Financial Inclusion and healthcare access are closely intertwined. They are both key indicators of human development and play a crucial role in reducing poverty and improving social welfare.
The World Health Organization estimates that each year about 150 million people around the world suffer financial catastrophe from out-of-pocket expenditure on health services, while 100 million are pushed below the poverty line.
Development projects work on ensuring that low-income households have bank accounts and access to loans. But, they must also focus on addressing health issues to maximize the impact of inclusive finance.
Let’s look at two case studies about how the financial services industry can improve its response to health risks and how increased access to financial services can empower vulnerable communities and provide them with the financial resources necessary to access healthcare.
Remittance-Enabled Health Savings Plans Increase Healthcare Access
In Kenya, startups such as Safaricom, CarePay, and PharmAccess Foundation partnered to create M-TIBA, a digital health payments platform, with the goal of increasing healthcare inclusion and empowering low-income Kenyan households to visit a doctor.
M-TIBA offers financial products, including commitment mobile savings accounts, health insurance for beneficiaries, and health funds and payments management services for donors and clinics.
M-TIBA’s platform lets users save, send, and spend funds for medical treatment. Beneficiaries use M-PESA to make deposits into and payments from their M-TIBA savings accounts, increasing convenience for clients by allowing mobile payments on a familiar platform.
Money saved or received on M-TIBA can only be spent at M-TIBA’s partner clinics and hospitals. The app, M-TIBA, is structured as a commitment savings account: beneficiaries forgo bonuses if they withdraw funds for other purposes. Plus, M-TIBA enables beneficiaries to mobilize funds for care by requesting remittances directly into their health savings account to cover healthcare costs.
Subscribers can also choose and search for nearby in-network clinics using their mobile phones. M-TIBA affiliated clinics use internationally recognized SafeCare standards and work with enrolled clinics to improve their standards and administration.
Further, M-TIBA allows donors to channel funds meant for health services directly to recipients so they can more effectively track usage. Healthcare providers, particularly smaller facilities, connected to M-TIBA benefit from increased business and reduced payment leakage.
Smaller providers also gain access to a dashboard with data on healthcare utilization—including visits, treatments, and costs—without having to invest in their own technology platform.
In India, Financial Inclusion Became a Catalyst for Deepening Access to Healthcare Services
Our second case takes us to India. According to Kim Fe Kramer, assistant professor at the London School of Economics, in 2005 the Reserve Bank of India (RBI) introduced a policy to incentivize banks to open new branches in underserved districts nationwide.
The results of this policy are very positive.
After five years, the number of bank branches in these districts had increased by 19%. More importantly, two nationally representative household-level surveys have shown that health in these districts improved, compared to similar districts where the policy did not apply.
The Indian Human Development Survey (IHDS), conducted years after the RBI’s policy went into effect, demonstrates that households in districts with an increased bank presence were 36% less likely to experience non-chronic illnesses such as fever or diarrhea.
Likewise, the Demographics and Health Survey, conducted a decade after the policy was implemented, shows higher vaccination rates and lower risks associated with pregnancy in these districts.
Decreased morbidity rates also improved health-related economic outcomes: the IHDS shows that households missed less school and work owing to illness and incurred significantly lower medical expenses.
Lastly, healthcare providers gained access to credit. Eight years after the RBI policy was implemented, the number of hospitals operating in the incentivized districts had grown by 140%, and providers were more likely to report institutional loans as their primary source of finance.
Local households also reported fewer problems with healthcare supply. Policymakers took to heart the importance of expanding credit to healthcare providers: in May 2021, during the COVID-19 outbreak, the RBI provided $6.78 billion in easily accessible credit for the sector.
Business Opportunities and Health Benefits
Evidence shows that financial service providers can have a significant impact on the health of their clients and their families.
Developing health solutions can be a triple win for clients, society, and financial service providers. However, while there is great demand for such solutions, only a few FSPs have focused on tackling health challenges.
Developing new solutions starts with a thorough understanding of the country context and understanding the needs and lives of clients.
However, pilots are important. Addressing financial needs related to health can be complex, and products may need a number of iterations before they succeed.
Plus, gender dimensions need careful consideration when designing products and solutions. The relationship between women, family health, and barriers to financial inclusion needs to be carefully understood before products and solutions are designed.
By including more people in the formal financial system, healthcare providers can design better insurance products and extend coverage to more low-income households.
Connecting People to Healthcare Services
There is a lot we can learn from Kenya's and India's experiences about the potential role of finance and fintech to boost healthcare inclusion.
Financial inclusion can be used to deepen healthcare access by promoting health insurance coverage. Insurance can play a complementary role, helping to cover lost income and out-of-pocket (OOP) expenses.
Financial service providers, however, should not try to compete with or substitute government-sponsored comprehensive health cover. Any private company would struggle to attain the required degree of risk pooling and revenue raising that a government can.
For maximum impact, financial service providers can bundle together a number of different health-focused products and services.
Packages that combine access to government health schemes with health savings accounts, health loans, supplementary health insurance, and relevant value-added services can make an important contribution to combating the cycle of poverty by helping households and micro and small enterprises manage their health risks.
Finding the Answers Through Education
By improving financial literacy and building financial capability among vulnerable populations, the rate of healthcare utilization can be increased, which can lead to better health outcomes.
Financial education can help individuals make informed decisions about their healthcare, such as seeking preventative services, paying for medicines, and adhering to treatment regimes.
With financial inclusion, these services can be made available to people living in remote areas who would otherwise have to travel to big cities to access basic healthcare services.
Finally, through partnerships between financial service providers and healthcare providers, financial inclusion can deepen the reach of healthcare services, especially in rural areas.
Mobile health clinics, which are often the only source of medical help in many rural communities, can have better financial support through easy payment systems provided by financial intermediaries. This can enhance the quality of care provided and create a seamless payment system, thus providing a critical link between financial inclusion and healthcare services.
Financial inclusion plays a fundamental role in deepening access to healthcare services. By providing access to financial services, vulnerable populations are empowered to avail of healthcare services that they previously could not afford.
Through financial inclusion, healthcare access is expanded, health insurance coverage is increased, financial literacy is improved, and partnerships are fostered between financial and healthcare providers to better serve remote communities.
Financial inclusion may be the critical missing link to improving health outcomes worldwide.
