This article appeared in The EastAfrican in the August 30 – September 5 2010 issue. In it Kevin discusses the provision of pre-paid schemes in Uganda as a means of payment for healthcare services.

Mr. Kevin Duffy, CEO, IHK/IAA Uganda, both affiliates of International Medical Group (IMG), fielded questions with Julius Barigaba on the potential of Uganda’s health insurance market

How many people are potential health insurance policy holders in Uganda?

The national market for current HMO products and health insurance (pooled-risk and pre-payment) could stretch to all those in formal employment and their dependents. It is somewhat difficult to get precise numbers for this but generally it is reckoned that there may be 500,000 in formal employment in the private sector and another 500,000 in the public sector. The ratio of employee to dependents (spouse and children) is about 2.5 on average, so if we assume one million employees then the total market may be as large as 3.5 million. In reality it is far short of that, perhaps due to many being on very low incomes and the current financial and commercial pressures on the employers, who generally make the scheme payments.

We consider IAA Healthcare to be the largest provider in this market and we have about 40,000 members. Whilst it is hard to be precise about how much of the market we have, we generally reckon on it being about 30 per cent, which means the total number of persons with such cover could be less than 150,000.

How much money is there for HMOs to make in Uganda, on say, a monthly or annual basis?

This year IAA will collect Ush10 billion (about $5m) of revenue, so our market estimate would indicate a total sector revenue of about 50 billion ($25m). This is quite small compared to the Ministry of Health budget which I think is about Ush600 billion ($300m) and I’ve read in other research that the population spends a further Ush600 billion in out-of-pocket payments. There is some evidence that this Ush1,200 ($600m) billion is still not enough to provide all of the essential healthcare that the population needs.

So you can see that the HMO and Health Insurance sector is actually still very small compared to the total market, regardless of how you measure it. We consider that there is still very significant opportunity for growth in our established market, as the formal sector continues to grow, incomes rise and people become more aware of the need for and benefits of a pooled-risk approach to health services.

What can HMOs do to haul in the population that has no healthcare insurance?

We are exploring other products and approaches that may help to make healthcare more accessible and affordable to the very large proportion of our population that do not yet have formal, regular employment/income. Community Health Schemes are very necessary and if designed and implemented correctly may be able to make much better use of the Ush600 billion currently be spent out-of-pocket by such persons.

This sector is still only just at its beginning, in its infancy; we have some products that currently suit a small portion of the overall market and we need to continue improving how we market these products and benefits. Clearly there is great scope for significant growth and greater penetration into the formal sector.

The larger numbers may however exit in the communities, where there is of course a great need for better service but some difficulties in finding the best way to fund it.

Why hasn’t the near collapse of state funded healthcare system translated into an opportunity for HMOs?

It is hard to give a clear answer to this question; I could simply note that in Uganda 72 per cent of all health service is provided by the private sector, by which I mean for-profit, not-for-profit and NGOs. In other parts of Sub-Saharan Africa the balance is usually more in favour of the public sector and perhaps on average about 50/50.

Perhaps it is time for those in office to start considering the private sector more when they are making plans for improving health service delivery and determining how to get best value from a limited budget. It is clear, at least in my opinion, that the country will only be served what it needs if the public and private providers are working together and when the Ministry of Health considers all providers to be part of the answer.