scheme is able to save
1.2 3 / 12, or 0.3 units of consultation per insured person.
The cost of the risk for the first year = 0.45 0.9 400.
The cost of the risk for subsequent years = 0.45 1.2 400.
The scheme wishes to charge the same premium for the first year and for subsequent years.
Consequently, the savings resulting from the waiting period in the first year are carried over
to all premiums (first year and subsequent years). The sum of the pure premiums over the
length of the membership (seven years, on average) is as follows:
with the waiting period: (0.9 + (6 1.2 )) 0.45 400 = 1,458 MUs;
without the waiting period: 7 1.2 0.45 400 = 1,512 MUs.
Savings resulting from the waiting period are:
54 MUs over seven years, i.e. 7.7 MUs per year.
The annual pure premium should therefore be: 1,458 / 7 = 208.3 MUs.
General formula
The introduction of a waiting period allows for an annual reduction of:
d
Annual
Pure premium
=
reduction
12 D
where d is the duration (in months) of the waiting period during the first year (e.g. three months)
and D is the average estimated duration (in years) of membership (e.g. seven years).
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ILO / STEP
In order to reflect the reduction in members premiums (first year and subsequent years), the
annual adjusted pure premium will be as follows:
d
Adjusted
1
=
pure premium
12 D
Pure premium
Taking into account insurance-related risks: moral hazard, over-prescription,

adverse selection, and the occurrence of catastrophic cases
Moral hazard
Moral hazard is a phenomenon according to which members of a health micro-insurance
scheme tend to consume covered health services at above-average levels owing to the fact
that they know they are insured.
Example: If a benefit provides coverage for five prenatal consultations (PCs), women
beneficiaries will have a tendency to consume five PCs (even if three PCs would have
sufficed).
They will also tend to modify the level of their medical consumption in order to take maximum
advantage of the benefits provided.
Example: If a Consultations benefit is subject to a flat-rate benefit, insured persons
will tend to consume the whole amount; they will, for example, consult private health care
providers that are more expensive than those they usually consult.
The risk of over-prescription

The risk of over-prescription is a phenomenon according to which health care providers may
cause sharp increases in health costs by prescribing unnecessary health services. Such actions
are not contested by patients solely because they know they are insured.
Adverse selection
Adverse selection is a phenomenon according to which persons with a high risk of illness tend
to enrol in large numbers, while persons in good health tend to abstain from enrolling.
If the health micro-insurance scheme proposes several benefit plans, adverse selection also
occurs when more comprehensive benefit plans are preferred by persons who present a high
risk of illness.
The cost of the risk attributable to these persons is higher than the average cost observed in
the overall target population, and thus, higher than the pure premium calculated for a reference
individual. This phenomenon may jeopardize the financial viability of the scheme because it
entails a higher than expected level of expenses for each person.
Catastrophic cases
Catastrophic cases are events that affect a large share of the covered population (epidemics)
and/or whose unit costs are high, such as a very costly hospitalization. The occurrence of
catastrophic cases may jeopardize the financial viability of a health micro-insurance scheme.
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147
The impact of these risks

It is difficult to calculate the impact of these risks on premiums. Moral hazard and overprescription, in particular, do not concern all individuals and may vary widely from one population group to the next.
At best, the scheme can protect itself against these risks by making a sensible selection of
services to be covered and coverage levels. It can:
carefully choose the health services to be covered: avoid covering planned hospitalizations; exclude brand-name drugs; limit coverage of medicines to generic drugs or to a list
of essential drugs;
offer increasing levels of coverage along with additional years of membership;
make a reasonable and prudent selection of coverage levels: in particular, avoid covering
100 per cent of expenses incurred; introduce monetary and numerical limits on the coverage of certain health care services; introduce monetary and numerical deductibles.
4.5.4 Calculating the safety loading

The main purpose of the safety loading is to protect the scheme against the statistical risk
that, among the covered population, the proportion of consumers of each health service may
exceed the proportion initially calculated on the basis of the target populations consumption
patterns.
The risk of divergence is even higher when the size of the covered population (N) is small
and the probability of consuming the health service (p) is low. Thus, when the number of insured
persons is low (e.g. 300) and the covered risk is very unpredictable (e.g. hospitalization, caesarean delivery or other surgical operations), the risk of divergence is highest.
This risk may be designated by the coefficient (N,p) and the Safety loading = Coefficient
(N,p) Pure premium.
The objective of the safety loading, as presented here, is to compensate for a potential and
unpredictable divergence from the average figure that was used in calculating the risk. It is
determined solely on the basis of mathematical rules. Certain actors also include a percentage
of the pure premium in the safety loading as a means of covering other unforeseeable costs
(operating costs, fee increases, the impact of insurance-related risks, etc.)
Indicative values of the coefficient (N,p)

P
N=
100
N=
500
N=
1000
N=
2000
N=
5000
N=
10 000
N=
20 000
N=
50 000
N=
80 000
0.01
3.07
1.37
0.97
0.69
0.43
0.31
0.22
0.14
0.11
0.02
2.16
0.97
0.68
0.48
0.31
0.22
0.15
0.10
0.08
0.03
1.76
0.79
0.56
0.39
0.25
0.18
0.12
0.08
0.06
0.04
1.51
0.68
0.48
0.34
0.21
0.15
0.11
0.07
0.05
0.05
1.35
0.60
0.43
0.30
0.19
0.13
0.10
0.06
0.05
0.10
0.93
0.41
0.29
0.21
0.13
0.09
0.07
0.04
0.03
0.15
0.74
0.33
0.23
0.16
0.10
0.07
0.05
0.03
0.03
0.20
0.62
0.28
0.20
0.14
0.09
0.06
0.04
0.03
0.02
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Indicative values of the coefficient (N.p) (cont.)

P
N=
100
N=
500
N=
1000
N=
2000
N=
5000
N=
10 000
N=
20 000
N=
50 000
N=
80 000
0.25
0.54
0.24
0.17
0.12
0.08
0.05
0.04
0.02
0.02
0.30
0.47
0.21
0.15
0.11
0.07
0.05
0.03
0.02
0.02
0.35
0.42
0.19
0.13
0.09
0.06
0.04
0.03
0.02
0.01
0.40
0.38
0.17
0.12
0.08
0.05
0.04
0.03
0.02
0.01
0.45
0.34
0.15
0.11
0.08
0.05
0.03
0.02
0.02
0.01
0.50
0.31
0.14
0.10
0.07
0.04
0.03
0.02
0.01
0.01
0.55
0.28
0.12
0.09
0.06
0.04
0.03
0.02
0.01
0.01
0.60
0.25
0.11
0.08
0.06
0.04
0.03
0.02
0.01
0.01
0.65
0.23
0.10
0.07
0.05
0.03
0.02
0.02
0.01
0.01
0.70
0.20
0.09
0.06
0.05
0.03
0.02
0.01
0.01
0.01
0.75
0.18
0.08
0.06
0.04
0.03
0.02
0.01
0.01
0.01
0.80
0.15
0.07
0.05
0.03
0.02
0.02
0.01
0.01
0.01
0.85
0.13
0.06
0.04
0.03
0.02
0.01
0.01
0.01
0.00
0.90
0.10
0.05
0.03
0.02
0.01
0.01
0.01
0.00
0.00
0.95
0.07
0.03
0.02
0.02
0.01
0.01
0.01
0.00
0.00
Example of application
Assumptions: Probability (health service) = 0.2; Planned size of population covered by the
health micro-insurance scheme in first year = 1,000 persons (members + dependents).
Results: Coefficient (N = 1000, p = 0.2) = 20% and Safety loading = 20% Pure premium.
Method of calculating the coefficient (N,p)

The coefficient (N,p) is calculated by using one of the properties of the standard normal distribution: the calculation of a confidence interval P0.998, which includes the expected proportion
of consumers of the service with odds of 99/100.
4.5.5 Sample premium calculation chart

The benefit/premium combination is selected from among several scenarios developed for this
purpose. This selection may be made during working group sessions (participatory approach).
In this case, the steering committee prepares the premium calculation charts that will be used
during the working group sessions in order to determine the cost of the various proposals put
forward. Each calculation chart corresponds to a benefit plan and includes a row for each
health service, as well as columns for the following:
Coverage rate and Co-payment, which indicate the type of coverage proposed for the
covered health service and the level of the co-payment, if any;
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149
Probability, Average quantity and Average unit cost, which list the calculated values
of each of these indicators for the health service in question;
Pure premium, which lists the result of the equation: Probability Average quantity
Average unit cost;
Safety loading, which lists the result of the equation: Pure premium Coefficient (N,p);
Operating cost, which lists the result of the equation: A% (Pure premium + Safety
loading);
Surplus, which lists the result of the equation: B% (Pure premium + Safety loading +
Operating cost);
Total, which lists the result of the equation: Pure premium + Safety loading + Operating
cost + Surplus.
Benets
Health services
(examples)
Statistical data
(Pure premium)
Coverage
CoProb- Average Average
Pure
rate
payment ability quantity unit cost premium
Safety Operating Surplus
loading
cost A%
B%
Total
Consultations
Pharmacy
Uncomplicated
deliveries
Prenatal
consultations
X-rays
Laboratory tests
Hospital accommodation fees
Annual premium per person
4.5.6 Performing premium calculations (practical example)

This requires the step-by-step completion of the premium calculation chart. The result obtained
may then be analyzed on the basis of the three criteria for selecting the benefit/premium
combination: relevance, accessibility and visibility. Additionally, it is important to ensure that
the proposed benefit plan allows for protecting the scheme from insurance-related risks: moral
hazard, over-prescription, adverse selection and the occurrence of catastrophic cases. If the
plan is deemed unacceptable, services may be added or subtracted and levels of coverage
modified in order to produce a new plan, which may, in turn, be analyzed on the basis of the
three criteria mentioned above.
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ILO / STEP
Coverage rate and Co-payment 6 columns

Statistical data
(Pure premium)
Benets
Health services
(examples)
Coverage
rate
Copayment
Consultations
100%
0*
Pharmacy
100%
0*
Uncomplicated
deliveries
100%
0*
100% maximum
3 per year
0*
100%
up to a limit
of 1,200 MUs
0*
Prenatal
consultations
X-rays
Laboratory tests
80%
80% with
deductible
for 1st day
Prob- Average Average

Pure
Safety Operating Surplus Total
ability quantity unit cost premium loading cost A%
B%
160*
8900*
* In most cases
The Co-payment column indicates for each health service the amount of the expenses that
would, on average or in general, be borne by members, depending upon the coverage level.
These figures are taken into account when making a selection from among various scenarios.
Note: If the co-payment is too high, the health micro-insurance scheme may fail to resolve
the problem of financial accessibility in terms of the health service in question. If it is too
low, the scheme may be confronted with the problem of over-consumption.
In this example, the Consultations, Pharmacy and Uncomplicated deliveries services are
covered in full. The level of co-payment = 0 for these services.
Prenatal consultations (PCs) are covered in full up to a maximum limit of three PCs per
pregnant woman and per year. (In most cases, women consume less than three PCs; consequently, the level of co-payment listed in the table is 0.)
The X-ray benefit is subject to a maximum benefit of 1,200 MUs per X-ray. (In most cases,
X-rays cost less than 1,200 MUs; consequently, the level of co-payment listed in the table is 0.)
The Laboratory tests benefit covers 80 per cent of expenses incurred (with a percentage
co-payment of 20 per cent). If the average fee for laboratory tests is 800 MUs, and the copayment is 20 per cent of the average fee, the average level of co-payment for laboratory
tests = 160 MUs.
The Hospital accommodation benefit covers 80 per cent of expenses, excluding the first
day, which is not covered (deductible for first hospital day). On average, hospital accommodation fees amount to 5,000 MUs per day. Thus, the co-payment is 5,000 MUs the first day
and 1,000 MUs per day for each subsequent hospital day, which totals 8,900 MUs for an
average-length hospital stay of 4.9 days.
6
All calculated data (probabilities, quantities and average fees) are fictitious.
VOLUME 2
151
Probability, Average quantity, Average unit cost and Pure premium columns
Statistical data
(Pure premium)
Benets
Health services
(examples)
Coverage
rate
Copayment
Prob- Average
ability quantity
Average
Pure
Safety
unit cost premium loading
Consultations
100%
0* 0.50
2.20
500
550.0
Pharmacy
100%
0* 0.50
2.01
800
800.0
Uncomplicated
deliveries
100%
0* 0.03
1.01
3000
90.0
Prenatal
consultations
100%
maximum
3 per year
0 * 0.02
1.53
500
15.3
X-rays
100%
up to a limit
of 1,200
MUs
0*
0.10
1.01
907
90.7
160*
0.15
2.01
640
192.0
8900* 0.04
3.91
4000
625.6
Laboratory tests
80%
80% with
deductible
for 1st day
Operating Surplus
cost A%
B%
Total
Pure premium =
Probability
Average quantity
Average unit cost
* In most cases
Services for which full coverage is provided

The results of the data-collection phase indicate that for the Consultations service:
the probability of consuming the service at least once per year = 0.5;
the average number of consultations per user = 2.2 consultations per year;
the average consultation fee = 500 MUs.
Consultations are covered in full. Consequently, the pure premium (Consultations service) =
0.5 2.2 500 = 550 UM.
The pure premium for the Pharmacy service and the Uncomplicated deliveries service
is calculated in the same way.
Services for which full coverage is provided subject to a limit on the quantity covered
The results of the data-collection phase indicate that for the Prenatal consultations service:
the average fee for a prenatal consultation (PC) = 500 MUs;
the results of the collection concerning the number of utilizations of the Prenatal consultations service are as follows:
100
20
20
152
ILO / STEP
The benefit covers 100 per cent of expenses incurred, up to a maximum limit of three PCs per
person (pregnant woman) and per year. The quantity covered is therefore the actual quantity
for patients utilizing less than three PCs, and three PCs for the others.
Quantity covered
100
20
20
Thus, the average quantity covered = [(100 1) + (20 2) + ((20 + 5 + 3 + 2) 3)] /

150 = 1.53. Consequently, the pure premium (PCs) = 0.02 1.53 500 = 15.3 MUs.
Services for which full coverage is provided up to a maximum limit
The results of the data-collection phase show that for the X-ray service, the following costs
were recorded:
Unit cost
Number of cases of X-rays recorded
800
1000
1500
2000
2500
38
12
The benefit covers 100 per cent of expenses incurred, up to a maximum limit of 1,200 MUs
per X-ray. The unit costs covered are thus as follows:
Unit cost
Number of cases of X-rays recorded
800
1000
1200
1200
1200
38
12
Thus, the average unit cost is 907 MUs. The probability is 0.1 and the average quantity covered for one X-ray is 1 X-ray per user and per year. The pure premium (X-rays) = 0.1 1
907 = 90.7 MUs.
Services for which coverage is provided at the rate of 80 per cent of expenses incurred
The results of the data-collection phase indicate that for the Laboratory tests service:
the average number of tests per user = 2 per year;
the average fee for laboratory tests = 800 MUs.
Coverage of laboratory tests is provided at the rate of 80 per cent of expenses incurred. Consequently, the average unit cost (Laboratory tests service) = 640 MUs. The pure premium
(Laboratory tests service) = 0.15 2 640 = 192 MUs.
Services for which coverage is subject to a numerical deductible
The results of the data collection indicate the following lengths of stay at hospital:
Length of stay (number of days)
35 15 15 35 30 25 10 10
9 10 11 12 13 14 15
5
Hospital accommodation fees for the first day of hospitalization are not covered. The quantity covered for
patients hospitalized one day is thus 0. For all other patients, it is the number of hospital days minus one.
Quantity covered
9 10 11 12 13 14
35 15 15 35 30 25 10 10
VOLUME 2
153
Thus, the average quantity covered = [(0 35) + (1 15) + (2 15) + (3 35) +
] / 200 = 3.91. The average fee for one hospital day is 5,000 MUs; the benefit covers only
80 per cent of expenses; thus, the average unit cost covered is 4,000 MUs.
The probability of a hospital stay is equal to 0.04. Thus, the pure premium (accommodation
fees) = 0.04 3.91 4,000 = 625.6 MUs.
Safety loading column

Statistical data
(Pure premium)
Benets
Health services
(examples)
Coverage
rate
Copayment

Pure
Safety
ability quantity unit cost premium loading
Consultations
100%
0* 0.50
2.20
500
550.0
55.0
Pharmacy
100%
0* 0.50
2.01
800
800.0
80.0
Uncomplicated
deliveries
100%
0* 0.03
1.01
3000
90.0
50.4
Prenatal
consultations
100%
maximum
3 per year
0 * 0.02
1.53
500
15.3
10.4
X-rays
100%
up to a limit
of 1,200
MUs
0 * 0.10
1.01
907
90.7
26.3
160* 0.15
2.01
640
192.0
44.2
8900* 0.04
3.91
4000
Laboratory tests
80%
80% with
deductible
for 1st day
Operating
cost A%
Surplus
B%
Total
Safety loading =
Coefcient (N,p)
Pure premium
625.6 300.3
* In most cases
The population covered in the first year is estimated at 1,000 persons. The following chart lists
the values for the coefficient (N,p), where N = 1,000:
Probability
(p)
Population
(N =1000)
0.02
0.68
0.03
0.56
0.04
0.48
0.1
0.29
0.15
0.23
0.5
0.1
Coefcient (N,p)
For each health service, the following formula is used to calculate the safety loading: Coefficient (N,p) Pure premium. Thus, for the Consultations service: Probability = 0.5; Coefficient
(N,p) = 0.10; and Safety loading = 0.10 550 MUs = 55 MUs.
154
Operating costs and Surplus columns
Coverage
rate
Operating cost =
10% (Pure premium + Safety loading)
Statistical data
(Pure premium)
Benets
Health services
(examples)
ILO / STEP
Copayment
Prob- Average
ability quantity
Average
Pure
unit cost premium
Safety
loading
Operating Surplus
cost 10%
5%
Consultations
100%
0* 0.50
2.20
500
550.0
55.0
60.5
33.3
Pharmacy
100%
0* 0.50
2.01
800
800.0
80.0
88.0
48.4
Uncomplicated
deliveries
100%
0* 0.03
1.01
3000
90.0
50.4
14.0
7.7
Prenatal
consultations
100%
maximum
3 per year
0 * 0.02
1.53
500
15.3
10.4
2.6
1.4
X-rays
100%
up to a limit
of 1,200
MUs
0 * 0.10
1.01
907
90.7
26.3
11.7
6.4
160* 0.15
2.01
640
192.0
44.2
23.6
13.0
8900* 0.04
3.91
4000
625.6
300.3
92.6
50.9
Laboratory tests
80%
80% with
deductible
for 1st day
* In most cases
Total
Surplus =
5% (Pure premium + Safety loading + Operating cost)
Initially, the operating cost is set at 10 per cent (Pure premium + Safety loading). This percentage may be revised (most likely upwards) when the budget estimate is established. The
level of the surplus is set at 5 per cent (Pure premium + Safety loading + Operating cost).
VOLUME 2
Total column
Total premiums =
Pure premium + Safety loading + Operating cost + Surplus
Statistical data
(Pure premium)
Benets
Health services
(examples)
155
Coverage
rate
Copayment
Consultations
100%
Pharmacy
Uncomplicated
deliveries

Pure
Safety Operating Surplus
ability quantity unit cost premium loading cost 10%
5%
Total
(MUs)
0.50
2.20
500
550.0
55.0
60.5
33.3
698.8
100%
0.50
2.01
800
800.0
80.0
88.0
48.4
1016.4
100%
0.03
1.01
3000
90.0
50.4
14.0
7.7
162.2
Prenatal
consultations
100%
maximum
3 per year
0*
0.02
1.53
500
15.3
10.4
2.6
1.4
29.7
X-rays
100%
up to a limit
of 1,200
MUs
0*
0.10
1.01
907
90.7
26.3
11.7
6.4
135.1
Laboratory tests
80%
160
0.15
2.01
640
192.0
44.2
23.6
13.0
272.8
80% with
deductible
for 1st day
8900
0.04
3.91
4000
625.6 300.3
92.6
50.9
1069.4
* In most cases
3384.3
Annual premium per person = Sum of premiums for each service
The following calculation is made for each health service: Total premium (service) = Pure premium + Safety loading + Operating cost + Surplus. The annual premium (unadjusted) for each
individual is then obtained by adding together the premiums for each health service.
Adjusting the pure premium of certain health services

A decision is made to set up a third-party payment mechanism for pharmacy services. Based
on previous experience, it is assumed that this payment provision will serve to increase medicine expenses by 20 per cent. The new table is identical to the previous table, except for the
pharmacy row.
Adjusted pure premium = 1.2 800 MUs = 960 MUs
Statistical data
(Pure premium)
Benets
Health services
(examples)
Pharmacy
Coverage
rate
Copayment
100%
Proba Average Average

Pure
quantity unit cost premium
Safety
loading
960
96
0.50
2,01
800
Operating cost
10%
Surplus
5%
Total
(MUs)
105.6
58.1
1219.7
Annual premium per person 3587.6
156
ILO / STEP
Next, the premium corresponding to the Pharmacy service is recalculated, which has the
effect of increasing the annual premium per person from 3,384.3 MUs to 3,587.6 MUs.
Deciding on a third-party payment mechanism for the Pharmacy service is a trade-off
between the service provided (not having to advance expenses) and its financial impact on
premium levels.
Costs associated with third-party payment and prevention/health information services

The cost of third-party payment for pharmacy services (associated with making contractual
arrangements with health care providers and invoice monitoring) and of health information
sessions (organization costs) are added to the basic premium (+ 50 MUs per person and
per year for each service, or a total of + 100 MUs). The annual premium per person is then
equal to 3,687.6 MUs.
The average cost of emergency transport is estimated at 100 MUs per person and per
year. This cost is added to the individual premium for persons subscribing to this service (offered
as an optional benefit).
Periodicity of premium payments

If the scheme plans to institute monthly premium instalments, the annual premium is divided
by 12.
Annual premium
per person
Monthly premium
per person
Without emergency transport

service
3687.6 MUs
307.3 MUs
+ Emergency transport service
+ 100 MUs
+ 8.3 MUs
Method of calculating individual and family premiums

When applying the individual premium, each covered person pays the amount of the
annual premium per person. A family of five would therefore be required to pay five times this
amount.

service
Annual premium
per person
Annual premium
for a family of ve
3687.6 MUs
18 438 MUs
When applying the family premium, each covered family pays a fixed premium amount,
regardless of the number of persons covered (adults, children).
In order to calculate the family premium, all that is required is to provide a very precise
definition of the term family and to determine the average number of persons per family (e.g.
6.7 persons). Such benefit terms give large families an advantage at the expense of small families. In this example, the amount of the family premium = 6.7 Annual premium per person.

service
Annual premium
per person
Annual premium for a family

regardless of family size
3687.6 MUs
24 707 MUs
VOLUME 2
157
A scheme may also consider charging premiums that are proportional to families income levels,
which would imply the subsidization of the poorest families by the richest.
Example: The distribution of income in a target population is as follows:
less than 500,000 MUs per year: 57. 9 per cent of families;
from 500,000 to 1,000,000 MUs per year: 24.3 per cent of families;
more than 1,000,000 MUs per year: 17.8 per cent.
By setting the amount of the family premium per year at 20,000 MUs for the first bracket,
24,707 MUs for the second bracket and 40,000 MUs for the third bracket, the scheme is
able to maintain an average premium of 24,707 MUs, thereby enabling the poorest families
to benefit from insurance. This system of cross subsidization may, however, be difficult to set up.
Other types of subsidies may also be sought, particularly those provided by the State.
4.5.7 Calculating willingness to pay

Sample data-presentation materials for data concerning
the level of willingness to pay
For details concerning the method of processing collected data on the level of willingness to
pay in order to produce directly usable information, please refer to:
u 3.4.8 Example of processing the data collected for objective 8: To evaluate the
target populations willingness to pay, page 110.
Data concerning the populations level of willingness to pay may be illustrated by a graph that
shows the percentage of positive replies and the cumulative percentage for each premium
bracket.
In the following example, the premium level of 600 MUs was ticked on 42 per cent of the
replies, and 88 per cent of households (cumulative percentage) would accept a premium level
of 600 MUs or more. The premium level of 800 MUs was ticked on 36 per cent of the replies,
and 46 per cent of households would accept a premium level of 800 MUs or more.
Level of willingness to pay
120%
100%
% replies
Cumul. %
80%
60%
40%
20%
0%
max 200
max 400
max 600
max 800
max 1,000
max 2,000
max 3,000
158
4.6
ILO / STEP
Preparing negotiations or agreements with partner organizations

(health care providers and others)
Sample Health care providers chart
The Health care providers chart is a decision-making tool that may be used to specify the
terms of agreements with health care providers. It contains the data compiled and indicators
calculated for objective 9: To establish a basis for negotiating with health care providers,
negotiating with transport operators, collaborating with prevention programmes; and obtaining
information on public aid. Such agreements may concern fees, quality standards, the establishment of treatment protocols or the method to be used to pay for health services (fee-for-service
or global payment). They may also concern third-party payment agreements. In the case of
the latter, an understanding must also be reached regarding the services to be included in
the third party payment mechanism, the verification procedures to be followed and the rules
pertaining to invoicing and payment.
Name of health facility:

Address:
Name of person contacted in order to prepare agreements:
Fees for health services (that the scheme plans to cover)
Name
of service
Ofcial
fee
Fee negotiated by other

HMISs
Overcharges
(estimated)
First fee
proposal
Date:
Second fee
proposal
Date:
Negotiated
fee
Date:
Consultations
Medicines
Quality standards
Quality criteria
Length of wait
to obtain an
appointment
Actual presence
of health care
staff
Level
of availability
of medicines
(nonexhaustive list)
Level of
objective
quality
Level of
perceived
quality
Problems relating
to functioning
Suggestions
for improvement
Quality
objective
envisaged by
Date :
Accompanying
measures
envisaged
VOLUME 2
159
4.6 PREPARING NEGOTIATIONS OR AGREEMENTS WITH PARTNER ORGANIZATIONS
Treatment protocols
Pathology
or treatment
Current protocol
Problems identied
Improvements envisaged
envisaged
Method of payment
Name of service
covered
Current method
of fee setting
Method of payment
envisaged
Third-party payment mechanism

Services concerned:
Checks to be performed before dispensing care:
Procedure to follow after dispensing care:
Preferred frequency for global payment (consolidated invoicing):
bi-monthly monthly quarterly
4.7
Dening the schemes organization

Sample table for defining internal bodies and actors
Decision-making function
Who carries out the decision-making

function? (name of internal body or bodies)
1.
2.
Body 1: Name
Who can participate in the body?

How are members appointed/elected?
What are the powers/functions of the body?
Actors contemplated (internal/external;
volunteer, salaried or compensated)
Body 2: Name
(if applicable)
160
ILO / STEP
Executive function
Who will perform the executive
function? (name of body)
Does this body have several
subdivisions? Which ones?
What are the powers/functions
of the body? Of each subdivision?
Supervisory function
Who will perform the supervisory
function? (name of body)
What are the powers/functions
of the body?
4.8
Dening the schemes methods of operation

Seasonal nature of income and willingness to pay
The same graph may be used to illustrate seasonal variations in income and willingness to pay.
In the following example, income is seasonal and reaches a peak in February. Willingness to
pay is highest in the following period (between late February and early March).
70%
60%
50%
Highest incomes
Preferred month of payment
40%
30%
20%
10%
0%
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sep.
Oct.
Nov.
Dec.
VOLUME 2
4.8 DEFINING THE SCHEMES METHODS OF OPERATION
161
Devising a role table

The steering committee makes a list of the various activities associated with the operation and
management of a health micro-insurance scheme in response to the question, Who does what
and how? The role table is drawn up in the following manner:
1. A list is made of all the actors involved, ranging from members to providers and including
the internal bodies of the scheme. (If these are not yet clearly identified, the role table will
assist in defining them.) All these actors are then listed in the first row of the table.
2. All management activities are listed in chronological order (enrolment, payment of premiums, etc.). These are then placed in the left column of the table.
3. Each activity is broken down into one or more tasks.
Example: The Enrolment activity includes the following actions: application for
membership, acceptance or denial of application, payment of membership fees and
annual premium, recording in membership register.
4. The person responsible for each action is determined by answering the question, Who
does what?
Example: The reply to the question Who is applying for membership? is the
member. The reply to the question, Who is accepting the application? is the local
branch.
5. Each action is placed in the column corresponding to the actor identified.
Example: The action Membership application is placed in the column corresponding to the member.
6. When an action is attributed to an actor, the management tools (documents, registers,
data-processing tools, etc.) that will be used are identified.
Example: Membership register of the branch/mutual organization, monitoring
charts.
162
ILO / STEP
MUTUAL ORGANIZATION (MO)
Enrolment
Members
Local branch
Branch
manager
Membership
application
Admission
Registration
Ofce
Board
of directors
Health care
providers
Membership
register
Payment of
membership
fees and
premiums
Cash receipts
(monthly
operation)
Branch
register of
premiums
Premium
payments
Issuance of
membership
card
Validation
(monthly
operation)
Membership
card
Monthly
meeting
Cash receipts
of membership
fees and
premiums from
local branches
MO
membership
register
MO premiums
register
Accounting
documents
Monitoring
charts
Waiting
period
Health care
utilization
Membership
card
Care
Collection
of treatment
certicates
Treatment
certicates
Verication
of entitlement
to benets
Disbursement
Payment of
health care
providers
Monthly
meeting
Verication
of certicates/
invoices
Payment
authorization
Monthly
invoice
Claims
register
Accounting
documents
Monitoring
charts
Verication and monitoring
of records. Annual report to GA
Payment
VOLUME 2
4.9
4.9 PREPARING THE SCHEMES BUDGET ESTIMATE
163
Preparing the schemes budget estimate

Preparing the budget estimate is a painstaking operation that requires an accurate estimate of
income and expenses. This estimate is based on a certain number of assumptions (the number
of members and dependents, the level of medical consumption, etc.). As a precaution, it is
advisable to include an item for contingency reserve that may be used to compensate for
higher-than-expected expenses or lower-than-expected income.
Compilation and evaluation of income

Income is derived primarily from:
premiums: these may be fixed amounts or linked to members income; family premiums or
individual premiums, which are dependent or not dependent upon insured persons characteristics;
membership fees;
donations and grants: gifts or subsidies from the State or from external actors, such as cooperation programmes, NGOs, etc., extended freely to the health micro-insurance scheme.
Donations and grants may be in cash or in kind;
income from fee-based activities: the emergency transport service or the health information
sessions may also be of interest to non-members and, from that standpoint, constitute a separate source of income when they are fee-based;
other income: interest income from financial investments; services billed to external users,
such as meeting room or supply rentals; income generating activities, such as lotteries,
cultural evenings, etc.
Premiums
This section discusses individual premiums, which are the most common type of premiums,
according to which a family of five pays five times the individual premium.7 The premium used
in the following example is not related to the individual characteristics of the insured person
(age, sex, health status, place of residence, occupation), nor is it linked to the insured persons
income. It is paid on an annual basis.
The total amount of income from premiums is equal to:
Income from premiums = Average number of insured persons Annual individual premium
The annual individual premium has already been calculated. It includes the premium corresponding to medical services and any additional amounts related to proposed services.
An estimate of the number of persons who will be covered by the end of the first accounting period may be made on the basis of a target population survey or the results of similar
experiences in other regions.
Example: It is estimated that 1,000 persons will be covered by the end of the first
accounting period.
7
In the case of family premiums, all that is required is to estimate the number of members and to multiply
the family premium by the average number of members.
164
ILO / STEP
When the health micro-insurance scheme has a closed enrolment period, all persons
insured by the end of the first accounting period will have been recruited during this initial
period, with no new enrolments accepted after its conclusion.
In this example, the average number of insured persons = the number of persons insured
at the end of the first accounting period = 1,000. Consequently:
Income from premiums = 1000 Annual individual premium
When the health micro-insurance scheme has an open enrolment period, the recruitment
of insured persons is spread out over the course of the first accounting period with, perhaps,
a peak at the start-up of the scheme or following specific promotional efforts.
In this case, the amount assigned to income is the amount of individual premiums, prorated on the basis of the number of months left in the year. Thus, for persons recruited in the
first month, a complete year of premiums (12 months) is counted; for persons recruited in the
second month, only 11 out of 12 months of premiums are counted, etc.
The number of insured persons used in the formula for calculating income from premiums is
thus equal to the sum of the persons recruited each month, weighted proportionally for the
respective lengths of coverage of these persons (portion of the year).
In this example, the number of persons insured at the end of the first accounting period
= 1,000. It is assumed that the distribution of recruitments is as follows:
Month
Number
500 200
10
11
12
Total
50
10
10
200
1000
The average number of persons insured = (12/12 500) + (11/12 200) + (10/12
50) + () + (1/12 5) = 848.33. Hence:
Income from premiums = 848.33 Annual individual premium
Estimates of the number of persons recruited each month are quite arbitrary. They may, however, be used as outcome objectives for the various promotional efforts carried out over the
course of the accounting period.
Additional/optional premiums
These refer to additional premiums required for subscriptions to an optional service, such as
emergency transport. The amount of income from additional premiums is equal to:
Income from optional premium =
Average number of persons subscribing to service
Annual individual premium for the service
The average number of persons subscribing to a given service is calculated in the same way
as the average number of persons insured (see above) using one of two methods of calculation, depending upon whether the enrolment period is open or closed.
VOLUME 2
165
Membership fees
Membership fees are paid at the time of registration of a new member and are not reimbursable. The total amount of income from membership fees is equal to:
Income from membership fees =
Number of members
Individual membership fees
Membership fees are generally assessed on each member (one per family). The amount of
such fees should not constitute a disincentive to enrolment. Regardless of whether the enrolment
period is open or closed, the number of members used as an input in the formula is equal to
the number of members enrolled by the end of the accounting period (since membership fees
are paid on a one-time only basis and their amount remains the same, regardless of the time
of enrolment).
Income from fee-based activities

Ancillary services emergency transport, health education/prevention sessions may be of
interest to members and non-members alike. Since such services are fee-based for nonmembers, they constitute an additional source of revenue.
Income from fee-based activities =
Number of non-member participants
Unit fee for activities
Donations and grants

The health micro-insurance scheme may receive gifts or subsidies from the State (e.g. premium
subsidies), cooperation programmes, NGOs, or from any other source, on a cost-free basis.
Compilation and evaluation of expenses

Expenses include:
expenses related to covered health services;
expenses associated with the organization of health education/prevention sessions;
operating costs (payroll, travel expenses, rent payments, office supplies, etc.);
training and facilitation costs (remuneration of external trainers or facilitators, travel expenses
related to training, teaching materials, meeting room rentals, lodging for participants, etc.);
other expenses (payment of membership fees to a federation, payment of a reinsurance
premium).
Expenses related to covered health services (benefits)

For each covered health service and each individual, these expenses are equal to the sum of
the pure premium and the safety loading.
Thus, the amount of total projected benefits is equal to:
166
ILO / STEP
Benets =
Average number of persons covered
[sum for covered services (Pure premium + Safety loading)]
The calculation of the average number of covered persons was described previously and is
based on two methods, depending upon whether the enrolment period is open or closed. In
determining this figure, waiting periods during which beneficiaries are not entitled to receive
benefits must also be taken into account. The fact that certain members may not be up-todate with their premium payments, thereby invalidating their entitlement to benefits, must also
be taken into account. The number of covered persons must therefore consist of the number of
persons effectively entitled to benefits for the period in question.
Costs associated with the organization of health education/prevention sessions

The organization of these sessions is relatively low in cost if the scheme works out a partnership
agreement with a prevention programme financed by the State or by an external financing
institution.
Operating costs
These are expenses related to the administration and management of the health microinsurance scheme, such as staff salaries, travel expenses, office rental, office supplies, etc. All
these expenses must be determined for the first accounting period.
In the case where a health micro-insurance scheme sets up a health facility, separate
accounting systems should be used to record the operating costs and income of such facilities
in order to differentiate the management of the two structures.
Training and facilitation costs

These are expenses associated with information, education and communication activities that are
carried out beginning with the inception of the feasibility study and throughout the existence of
the health micro-insurance scheme. They may also be included in the schemes operating costs.
Establishing the budget estimate

Income
The basic premium has been determined to be 3,587.6 MUs (rounded figure) per person and
per year (see 4.5.6 Performing premium calculations (practical example), page 149, for
details on how to calculate the premium). The population covered in the first year is estimated
to be 1,000 persons. The enrolment period is closed; consequently, all covered persons pay
a full year of premiums. Income from premiums is thus equal to 3,587,600 MUs.
Costs associated with third-party payment for pharmacy services and those associated with
health information sessions are added to the basic premium (+ 50 MUs per person and per
year for each, which represents a total of 100,000 MUs for the total covered population).
The average cost of coverage for emergency transport is estimated at 100 MUs per person and per year. According to a survey, only 250 insured persons would be interested in this
service. The total optional premium for this service is 25,000 MUs.
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167
The number of members is estimated to be 160 for the first year, and membership fees are set
at 500 MUs per member. Membership fees therefore total 80,000 MUs.
Health information sessions will be fee-based for non-members and billed at 100 MUs per
session. They will concern, a priori, 120 persons, for a total of 12,000 MUs.
Additionally, the scheme will receive a donation from an NGO in the amount of
20,000 MUs.
Expenses
The amount of the Pure premium + Safety loading equals 3,106.2 MUs (rounded figure)
per person and per year. The total amount of health benefits is thus 3,106.2 1,000 =
3,106,200 MUs. (For the sake of simplicity, it is assumed that there is no waiting period.)
Costs related to financing the emergency transport service are estimated at 25,000 MUs.
Costs associated with the organization of health information sessions are fully covered by
a prevention programme sponsored by a donor. They therefore do not represent any cost to
Operating costs (salaries, travel expenses, rent, office supplies) are estimated at
530,000 MUs.
The table
Once income and expenses have been calculated, this information is indicated on a table
listing expenses on the left and income on the right.
Expenses
Annual
amount
per person
Number
of
persons
Income
Benets
Pure premium +
Safety loading
Transport
Annual
Number
amount
of
per person persons
Total
3 106.2
1000
3 106 200
100
250
25 000
Operating costs
Premiums
Basic premium
Total
3 587.6
1 000
3 587 600
Third-party payment/
pharmacy
50,6
1 000
50 000
Health info/prevention
50,6
1 000
50 000
Transport
100,6
250
25 000
Salaries
280 000
Membership fees
500,6
160
80 000
Travel expenses
100 000
Rent
100 000
Fee-based activities
Health information
sessions
100,6
120
12 000
Supplies
50 000
Total
3 661 200
Contingency reserve
Donations
Total
20 000
3 824 600
163 400
According to the table, operating costs are higher than expected, representing 17 per cent of
the sum Pure premium + Safety loading, as opposed to the 10 per cent used in the premium
calculation. At this point, it is possible to reintroduce into the premium calculation the adjusted
value of the percentage of operating costs (17 per cent instead of 10 per cent), which will have
the effect of slightly increasing premiums, as well as the amount of the contingency reserve.
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5.1 SAMPLE OUTLINES OF THE FEASIBILITY STUDY REPORT
5.
Tools used to prepare

The tools used to prepare for setting up the scheme include:
Sample thematic and chronological
outlines for the feasibility study report
A sample plan of actions
A contract framework and a sample

individual contract
An agreement framework and a sample

agreement with health care providers
5.1
Tool 5.1
Provides outlines for drafting the report
using two different approaches
Tool 5.2
Describes the various components
of a plan of actions
Tool 5.3
Describes the form and the content
of a contract
Tool 5.4
Describes the form and the content
of an agreement
Sample outlines of the feasibility study report

The outline of the feasibility study report may be organized thematically or follow the chronology of the feasibility study.
Sample outline using a thematic presentation

1. Introduction
Presentation of organization promoting the scheme
Description of origin of health micro-insurance project
2. Sequence of events of study
Team charged with conducting the study
Budget, discrepancies (if any) with respect to budget estimate
Sequence of events: description of the phases and steps of the study, dates on which
intermediate objectives were reached, definitive Gantt chart (which may differ from chart
initially formulated)
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3. Methodology used in study

Data-collection procedure: strategic and implementation charts
Data-collection materials (see Annex 1 for details concerning data-collection materials)
Scheme design process: use of participatory method or not
4. Feasibility preconditions
Brief description of initial situation and fulfilment of preconditions
5. Context
Results of data collected for objective 1: To understand the context: description of
economic, demographic, social, health, and political contexts, etc.
6. Target population
Results of data collected for objective 2: To establish a basis for selecting the target
population
Selection criteria used
Target population selected: villages, neighbourhoods, cooperatives, etc.
7. Health services to be covered
Results of data collected for objective 4: To establish a basis for selecting the health
services to be covered
Health services selected
8. Partner health care providers and relations with health care supply
Results of data collected for objective 3: To establish a basis for selecting the partner
health care providers and objective 5: To establish a basis for determining methods of
coverage: direct payment or third-party payment
Health care providers selected. Services and providers for which a third-party payment
mechanism is envisaged
9. Benefit plans and corresponding premium amounts
Results of data collected for objective 6: To establish a basis for calculating premiums
based on the health expenses of the target population or objective 7: To establish a
basis for calculating premiums based on the operating costs of health facilities; and
objective 8: To evaluate the target populations willingness to pay
Results of calculations for various scenarios contemplated
Selection criteria used to select best benefit/premium combination
Benefit/premium combination(s) selected, i.e. benefit plans that members may choose
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171
10. Partnership agreements with health care supply and other partner
organizations, and requests for public aid
Results of data collected for objective 9: To establish a basis for negotiating with health
care providers, negotiating with transport operators, collaborating with prevention programmes, and obtaining information on public aid
Content of agreements
See Annex 2 for texts of agreements
11. Scheme organization
Methods of organization contemplated and selection criteria used
Method of organization selected
See Annex 2 for constituent documents: statutes, organizational chart
12. Operating rules
Operating rules contemplated
Operating rules selected
See Annex 2 for procedures manual, internal rules or contract(s)
13. Budget and plan of actions
Budget estimate
Plan of actions
Annex 1: Data-collection materials developed
during data-collection phase
Data-entry forms, interview forms, survey questionnaires
Annex 2: Documents and tools produced during phase
to prepare for setting up scheme
Statutes, internal rules or contract(s), management procedures manual, agreements
with health care supply, etc.
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Sample outline using a chronological presentation

1. Introduction
Presentation of organization promoting the scheme
Description of origin of health micro-insurance project
2. Sequence of events of study
Team charged with conducting the study
Budget, discrepancies (if any) with respect to budget estimate
Sequence of events: description of the phases and steps of the study, dates on which
intermediate objectives were reached, definitive Gantt chart (which may differ from chart
initially formulated)
3. Feasibility preconditions
Brief description of initial situation and fulfilment of preconditions
4. Data collection
Data-collection procedure
Strategy chart, defining objectives and listing information sought and sources utilized for
each objective
Implementation chart, listing information sought from each source and its purpose
Data-collection materials
See Annex 1 for detailed discussion of data-collection materials
Organization of data collection
Team charged with conducting data collection
Sampling of surveyed population
Testing of forms and questionnaires
Number of interviews, household surveys
Entering collected data using computerized tool
Establishing a basis for selections according to objective
Data concerning context
Data used in selecting target population
Data used in selecting partner health care providers
Data used in selecting health services to be covered
Etc.
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5. Scheme design
Procedure used: participatory or not
Methods and tools used
Data-presentation and decision-making tools, calculation tools, etc.
Alternatives and selections made
Target population
Partner health care providers and relations with health care supply
Benefit plans and corresponding premium amounts
Partnership agreements with health care supply and other partner organizations
Public aid
Scheme organization
Operating rules
Budget and plan of actions
6. Preparing to set up scheme
List of documents and tools produced
See Annex 2 of report for a detailed discussion of documents and tools
Annex 1: Data-collection materials produced during data-collection phase
Annex 2: Documents and tools produced during phase to prepare for setting
up scheme
Statutes, internal rules or contract(s), management procedures manual, agreements with
health care supply, etc.
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5.2 Sample plan of actions

Sample plan of actions for the first accounting period
(15/09/2005 14/09/2006)
1. Objectives
By the end of the first accounting period (14 September 2006), the scheme will have been
set up in three urban districts and three rural districts.
Two information/communication campaigns are planned: the first, to be held in September
2005, will be aimed primarily at inhabitants of urban districts; the second, scheduled for
February 2006, will be aimed primarily at inhabitants of rural districts.
The three urban districts comprise a total of 6,000 families, or 35,000 persons. The objective is to cover 8 per cent of the target population, or 2,800 persons (480 members) by the
end of the first accounting period. The three rural districts comprise a total of 2,000 families,
or 14,000 persons. The objective is to cover 5 per cent of the target population by the end
of the first accounting period, or 700 persons (100 members). (The average size of a family
in rural areas is 7 persons, as compared to 5.8 in urban areas.) The expected distribution
of enrolments over the course of the first accounting period is as follows:
Sep.
Oct.
Nov.
Dec.
Jan.
Feb.
Number of beneciaries
(urban)
600
1200
500
200
100
80
(rural)
500
600
1200
500
200
100
580
Mar.
Apr.
May
June
July
Aug.
Total Sep.-Aug.
(urban)
30
30
30
10
10
10
2800
(rural)
150
30
20
700
Total
180
60
50
10
10
10
3500
Total
2. Stages
Official establishment of scheme: inaugural GA on 15 August.
First communication campaign: start-up of communication operations: 1 September;
final rehearsal for enrolment procedures: 12-13 September; official inaugural meeting:
14 September; start-up of enrolments: 15 September; final rehearsal for claims procedures: 7-8 December; startup of claims settlement: 15 December.
Second communication campaign: start-up of communication operations: 15 January; final
rehearsal for enrolment procedures: 29-30 January; start-up of enrolments: 1 February;
final rehearsal for claims procedures: 24-25 April; start-up of claims settlement: 1 May.
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5.2 SAMPLE PLAN OF ACTIONS
175
3. Contents of each stage

Communication activities shall include:
in urban areas: three meetings with the neighbourhood associations (one per district),
three meetings in collaboration with managers of health centres (one per centre), one
mobile campaign during markets and specific events held at this time;
in rural areas: two meetings with members of cooperatives, three meetings in collaboration
with managers of health centres (one per centre), one mobile campaign during markets.
Mobile campaigns will then be repeated monthly, on average.
Rehearsals are scheduled prior to the start of enrolments and prior to the start of claims
settlement, which means, after taking into account the waiting period, three months after
the start of enrolments.
An inaugural meeting will be organized prior to the first communication campaign. The
following persons will be present: the provincial administrator, the mayor, the director of
the provincial hospital, the managers of the health centres of the three urban and rural
districts, etc.
Enrolments will take place at the branches responsible for promoting the scheme. In urban
areas, five branches will be opened: one at the headquarters of the health micro-insurance
scheme, one on hospital premises and three on the premises of the three health centres
located in the city. In rural areas, three branches will be opened on the premises of the
health centres (one per centre). Coverage through third-party payment will be provided at
health facilities with which agreements have been signed: at the hospital (for emergency
hospitalization and maternity) and the six health centres (three urban, three rural).
4. Resources, materials and related costs
Communication activities
Resources: six facilitators.
Materials: brochures (6,000 copies), facilitation plan (six copies).
Travel and miscellaneous expenses: 2,000 MUs.
Rehearsals
Resources: steering committee members and actors concerned with future scheme:
facilitators, managers, health care staff of health facilities.
Materials: scenarios (15 copies).
Miscellaneous expenses: 500 MUs.
Inaugural meeting
Along with steering committee members, actors concerned with the future scheme, local
authorities, health authorities and leaders of civil society organizations, the inaugural meeting will also be open to the target population. The objective is to take this opportunity to
carry out a wide-ranging information and communication campaign on the topic of the
health micro-insurance scheme.
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Enrolments
Resources: 16 facilitators and two scheme managers to carry out computer registration
Materials: Membership sheets (4,000 copies), explanatory brochures (4,000), paperbased registers (eight), computerized record tool (one), payment receipts for membership fees (4,000).
Production costs for materials: 2,500 UM.
Claims settlement
Resources: staff of health facilities with which agreements have been signed and two
scheme managers.
Materials: blank membership cards (4,000), treatment certificate forms (7,000), prior
agreement request forms (1,000), model consolidated invoice forms (30).
Production costs for materials: 2,000 MUs.
5. Timetable
Sep.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Communication
(urban areas)
1st Rehearsal 1
(12-13 Sep.)
Inaugural meeting
(14 Sep.)
Start-up of enrolments
(15 Sep.)
2nd Rehearsal 2
(7-8 Dec.)
Start-up of claims
settlement (15 Dec.)
Waiting period
Communication
(rural areas)
1st Rehearsal 1
(29-30 Jan.)
Start-up of enrolments
(1 Feb.)
2nd Rehearsal 2
(24-25 Apr.)
Start-up of claims
settlement (1 May)
1
2
for enrolment procedures

for claims procedures
Waiting period
May
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5.3 CONTRACT FRAMEWORK AND SAMPLE HEALTH INSURANCE CONTRACT
177
5.3 Contract framework and sample health insurance contract

Sample contract framework
Section 1
The parties to the contract, i.e. the health micro-insurance scheme and the member, in the
case of an individual contract, or the health micro-insurance scheme and the organization
(cooperative, trade union, enterprise, etc.) underwriting the contract on behalf of its members, in the case of a group contract.
Legislative framework: act or code applicable to contract
Type of contract: individual or group
Section 2
Purpose of contract
Section 3 Exclusively for group contracts
Provisions concerning the contract concluded between the health micro-insurance scheme
and the organization:
entry into effect, duration and renewal of contract;
possible changes;
cancellation of contract;
provisions in event of litigation.
Section 4 Provisions concerning insurance coverage
Qualifying conditions:
definition of member;
definition of dependent.
Enrolment and membership:
enrolment procedure;
entry into effect of membership;
duration and renewal of membership;
changes in membership: for each change, date on which request for change must be
made, specific supporting materials used and date on which change enters into effect;
withdrawal: date for submission of withdrawal request, specific supporting materials
used, date on which withdrawal enters into effect;
termination of a member: circumstances of termination, deadline for informing member
concerned, date of entry into effect;
termination of a dependent: circumstances of termination, deadline for informing the
member and dependent of the termination, date of entry into effect.
Cessation of benefits and services.
Section 5 Provisions concerning benefits and ancillary services
Benefits:
list of covered health services;
list of actions or events whose medical consequences are not covered (e.g. epidemics, wars);
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waiting periods, if any;

in cases in which scheme does not plan to use third-party payment for all health services:
date entitlement to benefit expires, i.e. maximum period of time during which member
must submit claims;
methods of claims settlement: payment in cash, by check, by transfer to bank or postal
account;
possibility of choosing benefit plan, if applicable;
benefit plan schedule, listing services and levels of coverage for each plan.
Ancillary services (e.g. prevention programme).
Section 6 Provisions concerning premiums
Principle used to calculate premiums for a family, based on individual fees
Fee schedule
Rules for adjusting fees
Methods of payment for premiums
Sample individual contract

SAMPLE INDIVIDUAL INSURANCE CONTRACT
The Provident Society insurance company (fictitious name)
Preamble
This contract, which shall be governed by
(title of applicable act or code),
is entered into between The Provident Society (hereinafter referred to as the insurance
company), or the party of the first part, whose registered office is located at
(address), and the member, or the party of the second part.
This is an individual insurance contract.
Article 1 Purpose
The purpose of this contract is to offer the member and persons in his/her family health
insurance coverage, including benefits and services.
Article 2 Qualifying conditions
Definition of member Any person aged 18 or above, with domicile in district K and not
benefiting from any other health insurance coverage (social security, private insurance or
other type of insurance) may accede to this contract.
Definition of dependent Members may designate one or more dependents from among
the members of their family (spouse, partner, ascendant, descendant or collaterals). The
number of dependents is not limited; however, all dependents must be registered by name
on the membership sheet. They enjoy the same benefits and services as the member. In
order to be registered, dependents must not be benefiting from any other health insurance
coverage (social security, private or other type of insurance).
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179
Article 3 Enrolment and membership

Enrolment procedure The member must fill out a membership request and submit it to
the insurance company, which reserves the right to accept or refuse the request.
Validity of membership Membership becomes valid on the first day of the month following
the date of the request for membership, provided that the request was accepted.
Duration of membership and renewal Membership is valid for a period of one year,
following which it is automatically renewed on a regular annual basis.
Addition/termination of a dependent Members may, at any time, make a written request
to add a dependent. Such addition becomes effective the first day of the month following
the request. The member may, at any time, make a written request to terminate a dependent.
This termination does not become effective until the anniversary date of membership, except
in the case of the dependents death, in which case it becomes effective the first day of the
month following the death. A dependent who has been terminated may not be reinstated
until completion of a lapse of two years.
Changes to benefit plan Members may request to make changes in their benefit plan
no later than one month prior to the anniversary date of their enrolment. Such changes
become effective on the above-mentioned anniversary date.
Subscription to/withdrawal from a service Members may request to subscribe to a
service or to withdraw from a service no later than one month prior to the anniversary date
of their enrolment. Such subscriptions and withdrawals become effective on the abovementioned anniversary date.
Other changes Members may also request a change in the amount of the premium
instalment payment, the method of payment of the premium or the method of payment of the
claim. Such requests must be submitted no later than one month prior to the anniversary date
of their enrolment. The changes become effective on the above-mentioned anniversary date.
Members may, at any time, request a change in the administrative information they receive.
Such changes become effective on the date of reception of the request or at a later date
chosen by the member.
Withdrawal Members have the right to withdraw from the scheme. Requests for withdrawal must be received by the insurance company no later than one month prior to
the anniversary date of the members enrolment. Withdrawal becomes effective on the
above-mentioned anniversary date.
Termination of membership Membership may be terminated by the insurance company on the grounds of manifest fraud and abuse on the part of the member. The termination takes effect immediately and without advance notification.
A member who is in arrears in payment of premiums for 15 days receives formal notice
to pay. If the situation is not corrected within the next 15 days, benefits and services are
suspended and remain so pending payment. At the end of three consecutive months of
suspension, membership is terminated. Persons whose membership is terminated are liable
for any unwarranted benefits received during the period preceding the suspension (15 days
in arrears in payment + 15 days of formal notice).
Persons whose membership has been terminated cannot again subscribe to an individual
or group contract with the insurance company, nor be considered a dependent member
under the terms of a contract until completion of a lapse of two years.
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Termination of a dependents entitlement to insurance A dependents entitlement to

insurance may be terminated on the grounds of manifest fraud and abuse on his/her part.
The termination takes effect immediately and without advance notification. A dependent
whose entitlement to insurance has been terminated may not subscribe to an individual or
group contract with the insurance company, nor be considered a dependent under the
terms of a contract until completion of a lapse of two years.
Article 4 Cessation of benefits and services
Benefits and services to members and their dependents are discontinued on the date on
which membership ends, whether as a result of withdrawal, termination of membership or
death. Benefits and services to dependents are also discontinued on the date of the termination of their entitlement to insurance as a dependent.
In the event of the death of the member, benefits and services to the members dependents
are discontinued as of the first day of the month following the members death. The dependents, or their legal representative, if all dependents are minors, may, if they so desire, conclude an equivalent individual contract beginning on the date of the cessation of benefits.
Article 5 Benefits
List of covered health services Only certain health services dispensed by the health centres and district hospital of K are covered. They include the following health services:
in health centres: consultations, pharmacy (only medicines included on the list of essential
drugs*), uncomplicated deliveries, X-rays, laboratory tests;
at the hospital: consultations, pharmacy (only medicines included on the list of essential
drugs*), medical hospitalization, uncomplicated deliveries, dystocic deliveries, X-rays,
laboratory tests, unplanned surgery. Planned surgical operations may, in certain cases,
be covered. The agreement to provide coverage must be requested before such care is
delivered (prior agreement forms).
* The list of essential drugs is available from the headquarters of the insurance company, from each health
centre and from the pharmacy of the district hospital of K.
List of actions or events whose medical consequences are not covered In the event of
war or epidemic, the above-mentioned health services are not covered.
Waiting period Coverage may be provided only for health expenses incurred at least
three months following the date of enrolment of a member, or at least three months following the date of affiliation of a dependent. This deadline shall be extended to nine months
for uncomplicated deliveries and dystocic deliveries and to 12 months for planned surgical
operations.
Expiration of any entitlement to benefit Claims must be made no later than six months after
the date of the medical expenses; expenses cannot be reimbursed beyond this period.
Procedure for claims settlement Claims are paid out in cash at each branch of the
insurance company or at the central offices of the fund. Payment may also be made by
check or by transfer to the members bank or postal account. The method of payment of
claims is selected at the time of enrolment. Payments are made on the first day of the month
following the reception of the claim.
Levels of coverage Levels of coverage for adults and children are identical. Members
may choose the Health centre benefit, the Hospital benefit, or both simultaneously. The
benefit or benefits chosen apply to the member and to his/her dependents.
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181
Health centre benet

Covered
services
Level
of coverage
Hospital benet
Covered
services
Level
of coverage
Consultations
Consultations
Pharmacy
Pharmacy
Uncomplicated 100% of expenses incurred

deliveries
Medical
hospitalization
X-rays
Uncomplicated 100% of expenses incurred

deliveries
Laboratory
tests
Dystocic
deliveries
X-rays
Laboratory
tests
Unplanned
surgery
Planned
surgery *
*Subject to prior agreement
Article 6 Ancillary and optional services

The following services are offered on an optional basis in exchange for the payment of an
additional premium.
Third-party payment for pharmacy services Refers to the exemption from payment of
covered health costs in pharmacies that have signed an agreement with the insurance
company for medicines and medical consumables prescribed by the medical staff of
approved health centres and the district hospital of K. The list of approved pharmacies and
health centres is available from the insurance company.
Third-party payment for hospital services Refers to the exemption from payment of health
costs at the district hospital of K. for the following services: medical hospitalization, uncomplicated deliveries, dystocic deliveries, unplanned surgery.
Emergency transport Refers to coverage of the cost of a taxi journey for emergency
transport to the district hospital of K. for a sick person incapable of walking or a pregnant
woman in labour. Expenses incurred for the taxi journey are fully covered up to a limit of
4,500 MUs per patient evacuation.
In addition, members and their dependents may participate on a cost-free basis in prevention or health information programmes. The list of prevention activities and health information
sessions is available from the headquarters of the insurance company.
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Article 7 Premiums
Formula for calculating family premium The family premium is the sum of the individual
premiums for the covered members of the family.
Premium schedule
Health centre benet
Hospital benet
Annual adult
premium (MUs)
Annual child
premium (MUs)
Annual adult
premium (MUs)
Annual child
premium (MUs)
Rural districts
2000
1500
1500
1000
Urban districts
2400
1800
1800
1200
Annual premium
per person (MUs)
Third-party payment
for pharmacy services
200
Third-party payment
for hospital services
50
Emergency transport
100
Health information/
prevention programmes
Cost-free
Rules for updating premium levels Premium levels are indexed according to the official
rate of inflation. They are adjusted each year at the end of the accounting period for the
following period. The new premium levels apply to all members and their dependents.
Procedure for payment of premiums At the discretion of the member, premiums may
be remitted weekly, monthly or bi-annually. Premiums may be paid by automatic deduction, by check or in cash. The instalments and method of payment are chosen at the time
of enrolment.
5.4
Agreement framework and sample agreement

with a health care provider
The content of an agreement may vary from one health micro-insurance scheme and one health
care provider to the next. The elements to be included depend on the decisions made when
designing the scheme: establishment of a third-party payment mechanism, quality standards
or treatment protocols to be observed, choice of particular methods of payment, negotiation
of preferential fees, etc. The content of an agreement also depends on the parameters of the
context in question: regulations, establishment of health coverage plan system, possibility of
developing a network among health care facilities at different levels of the health pyramid,
possibility of introducing financial incentives for members of the health care staff, etc.
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5.4 AGREEMENT FRAMEWORK AND SAMPLE AGREEMENT WITH A HEALTH CARE PROVIDER
183
Sample agreement framework

Regardless of its textual content, an agreement is essentially a contract that can be formulated
according to the following framework:
Section 1: Parties to the agreement
Section 2: Purpose of the agreement and objective of the health facility
network, if such a network is contemplated
Section 3: Entry into effect, duration and renewal
Section 4: Amendments
Section 5: Termination
Section 6: Disputes and methods of arbitration
Section 7: Obligations of the two parties
Sample agreement
The following sample provides a very precise description of the obligations of the two parties,
in the particular context of the formation of a network of health care providers. Agreements,
such as the one presented here, are concluded with each health facility belonging to the
network. Provisions concerning the provider network (Article 1) and progress groups may be
omitted if the health micro-insurance scheme does not contemplate forming such a network.
The idea of forming a network of the health care providers with which agreements have
been concluded is, however, an interesting one: it motivates providers to become informed
and to seek training, and it provides their establishment with a guarantee of quality. It serves
to increase the effectiveness of health care and to contain costs as a result of better coordination and better circulation of information among the providers in the network, particularly as
concerns patient medical records.
The relatively explicit nature of the wording may appear to be cumbersome, but it is necessary if one wishes to produce an agreement that may be considered a proper legal instrument.
SAMPLE AGREEMENT
between The Provident Society insurance company
(name of health facility)
and the health facility
Agreement No.
Preamble
The text of this agreement was approved on 2 October 2004 by the General Assembly
of The Provident Society insurance company.
This agreement is concluded between the The Provident Society insurance company, hereinafter referred to as the insurance company, or the party of the first part,
, and
, hereinafter
whose registered office is located at
referred to as the health facility, or the party of the second part, whose registered office
is located at
.
184
ILO / STEP
Article 1 The purpose of the agreement

This agreement defines the mutual obligations of the insurance company and the health
facility with respect to the network of approved health facilities established by the insurance company.
The objective of this network is to:
facilitate access to health care for members of the insurance company and their families by setting up a third-party payment mechanism for certain services in network health
facilities, and by improving the circulation of information within the network concerning
the type of treatment suited to each pathology;
improve the quality of health care through the application of quality standards stipulated
under the agreements and through the good practices defined by the progress groups
(see definition below);
improve the level of health education of the members of the insurance company and
their families through prevention and health information programmes;
improve the cost recovery of the network health facilities through the provision of coverage by the insurance company for medical expenses associated with the consumption
of certain health services;
facilitate the further training of health professionals in the network, and increase their
knowledge base as a result of the establishment and development of progress groups;
increase the effectiveness of health care, and limit costs as a result of better coordination and better circulation of information among the network health facilities, particularly
concerning patient medical records.
Article 2 Entry into effect, duration and renewal
This agreement shall remain in effect from 1 January 2005 to 31 December 2005. It shall
then be revised and renewed on an annual basis. Such revisions may, in particular, concern
quality standards, the degree of compliance with each standard, the degree of compliance
with treatment protocols, and the level of participation in progress groups and in health
information and prevention sessions (see definitions below). They may also concern the
dates and frequency of evaluations.
Article 3 Amendments
Each year, by 31 November at the latest, either party may propose to the other, in writing,
that amendments be made to the agreement.
To the extent that such amendments concern the objectives of the health facility (quality
standards, treatment protocols, participation in progress groups, facilitation of health information and prevention sessions) or the methods of payment, the consent of the two parties
shall suffice. The new agreement shall enter into effect for the health facility as of the
following 1st of January.
To the extent that the amendments concern provisions of the agreement affecting other
health facilities in the network (such as fees that are identical in all approved health facilities), they must be approved by all network health facility managers and the insurance
companys board of directors. If approved, these amendments shall be incorporated into
the text of a new agreement, which must be ratified by the general assembly of the insurance company. The new agreement shall enter into effect for all health facilities in the
network as of the following 1st of January.
VOLUME 2
185
Article 4 Termination
Each party has the right to terminate the agreement in writing. The letter of termination must
be received by the other party prior to 31 October of the current year. The termination
enters into effect as of the following 1st of January.
Article 5 Disputes
In the event of a dispute, the parties shall submit to the arbitration of a third party, or in the
event of the failure of such arbitration, to the judgment of the Court
(name of court).
Article 6 Obligations of the two parties
1. Obligations of the health facility
The health facility agrees to:
observe verification procedures (see Article 7);
observe procedures concerning requests for prior agreement (idem);
depending on the case, issue a treatment certificate or individual invoice (idem);
observe quality standards (idem);
observe treatment protocols (idem);
participate in progress groups and apply good practices defined by these groups
(idem);
organize and carry out prevention and health information efforts aimed at scheme
members and their families (idem);
authorize the insurance company to undertake periodic evaluations of the extent to
which these obligations have been observed (idem).
2. Obligations of the insurance company
The insurance company agrees to:
observe the procedures for paying the health facility (see Article 7);
utilize the contractual fees for calculating the amounts of payments (idem);
transmit documents enabling the health facility to follow verification procedures in the
case of third-party payment (printout of members and dependents who are up-to-date
with their premium payments and who have completed their waiting period);
transmit blank forms for prior agreement requests, treatment certificates, and individual
and consolidated invoices;
promote the health facility among members and their families (idem);
organize progress groups in which health facility staff members will participate
(idem);
organize prevention and health information efforts aimed at scheme members, and
compensate health facility staff members who prepare and facilitate such sessions
(idem).
186
ILO / STEP
Article 7 Details of obligations

1. Verification procedures
If the health services utilized by a patient are provided through a third-party payment mechanism, the health facility staff must previously have verified that the patient is entitled to coverage: patients name appears on the membership card, entitlement to third-party payment
services, entitlement to coverage (patients name appears on the printout of covered persons
that is updated each month and transmitted by the insurance company). When in doubt,
the health facility staff must contact the insurance company. In non-urgent cases, it may
request that the patient submit a letter of guarantee signed by the insurance company.
In the case of a third-party payment mechanism, the health facility staff must, after having
dispensed services, require that the patient sign a treatment certificate (form provided by
the insurance company) and give the patient a duplicate of the certificate, which the
patient must, in turn, submit to the insurance company. This certificate is proof that the
health services were effectively dispensed.
In the absence of a third-party payment mechanism, the staff of the health facility must produce a detailed invoice of the services dispensed (invoice forms supplied by the insurance
company) and give it to the patient, so that the patient can, in turn, obtain reimbursement
from the insurance company.
2. Procedures for request of prior agreement
In certain cases, the services included under planned surgical operations may be covered
by the insurance company. The staff of the health facility must before such services
are dispensed fill out a form requesting prior agreement (form supplied by the insurance
company) and give it to the patient, who then brings it back signed by the insurance
company, provided the latter has approved the request.
3. Quality standards
As of 1 January 2006, the average waiting time before delivery of the first medical treatment or service to members or dependents of the insurance company shall be reduced
from 3.5 hours (current level) to 2 hours.
As of 1 January 2006, the percentage of days without stock shortages of 5 essential drugs
(list drugs:
) shall be increased from 65 per cent (current percentage) to
90 per cent.
As of 1 January 2006, the following procedures shall be applied systematically in order to
ensure the confidentiality of medical records:
non-medical staff is not authorized to ask questions of a medical nature;
all questions of a medical nature shall be asked in private, i.e. behind closed doors, out
of the sight and hearing of others, in the absence of persons who are not part of the
medical staff (other patients, visitors, administrative staff of the health facility and others);
Female patients may if they so desire be examined/treated by female medical staff;
if the patient is accompanied by a relative or a friend, the medical staff shall request the
patients consent prior to authorizing the accompanying person or persons to enter the
consultation or examination room;
the medical staff shall keep a medical record for each patient and file these records in
a locked location. The patients file shall be taken out at the time of consultation or treatment and returned when these are finished.
VOLUME 2
187
4. Treatment protocols
As of 1 January 2006, the percentage of prescriptions for generic drugs issued to the
members of the insurance company or their dependents shall increase from 35 per
cent of the total number of prescriptions (current level) to 70 per cent. This increase will be
facilitated by the organization of information sessions on generic drugs for the members of
the insurance company and their families.
5. Progress groups
These groups shall be composed of health care workers from several health facilities and,
in some cases, external partners (directors of foreign clinics, public health physicians, administrators of health care networks). They shall meet each month to: reflect upon topics concerning specific issues related to medical practice, envisage common measures to combat
certain illnesses or better treat sick persons, lead prevention and health information sessions
and prepare information materials directed to members of the insurance company and
their dependents.
As of 1 March 2005, the insurance company shall have set up four progress groups in
various locations throughout the province. As of 1 January 2006, 50 per cent of the doctors
and nurses of the health facility shall be members of a progress group and shall have
participated in at least six of the nine meetings held by the group during the first year.
6. Prevention and health information actions
These are prevention and health information sessions on specific topics: prevention of sexually transmitted diseases and HIV/AIDS, prevention of occupational accidents, prevention
of the damaging effects of tobacco, basic measures to be taken in the event of a malaria
crisis, generic drugs, etc.
As of 1 January 2006, the insurance company shall have organized three prevention
or health information sessions at the health facility on the topics that were given the highest scores by the health facilitys users. Such sessions shall be organized in collaboration
with a partner prevention programme. The staff members of the health facility are invited
to participate actively in promoting these sessions among their patients (whether the latter
are members of the insurance company or not) and, if the staff members so desire, in
preparing the content of these sessions and leading them.
7. Periodic evaluations
An initial evaluation shall be undertaken in May 2005. It shall enable evaluators to determine whether the verification procedures and requests for prior agreement have been
properly applied and whether the levels of the quality indicators are increasing.
A second evaluation shall be undertaken in early January 2006. It shall enable evaluators
to determine whether quality objectives have been reached: average length of waiting
time, availability of medicines, confidentiality of medical records, treatment protocols, participation in progress groups, and participation in the promotion, organization and facilitation
of prevention and health information sessions.
8. Procedures for payment of health facility
On the first day of each month, the health facility shall send the insurance company
a consolidated invoice (model invoice supplied by the insurance company). The insurance company shall perform the necessary checks and pay the health facility on the
basis of this invoice prior to the first day of the following month. Payment is made by bank
188
ILO / STEP
transfer to the health facilitys account. The price of the health services is determined
on the basis of the contractual fees (see below). The contractual fees are higher than the
official fees because they take into account the increase in the level of quality of the health
services and the increased availability of the health facility staff.
9. Contractual fees
Contractual fee
Ofcial fee
(indicative)
600
500
1.2 Ofcial fee
Ofcial fee
Uncomplicated deliveries
1200
1000
X-rays
840
700
1.2 Ofcial fee
Ofcial fee
840
700
Pharmacy
1.2 Ofcial fee
Ofcial fee
1.2 Ofcial fee
Ofcial fee
Uncomplicated deliveries
1800
1500
Dystocic deliveries
3600
3000
X-rays
1080
900
Laboratory tests
1.2 Ofcial fee
Ofcial fee
Planned surgical
operations *
Ofcial fee
Ofcial fee
1.2 Ofcial fee
Ofcial fee
Consultations
Pharmacy
Health centre
Laboratory tests
Consultations
Hospital
Unplanned surgical
operations
* Subject to the prior agreement of the insurance company
10. Promotion of the health facility

The insurance company agrees to provide a list of the network health facilities to the
members and their dependents. This list is part of the welcome package for new members,
which is given to each new enrolee. The list is also posted at the premises of the insurance
company and at each local branch.

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Health Micro-Insurance Schemes:

Feasibility Study Guide

Health Micro-Insurance Schemes:

International Labour Office Geneva

Copyright International Labour Organization 2005

ILO Cataloguing in Publication Data

How did the Guide come about? . . . . . . . . . . . . . . . . . . . . . . . . . . . .

What are the objective and scope of the Guide? . . . . . . . . . . . . . . . . . . . .

What are the limitations of the Guide? . . . . . . . . . . . . . . . . . . . . . . . . . .

How is the Guide structured? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

To whom is the Guide addressed and how should it be used? . . . . . . . . . . . . .

1. Characteristics and role of the feasibility study . . . . . . . . . .

What is a feasibility study? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Who conducts the feasibility study? . . . . . . . . . . . . . . . . . . . . . . . . . .

When should the feasibility study be carried out? . . . . . . . . . . . . . . . . . . . .

2. Initial phase to prepare for and plan the feasibility study . . . .

Action 1: Verify that the preconditions have been met . . . . . . . . . . . . . . .

Action 2: Confirm the possibility of establishing a health micro-insurance scheme

HEALTH MICRO-INSURANCE SCHEMES: FEASIBILITY STUDY GUIDE

Action 3: Set up the steering committee . . . . . . . . . . . . . . . . . . . . . . . . .

Action 4: Plan the feasibility study . . . . . . . . . . . . . . . . . . . . . . . . .

Action 5: Prepare the budget estimate for the feasibility study . . . . . . . . . . . . . .

3. Data-collection and analysis phase . . . . . . . . . . . . . . . . . 29

Step 1: Define the data-collection procedure . . . . . . . . . . . . . . . . . . . . . .

Step 2: Develop the data-collection materials . . . . . . . . . . . . . . . . . . . . . .

Step 3: Prepare for and carry out the data collection . . . . . . . . . . . . . . . . . .

Step 4: Process the collected data to produce usable information . . . . . . . . . . .

4. Scheme design phase . . . . . . . . . . . . . . . . . . . . . . . . . 43

Step 1: Select, or confirm the selection of, the target population . . . . . . . . . . . .

Step 2: Pre-select the health services to be taken into account

Step 3: Select the partner health care providers . . . . . . . . . . . . . . . . . . . . .

Step 4: Select the services and health care providers to include

Step 6: Prepare negotiations or agreements with partner organizations,

Step 7: Define the schemes organization . . . . . . . . . . . . . . . . . .

Step 8: Define the schemes methods of operation . . . . . . . . . . . .

Step 9: Prepare the schemes budget estimate . . . . . . . . . . . . . . . . . . . . . .

5. Phase to prepare for setting up the scheme . . . . . . . . . . . . 85

The feasibility study report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The action plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The statutes and the organizational chart . . . . . . . . . . . . . . . . . . . . . . . .

The internal rules or the insurance contract . . . . . . . . . . . . . . . . . . . . . . . .

Management tools and documents . . . . . . . . . . . . . . . .

The procedures manual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Agreements with health care providers . . . . . . . . . . . . . . . . . . . . . . . . . .

Index of Volumes 1 & 2 . . . . . . . . . . . . . . . . . . . . . . . . . .

Centre International de Dveloppement et de Recherche

1st dose of diphtheria-tetanus-whooping cough vaccine

Health micro-insurance scheme

International Labour Office

International Labour Organization

International non-proprietary name

National Federation of Coffee Producers

Strategies and Tools against social Exclusion and Poverty

HEALTH MICRO-INSURANCE SCHEMES: FEASIBILITY STUDY GUIDE

What are the objective and scope of the Guide?

Guide to setting up schemes

Feasibility study guide

Management guide for

What are the limitations of the Guide?

How is the Guide structured?