Economic effects of Health Insurance in Rwanda: Case of Community Based Health Insurance (CBHI)

This study investigates the effects of community based health insurance in preventing households from consumption expenditures disruption and impoverishment effects resulting from health problems and associated costs. Many theoretical models argued that health insurance protects households from health problems and associated costs. Using integrated household living condition survey (EICV 2) data and qualitative data, we explore whether food and non-food, health and education expenditures of insured people are not disrupted in the wake of health problems, and whether they are prevented from impoverishment effects of health expenditure payments. In addition, we tested whether insured households were protected from dropping their children out of school as adjustment mechanisms when they face severe illness. The results suggested that community based health insurance has prevented consumptions disruption for insured people which would result from health problems. Non-food consumption was found to be positively related to community based health insurance, but was not statistically significant. The findings are consistent with the impact of health insurance on poverty reduction and school dropping out whereby insured households were prevented from falling into poverty and dropping their children out of school following episodes of illness. These findings indicate that community based health insurance plays a crucial role in addressing issues preventing poor people to lead decent life. Relevance to Development Studies Community based health insurance schemes are increasingly considered as important tools in protecting poor people from health problems and its associated costs in developing countries. This has therefore drawn the attention of many scholars to assess its impacts. Previous studies have revealed potential impact of community based health insurance on demand for modern health care, mitigation of out-of-pocket catastrophic health payments. However, little is known on its role on preventing the disruption of household consumption expenditures, household impoverishment and school dropout. Identifying its impacts on these outcomes will help to design appropriate policy, aiming at improving the standard of living in developing countries.