Karuna Trust, Karnataka - ZEF

Good and Bad Practices in MicroinsuranceKaruna Trust, IndiaDrug fund. As spending for drugs to treat illnesses can become expensive, Karuna Trust hasalso included coverage for drugs. Basic drugs are provided by the public health facilities. Inthe case of hospitalization, if additional drugs are needed, they are also provided by the healthinsurance scheme. To cover the costs of these drugs, Karuna Trust established andadministers a drug fund that allocates Rs. 50 ($1.10) per hospitalised person per day. Amaximum of 30 days, i.e. Rs. 1,500 ($34), is covered per person. If the drugs needed for onepatient are cheaper than the number of days hospitalized times Rs. 50 ($1.10), the balanceremains in the drug fund. Patients whose drugs are more expensive enjoy the benefits of thisbalance. It is the duty of the respective facilities to keep a stock of the necessary drugs.Karuna Trust has partnered with a provider of quality generic drugs to save money. Thehealth facilities submit a list of drugs needed and Karuna Trust supplies these drugs. Thesedrugs are not supplied on the basis of each case but in bulk in advance. Currently, 46different drugs are supplied. The hospitals record the use of the drugs but there are noadditional checks from Karuna Trust’s side so far. This certainly opens the door for fraud andmisuse and effective monitoring needs to be introduced.If patients use public facilities outside T. Narsipur taluk, Karuna Trust reimburses this patientup to the maximum coverage applying. Drugs for OPD or follow-up treatments beyondhospitalization are not covered.Additional benefits in case of surgery. In the event of surgery, Rs. 500 ($11) is paid to thepatient as compensation of wage loss in addition to the benefits received for beinghospitalized. This benefit is intended to be an incentive for the patient to take ten days offfrom work to recover after surgery. Additionally, Rs. 500 ($11) is provided from the drugfund for drugs necessary during or after the surgery. Clients are only eligible for this benefitonce a year.Ambulance. Karuna Trust tries to respond to the geographical distance of some of its clientsfrom the designated health facilities by offering emergency ambulance transport. The costsfor ambulance are usually borne by the drug fund. Karuna Trust operates one ambulance atthe T. Narsipur hospital, and the hospital operates a second ambulance.The insurance benefits offered by Karuna Trust effectively reduce a big part of the risk facedby low-income households. However, important risks, like drugs and tests for OPD, remainuncovered. Further, only focussing on public providers might not respond to the clients’preferences – but it keeps the costs of the product low. Although this product is certainlygood and attractive, Karuna Trust might wish to check the preferred benefit package in aparticipatory approach and balance the preferences expressed by the clients with theirreported willingness to pay. In the 2005 household survey, half the respondents reported awillingness to pay at least Rs. 300 per household per year for health insurance.Changes to BenefitsThere have only been minor changes in the benefits since the scheme’s inception:28