In Nepal, micro-insurance helps the poor cope with health needs

The ILO's "STEP" programme (Strategies and Tools against Social Exclusion and Poverty) promotes innovative systems of social protection for excluded populations. In Nepal, ILO/STEP is working with local partners to develop health micro-insurance that will improve access to health care for workers in the informal economy. In this story, the ILO's Ismène Stalpers shows how health micro-insurance helps pool risks and resources of community groups to provide health protection to all members against financial consequences of the various risks.

Article | 26 September 2003

KATMANDU, Nepal (ILO Online) - Sharing risks is not a new concept in Nepal. In the past, the poor depended on occupational and caste-based social protection systems and emergency funds. But today, faced with growing concern at the social and economic exclusion of vulnerable groups, rural communities are using new and creative ways of coping with health problems.

Community-based initiatives are providing a gateway to health care for the poor and excluded. The ILO's continuous promotion of social protection in health has encouraged organizations, from the grassroots to the government, to launch innovative health micro-insurance schemes.

The Public Health Concern Trust (PHECT) is one such initiative. In 1992, a group of doctors wishing to offer their services to the poor established a small clinic in the village of Tikathali. It was an experiment to learn how best to provide health services. A year later, PHECT Nepal founded the 'Kathmandu Model Hospital' aiming to make it a referral centre for their target community.

At the local level, PHECT created a cooperative structure in order to encourage the involvement of the local community. These community cooperatives are comprised of several families and membership is voluntary. Membership is given to the family as a unit. At present, about 1,000 families are benefiting from the scheme and the membership has remained more or less stable since the beginning.

Today, under PHECT's umbrella, there are five health cooperatives and one Health Information and Service Centre that provide health micro-insurance to the community through local clinics. However, PHECT's community initiative is by no means the only health cooperative in Nepal that is committed to bringing health insurance to the poor.

Health insurance campaign: "All for one, and one for all"

The General Federation of Nepalese Trade Unions (GEFONT) has also begun to reach out to workers in the informal economy by promoting community-based health insurance. One of the largest trade-unions in Nepal, GEFONT is dedicated to the rights, welfare and dignity of workers from different economic sectors, such as carpet, textiles, tourism, transportation, rickshaw pulling, agriculture, public and civil construction.

GEFONT has been running a comprehensive welfare fund for transport workers since the early 1970's, and has recently acknowledged the call for health protection from all its constituents. In 2000, a health cooperative was founded as the first step towards a workers' cooperative movement. The health cooperative aims to provide affordable health care and clinical services to its members. The insured members of this Kathmandu-based health cooperative are referred to the hospital founded by PHECT.

GEFONT has a dream to extend health protection to all its workers within the next five years. A nation-wide campaign carries the slogan, "All for one, and one for all", and through cooperative action their dream is materializing. With technical support of the ILO, GEFONT is now forming workers' health cooperatives across the country to carry out programmes related to micro-insurance.

The oldest micro-insurance scheme in Nepal started with the establishment of local health posts by the United Mission to Nepal. Over 27 years ago, the community health development programme of United Missions to Nepal founded the Lalitpur Medical Insurance Scheme. United Missions to Nepal managed to set up a viable scheme for the habitants of villages in and around Kathmandu. The Lalitpur Medical Insurance Scheme mainly covers the costs of essential drugs supplied to the health posts. Under this scheme, beneficiaries pay an annual premium to receive free essential drugs and a range of promotional and preventive health care at nominal fees. For serious illnesses, the health posts have a provision to refer patients to Patan Hospital in Lalitpur district.

This well-conceived micro-insurance scheme which instils responsibility at the health posts has become a model in Nepal. The health posts have gradually been handed over to the Government. Owing to the structure, which is now set up through locally run government health posts, it is promising for its sustainability.

Another encouraging micro-insurance scheme, in fact, the largest scheme in Nepal, is run by a regional hospital in the foothills of Eastern Nepal. Dr. Narayan Kumar, Hospital Director, the founder and visionary behind this scheme, learned the principles of health insurance at a joint ILO/STEP and ILO/Training Centre course in Turin, five years ago. Inspired by the innovative concept, in 2000 he set up a Social Health Insurance Scheme at the B.P. Koirala Institute of Health Sciences * (BPKIHS) for the people of Dharan and neighbouring districts.

The scheme is now marketed by more than 30 Village Development Committees, municipalities, schools and colleges, socio-cultural organizations and other local community groups, as well as I/NGOs. These organizations represent 18,000 members, and BPKIHS has the largest membership of any insurance scheme in Nepal, covering both the formal and informal economy.

A birthright to healthcare

The Government is actively fostering the development of these health insurance systems. In a recent ILO round table discussion, former Minister for Health, Dr. Upendra Devkota declared that "access to health services is a right of all citizens. No one should be barred from health services due to a lack of treatment, low income or poverty. It is a shame that people have to beg for health care, as it is their birthright".

Whether in the form of a health cooperative, a health post or so-called social health insurance; all these initiatives offer health insurance at the grassroots, with a genuine interest in providing affordable health care. When properly managed, health micro-insurance schemes carry enormous potential for transforming the lives of the excluded.

The ILO is technically supporting the policy and programming health insurance initiatives taken up by the Government, and encouraging the connection between national level policies and local initiatives. Government, trade-unions and NGOs act as partners in the provision and as advocates for the extension of social protection. And their collaborative work as providers and promoters is paving the way for extending health care to poor and disadvantaged groups in Nepal.

The holistic approach taken by the different actors in Nepal gives health micro-insurance schemes the chance of remaining viable and sustainable in the long term. The ILO's STEP programme supports these initiatives throughout the world.


* BPKIHS, established in 1993, upgraded to a University in 1998, is an autonomous Health Science University with a mandate to work toward developing socially responsible and competent health work force. BPKIHS is the single largest project implemented through Indo-Nepal cooperation. The university is aptly named after the late Bishewur Prasad Koirala, a great nationalist and former Prime Minister of Nepal, who was Nepal's foremost visionary in social upliftment and a firm believer of national reconciliation and national integration (BPKIHS, 2002).