Health Financing in Ghana: The Role of Microfinance Institutions in Reducing Health Risks

The focus of the Sustainable Development Goal 3 (SDG 3) is to ensure healthy lives and wellbeing of all people. This global call for Universal Health Coverage (UHC) is anchored in the ability to provide a health financing system that is efficient, effective and equitable. Ghana, like several other countries recognizing the gap in access to healthcare, instituted the National Health Insurance Scheme (NHIS) as a way to mitigate the negative impact of out-of-pocket payments. However, cost of services and premium continue to pose challenges to enrolment and retention on the NHIS. Unlike Microfinance, health insurance has not found innovative ways of substantially bringing down the cost of services to levels that the poor can afford. Though the ability of Microfinance Institutions (MFIs) to reach people in the informal sector is not in doubt, questions have been raised about the efficiency of Microfinance institutions and its relationship with their ability to reach the poorer segments of the population. Using a mixed methods approach, the study sought to examine the role of MFIs in Ghana’s health financing structure, conduct a cost-efficiency analysis of microfinance institutions in their current operations and also examine the factors that influence the participation of households in paying for health insurance through MFIs. The study found that some MFIs, recognizing of the effects of poor health on the economic performance of their clients, have found innovative ways of offering health related savings and loans products. These products are however provided on the blind side of the regulator. Significant inefficiencies were identified in the MFI sector with an average cost efficiency of 50%, and with, wide variations observed between the least efficient (Central) and the most efficient (Eastern) regions. The average loan per savings indicated that MFIs lend about two times a client’s savings. This indicates that though MFIs are striving for efficiency, they still concentrate on serving poorer clients. The average WTP is GHȻ40.00. It is relatively higher in the urban districts (La-Dadekotopon- GHȻ45; Tamale Metro- GHȻ40) as compared to the rural districts (Shai-Osudoku- GHȻ35; West Mamprusi- GHȻ27.5). Subjective norms, ethnicity, age, household size, source of treatment, last episode of illness in the household and wealth are the significant determinants of willingness to pay for health insurance through MFIs. The study recommends that to use Microfinance institutions as a platform to reach the informal sector, there is the need for a strong policy and regulatory framework. Also, Bank of Ghana must intensify its regulation and monitoring of the Microfinance sector in order to streamline their activities. MFIs themselves must strive to improve their efficiency by managing their asset base well and maintaining portfolio quality in order to reduce inefficiency which will lead to their sustainability. Premiums must be actuarially determined with the characteristics of the segments of the population in mind to ensure that people pay premiums that resonate with their economic status.