It was most gratifying to see at the Institute of Actuaries last night a presentation on health provision in the Indian slums through small-scale mutual insurance. The model is very similar to the Friendly Society movement that did so much to bring insurance to the formerly uninsurable in the UK in the nineteenth and early twentieth centuries. Eamon Kelly described how 40,000 very poor slum dwellers (there are high hopes that the scheme will expand to cover many, many more, quite quickly) under the umbrella of the Uplift Health Mutual Fund form a series of micro-insurance units. The members pay premiums and can make claims when they need medical treatment. Each unit has a claims management committee that decides how to prioritise claims, but there was no evidence of valid claims not being met. The model has many subsidiary benefits that one does not get from either state-provided healthcare or from policies provided by proprietary insurance businesses. The group has a strong incentive to ensure that people are well educated about maintaining their own health; there is peer pressure to prevent frivolous claims; and the group is much more effective at purchasing healthcare services at good prices than individuals who were self-funding could ever be. And, of course, there is the incentive to be efficient, that is completely absent in state-provided healthcare.
Interestingly, Eamon Kelly mentioned that, if the state should become involved, it will help pay the premiums or meet some of the running costs of the organisations. In other words, it will build on these spontaneous systems rather than supplant them – thus avoiding the huge mistake that we made in the UK in 1948.