Healthcare Insurance in Bangladesh: An Area in Need of Rapid Improvement

    LightCastle Analytics Wing
    LightCastle Analytics Wing
    Healthcare Insurance in Bangladesh_LightCastle

    Health insurance is a type of benefit that is offered by a government agency, a private enterprise, or a not-for-profit organization. To determine the cost, a provider estimates a population’s collective medical bills and then divides that risk among policy subscribers. In theory, insurers know that one individual may experience significant unexpected bills while another may not. The cost is then distributed among a group of people in order to make health care relatively cheaper for the greater good of all. 

    Prior to the onset of the COVID-19 pandemic, reports from the World Bank denoted that out-of-pocket health expenditures as a percentage of current health expenditures in Bangladesh stood at 74% in 2018 recording an uptick at an annual rate of 1.21% on average from the previous year. The incurrence of continually increasing high healthcare expenses amid the COVID-19 pandemic by Bangladeshi citizens now recognizes the need for insurance support, and an overwhelming amount of corporate and individual clients are approaching insurers in search of suitable products. Thus far, against a population of over 160 million, Bangladesh has maintained approximately 90,000 life insurance policies and of those, less than 10% of life insurance subscribers have any health coverage.

    Figure: Trend in out-of-pocket expenditure as a % of total healthcare expenditure (2000 - 2018)
    Figure: Trend in out-of-pocket expenditure as a % of total healthcare expenditure (2000 – 2018)

    It is unfortunate that in Bangladesh people are rarely willing to pay to be insured against any risk, health, and/or accident and these insurances have historically been associated with international travel, only because many nations do not allow entry without such a policy. While the state has subsidized public sector healthcare, a policy push for health insurance is simply not there, and the concept of insurance support only began gaining some traction in the late 1990s, according to statements by several insurance experts.

    Currently, the insurance business offers two forms of health coverage: standalone health insurance policies and life insurance policies that include health coverage. In Bangladesh, only non-life insurers are permitted to offer standalone health insurance coverage. However, they receive a significantly lesser share of the overall yearly health insurance premium than private-sector enterprises did when they began in the late 1990s and early 2000s. 

    On the other hand, life insurers bundle health coverage with life plans and began providing group life and health insurance policies decades ago, primarily to large firms that require such coverage for their employees as a form of international human resources compliance. Due to the industry’s exemption from reporting health insurance data to their major regulator, no official figures on the total yearly health insurance premium or covered population are available. The sparsely available data suggests that health insurance premiums are reported by life insurers under the heading ‘Group and Health Insurance’ whereas non-life insurers report them under the heading ‘miscellaneous’.

    Therefore, health insurance continues to be dominated by group policies, with industry experts estimating that between 85% to 90% of overall health insurance premiums are paid by good employers, largely multinational corporations, and a few small local businesses and according to Md. Rafiqul Alam Bhuiyan, deputy managing director of Pragati Life Insurance Company, “The number of such employers would not be more than 500 who pay for health coverage”.

    Health Insurance Companies in Bangladesh
    Table: Major Insurance Companies Providing a Diverse Range of Health insurance Schemes

    Healthcare Insurance for Selective Groups

    RMG Factory Workers

    At a 2020 seminar organized by SNV Bangladesh, the Netherlands based not for profit organization, and the University of Dhaka’s Institute of Health Economics, the introduction of health insurance in all garment companies was announced and experts stated that this initiative would increase worker productivity and decrease absenteeism in the workplace. The project’s objective is to enroll 20,000 RMG employees in inexpensive health insurance coverage during a four-year period beginning in June 2017 and ending in May 2021. As of 2020, approximately 29,500 employees from 16 factories had enrolled in the health insurance scheme that was to be piloted by SNV, BRAC, and CARE and it was also stated that at least USD 10 billion would be contributed to the country’s economy each year if all workers were covered by insurance. By availing this scheme, the beneficiary would be able to avail medical expenses worth up to BDT 15,000 in exchange for an annual premium of merely BDT 575 per person. Out of this premium, almost 48% would be paid for by donors and the workers and owners would have to pay for the balance.

    The garment industry in Bangladesh relies heavily on over-the-counter drugs to treat common illnesses such as fever, diarrhea, and colds, as well as several non-communicable diseases. The primary causes for non-treatment are financial constraints, time constraints, and, most crucially, a lack of onsite health services. Additionally, the majority of factories lack medical doctors and nurses to care for their employees and are not affiliated with any government or non-government healthcare programs. The overarching goal of the initiative is to make health services available, accessible, and inexpensive to workers in various circumstances, thereby improving their health conditions and productivity.

    Frontline Health Workers

    Before the pandemic hit, even healthcare front-liners were not subjected to any specific or special health insurance schemes by the government. The most they received was from the grace of private hospital employee policies. However, the emergence of the pandemic brought insurance concerns to the forefront as the workers facing the tribulations of COVID-19 were left as helpless as ever when it came to their own families. In 2020, the Bangladeshi government planned to establish a separate health insurance program for physicians, nurses, and technicians who treat individuals afflicted with the coronavirus. Under this program, if a doctor were to die whilst treating COVID-19 patients, their families would be entitled to receive BDT 1,000,000 worth of benefits in addition to cash compensation. The insurance benefit for nurses and technicians was set at BDT 5,00,000 and the insurance was set to be introduced by the state-owned Jiban Bima Corporation.

    In April 2020, Prime Minister Sheikh Hasina also launched a special insurance policy in order to compensate government personnel and staff, including doctors, nurses, and technicians, who are risking their lives to offer healthcare in the midst of the coronavirus pandemic. Following that, the Jiban Bima Corporation proposed health insurance for doctors, nurses, and technicians, but the finance and health ministries refused to fund it. It was later reported that a French reinsurance company proposed insurance benefits pertaining to a death benefit of BDT 5,00,00 for doctors and BDT 3,00,00 for health professionals, including nurses with a yearly premium rate for the one-year term policy of 0.78%, and maximum age of 60 years.

    The company stipulated several terms for the insurance facility, and they included the submission of a National Identification Card (NID), a digital fingerprint, date of birth, a Polymerase Chain Reaction (PCR) test matching the digital fingerprint, the date of hospitalization, and a death certificate. However, the Jiban Bima Corporation revised the proposal, stating that the insurance benefit would be BDT 10,00,000 for doctors and BDT 5,00,000 for health workers with a 70-year age restriction.

    Health Insurance Conditions in Neighbouring Countries

    In neighboring India, almost one-fourth of the population now has some form of health insurance, which protects them against unforeseen health emergencies. In fact, their health insurance policies are more advanced in comparison to that of Bangladesh’s that the Insurance Regulatory and Development Authority (IRDAI) of India has mandated some health insurers to begin tailoring their policies to include coverage for mental health issues. Max Bupa Health Insurance, ICICI Lombard, Aditya Birla Health Insurance Company, HDFC Ergo General Insurance, and Digit General Insurance are just a few of the famous insurers that have created health insurance policies that exclusively cover patients with mental health problems. Generally, these insurers’ health insurance plans cover the costs of in-patient hospitalization for mental illness. However, outpatient counseling or treatment is covered only if the coverage includes benefits for Outpatient Departments (OPDs).

    In contrast, Cambodia seems to be facing the same struggles as Bangladesh in terms of health insurance policies. Although the Cambodian government has made an attempt to establish healthcare protection systems, the preponderance has not been implemented efficiently, and the number of persons protected by these insurance programs remains extremely low. Together, four social health protection plans, namely the Cambodia Health Equity Fund (HEF), Community Based Health Insurance Schemes (CBHIS), Social Health Insurance (SHI), and various Private health insurance schemes cover fewer than 10% of the population. Cambodians still lack health insurance in large numbers – 89% of women and 92% of men do not have access to health insurance. Additionally, social health protection programs often pay the expenses of primary care and hospitalization, but not always medications.

    The Way forward for Bangladesh

    Despite the extreme shortage of supply in health insurance for most Bangladeshi citizens, some private insurance companies do offer health insurance to the high-income groups of the country and much like access to every other necessary service, health insurance too is unavailable to most of the low-income and poverty-stricken citizen groups of Bangladesh. 

    In the 2021 presentation for the national budget, Finance Minister AHM Mustafa Kamal announced that the government plans to increase health insurance coverage for those living below the poverty line as an initiative included in the Shashtho Shurokkha Karmashuchi (SSK) program which he described as a vehicle for financing healthcare services for individuals living below the poverty line. According to a report published in 2018 by the International Centre for Diarrheal Disease Research, Bangladesh (icddr,b), each enrolled household under this scheme receives BDT 50,000 worth of monetary coverage per year for healthcare services in exchange for a government-financed payment of BDT 1,000. Furthermore, according to the budget speech, the increase will be made in order to achieve the government’s aim of universal health care throughout the country by 2030, and the policy is titled, ‘Strategy for Finance in the Health Sector: 2012-2032’.

    It is about time that Bangladesh begins to take the wide availability of health insurance, regardless of one’s economic and/or social status, seriously because having the majority of a population covered by health insurance comes with a series of advantages and benefits that can in turn actually improve the quality of healthcare nationwide. For instance, health insurers can often use their market position to either negotiate price reductions with physicians, hospitals, and health care systems or to exclude high-cost providers from their networks. Patients who are covered receive these savings even if they pay for services out of pocket (with the exception of prescription drugs, for patients often pay list prices even when they have insurance). Policies that emphasize this role of health insurance have an effect on clinicians’ and hospitals’ negotiation clout with insurers. Medicare in the USA, for example, establishes payment rates through fee schedules, rather than allowing health care organizations to increase their prices through market leverage.

    Additionally, health insurance helps cover the costs associated with managing chronic diseases such as diabetes, heart disease, or depression. For these types of illnesses, health insurers often offer disease management plans. This makes it that much easier for citizens to stay on top of things and maintain a healthy lifestyle. Recent reports by the International Labor Organization (ILO) have revealed that typically, 10% of RMG workers per month relocate to other factories and/or employers in search of better opportunities in terms of workplace benefits in addition to salary, while up to 8% remain absent due to illness. Considering how dependent the country is on the RMG sector, it is incontestable that we put more effort into ensuring that the contributors of this sector, among others, are covered for healthcare expenses.

    Furthermore, routine and preventive treatment is especially critical when it comes to children. Children, newborns, and pregnant women all require routine medical care to remain healthy and thriving. Early intervention averts future issues and may even save lives. 

    Sharose Islam, Content Writer, and Farah H. Khan, Senior Business Consultant & Project Manager, at LightCastle Partners, have prepared the write-up. For further clarifications, contact here: [email protected]

    References:

    1. Understanding the Gender Composition and Experience of Ready-Made Garment (RMG) Workers in Bangladesh – International Labor Organization (ILO) 
    2. Incentives for those on the front line – The Daily Star 
    3. Out-of-pocket expenditure (% of current health expenditure) – Bangladesh | Data – The World Bank
    4. Health Insurance for RMG Workers – SNV
    5. Finally doctors, nurses getting health insurance besides cash compensation – The Business Standard
    6. Is treatment for mental health covered by insurance policies? – LiveMint
    7. In review: the healthcare framework in Cambodia – Lexology
    8. Govt to expand health insurance for people below poverty line – The Daily Star
    9. The 6 Functions of Health Insurance | Health Care Economics, Insurance, Payment | JAMA – JAMA Network 
    10. Pandemic makes health insurance more desirable – The Business Standard  

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    LightCastle Analytics Wing

    LightCastle Analytics Wing is the research division of LightCastle Partners. It is tasked with producing periodic reports on the different sectors of the economy, analyzing trends in markets and making methodical, thorough and intelligent analysis to improve strategy and drive business growth.