Who’s responsible for responsible health financing?

By: Bobbi Gray, Research and Evaluation Specialist

Six years ago and 24 weeks into her pregnancy, my sister gave birth to a daughter.

For anyone who has had a child, you probably know that this is the point when, if a child is born early, he or she has a reasonable chance of surviving with the benefit of the latest medical technology. Girls are more likely to survive. We were lucky and I now have a healthy six-year-old niece.

My sister and her husband joke about her being the million-dollar baby because the medical bills amounted to nearly that amount. What started out as a typical pregnancy ended abruptly one day with premature labor. What family is ever financially prepared for that kind of medical emergency?

There is a growing body of evidence showing that, for poor families in the developing world, health is often the primary cause for late payments and defaults on microfinance loans. This isn’t that shocking really, given that health problems and medical bills also contribute to many family financial crises here in the United States as well.

Unfortunately, microfinance institutions (MFIs) often lack experience with financial products that are specifically designed to help poor families pay for health expenses.

We know anecdotally that microenterprise loans are regularly used to cover health expenses. This tells us that poor households need specialized financial products to help them access and make use of timely curative care when they are ill as well as seek preventive care to avoid more costly illnesses down the road. They need to be able to save for anticipated health expenses and, when unanticipated health shocks occur, they need access to loans since savings, liquidation of assets and other financial juggling often cannot cover the costs of major medical care. That seems simple, right?

However, designing health financing requires a nuanced understanding of the health landscape. In some countries, basic health care is free, but the cost of medications is what determines whether people follow through with medical treatments. In other countries, if you arrive at the hospital without enough money to pay for the entire course of treatment, no medical care is provided. Some countries have national health insurance, but for a variety of reasons many poor households are not covered, often because of their inability to pay even highly subsidized premiums.

If poor households are to be financially protected, cross-sectoral collaboration is imperative.

We are left scratching our heads, wondering, “Who is responsible for ensuring they have money in their pockets to cover treatment?” and “Who is left holding the bag if they don’t have enough money to cover treatment?” Is it the microfinance sector? Is it the health sector?

It seems that the answer is both.

However, both sectors need to better understand the opportunities for (and challenges of) working together. They need a shared vision for how this can help both to succeed at their ultimate goal—building and preserving health as capital.

The lack of access to funds to pay for health care means there will be more unhealthy and sick people. Unhealthy and sick people make true financial inclusion impossible.

There is, however, good news.

Collaboration is happening and much of this effort has been driven by the microfinance sector. MFIs (and NGOs that facilitate savings groups) are reaching out to local healthcare providers to link their clients to discounted health services (because they can negotiate on behalf of a large number of new patients) and designing health savings and loan products to ensure that their clients can utilize health services when needed. Others are seeking ways to link with innovative public and private health microinsurance schemes.

By comparison, the financial crisis stemming from the birth of my niece was resolved quickly and easily. Their insurance and health providers were willing to work out a long-term payment plan for the services that insurance wouldn’t cover.

The clients that we serve generally don’t have that luxury, but microfinance providers have found a way to step in and link their clients to microinsurance, health-financing products, and stronger linkages to health providers.

Combining financial services and health is still a new field of practice. There are still plenty of lessons to be learned and best practices to share, especially as health providers and financial service providers learn to speak a common language. But let us propose to start from what we already have in common—a desire to protect lives and livelihoods.


Bobbi Gray leads Freedom from Hunger’s research and evaluation efforts, assessing and measuring the social performance and impacts of integrated financial and non-financial services for adults and youth. She is also the Facilitator of the Health and Market Development (HAMED) working group at the Small Enterprise Education and Promotion Network (SEEP) and holds a Master of Public Administration degree in International Management from the Monterey Institute of International Studies.