If there is one area that vividly sums up Africa’s development challenges, it is the field of health. Thus, private health insurance is absolutely vital when living anywhere in Africa.
Access to decent health care is a daily struggle for the sick, due to seriously underfunded national health systems, a lack of basic infrastructure to provide clean water and electricity, and a serious shortage of health care workers.
According to the World Health Organization (WHO), Africa carries 25% of the world’s disease burden but its share of global health expenditures is less than 1%. Worse still, it manufactures only a fraction—less than 2%—of the medicines consumed on the continent.
In countries where one can get decent public health care, it comes at a price the majority can hardly afford. In some cases, a two-tier system gives the rich access to quality care through private health insurance while the rest have to put up with overcrowded state-run facilities where they pay out of pocket.
Health insurance is essential to reduce the financial burden of purchasing healthcare by pooling funds and sharing the risk of unexpected health events. Risk-sharing mechanisms are particularly important in countries where resources for healthcare, including medicines, are financed out-of-pocket.
The benefits of adequate and sustainable health insurance coverage in Africa are numerous. They include improving the availability and affordability of essential medicines; increasing access to care and protecting households from the detrimental economic effects of ill-health; providing coverage for in-patient care to mitigate sudden huge financial burden due to hospitalization; ensuring greater access to essential medicines and providing an incentive for appropriate use; and advancing towards universal health coverage.
The impact of achieving universal health coverage for both individuals and society cannot be overemphasized. Many countries in Africa are currently striving for greater access to care, a significant standard of treatment, and improved health outcomes that universal coverage could bring. But existing limited budgets from both governments and international donors paired with challenges in implementation capacity mean this cannot be achieved without the private sector.
This is where Private health insurance comes in. Private health insurance actors, for-profit or non-profit, have a role to play in Africa’s health insurance system.
Private health insurance first emerged following a government’s call for private sector participation in health care provision.
The government’s cost-sharing policy, introduced at the same time, prompted people to seek care in the private sector as the quality of care in public facilities deteriorated due to limited funding.
Demand for private health insurance was further stimulated by employers offering private health insurance as an employee benefit to attract better workers, reduce absenteeism and increase productivity.
In response to this rising trend, general insurance companies developed policies covering medical benefits, initially only selling them to companies as corporate or group cover because individuals were not regarded as reliable customers.
In 1999, about 87% of private health insurance policies were purchased by companies for their employees. Other types of insurers also emerged, notably HMOs and medical insurance providers. Increased competition within the insurance industry contributed to growth in the private health insurance market.
There are two main types of cover: individual cover and group cover. For both sorts of cover, contracts are normally renewed annually and premiums are paid once a year. Only a few insurers offer individual cover. People can choose from varying levels of cover and premiums are usually age-related.
Private health insurance is mainly purchased by the rich, the employed, and urban residents. Health insurers tend to be based in or focus on urban areas. Having private health insurance is often regarded as a service for the middle or upper classes.
To reverse current trends, experts maintain that the private sector should take the lead in offering affordable prepaid insurance coverage, mostly to low-income families. The private health insurance industry—in partnership with governments and taking advantage of technology—can transform health systems in Africa.
But experts warn that if not properly regulated, the industry can enrich insurance owners while denying or restricting treatment to patients. If unchecked, companies could be lax in preventing fraud and waste and keeping down costs.
Despite these significant barriers to expansion, the private health insurance industry has some potential to grow in the future, especially if mechanisms are put in place to ensure quality and affordability. Private insurers could reduce premium prices by encouraging groups to enrol or by paying more attention to how providers deliver health services
