Community-based health insurance (CBHI) is attracting attention in low- and middle-income countries as a means for improving healthcare utilization and protecting households against impoverishment caused by out-of-pocket medical expenditures. The World Health Organization and the World Bank have continuously suggested reducing out-of-pocket payments (OPPs) and promoting universal health coverage (UHC) (1, 2). Different health financing approaches have been developed to counter the detrimental effects of user fees introduced in the 1980s, but those efforts have not yet increased healthcare utilization, particularly among marginalized populations and, moreover, sometimes lead to catastrophic health expenditures (CHEs) (2–4). There are different models of health insurance; among them, CBHI is the most widely used among middle-income populations and in remote areas. CBHI has been implemented on a small scale in Nepal, but its effectiveness remains a critical question.

There are different models of health insurance. Mandatory and single payer health insurance models are considered to be among the better approaches, but it is very difficult to collect premiums in low- and middle-income countries due to a profound dearth of economic activities in the informal sector and a lack of information technology that is compatible with premiums (5). Likewise, for people who are ultra-poor and live in rural areas, enrolling in health insurance is an additional challenge. The government-only approach is unable to provide universal health insurance because the primary responsibility for health falls upon each individual. In the United States, the Obama administration proposed reducing healthcare costs and providing affordable health service using a co-operative concept (6); and co-operative health insurance is also replacing private health insurance in Canada (7). Voluntary health insurance could be a step forward to lower risks associated with illness.

There are two approaches to voluntary health insurance that have been initiated by both the government and local communities. Some studies have investigated the outcomes of CBHI in low- and middle-income countries, but their results have been inconsistent. Several previous reviews have evaluated the performance of CBHI in terms of enrollment, financial management, and sustainability (8–10). One study from Laos indicated that the government-funded CBHI has low coverage, but the insured people have a significantly higher level of healthcare utilization, lower OPPs, lower incidence of catastrophic expenditures, and a lower propensity to employ coping mechanisms (11). In a study in Ethiopia, out-patient department (OPD) services increased, while inpatient department (IPD) services remained the same even after the implementation of CBHI (12). However, people were not convinced that they should enroll in CBHI, and the coverage rate was thereby unsatisfactory.

There are some successful reports of voluntary health insurance through community initiatives, such as in Vietnam (13) and Japan (14), and government initiatives in some developing countries. In China, a New Co-operative Medical Scheme (NCMS) was piloted, and it had mixed results (15). Similarly, the state government of Karnataka in India also made health insurance available to its people and tried to reduce OPPs and CHE (16). Previous studies have largely focused on the single model of CBHI, and comparison of outcomes between government and co-operative CBHI models is rare globally, and none has focused on Nepal.

Over the past two decades, the government of Nepal has spent less than 5% of the total budget on health care, while more than two thirds of the population used OPPs during illness (17) and over 13% had CHEs due to vehicular injuries, diabetes, asthma, and/or heart disease (18, 19). In Nepal, more than 80% people live in villages, and the livelihood of 75% of these people is subsistence agriculture; hence, they cannot purchase any medical care, and to date, health insurance has covered only less than 5% of total population (20). For example, in the case of child pneumonia, the direct cost for treatment per case was $25, and its indirect cost was $312, indicating that there is a great loss when there is illness in a family (21). Until now, more than one-fourth of the population has used endogenous and complementary and alternative therapy (22). Obviously, the government does not have sufficient funds to finance all health expenditure for the entire population.

Lack of sustainable health financing has resulted in highly unequal health care, and such inequalities affect both rich and poor, urban and rural, male and female, and upper caste and disadvantaged groups. In Nepal, there have been several experiments with CBHI reported since 2004 in both rural and urban settings (23). Provider-based health insurance was introduced in Nepal in 2003 through six pilot schemes offered by the government. At the same time, some community groups (co-ops) started CBHI on their own initiative supported by non-governmental organizations (NGOs) (24). CBHI schemes in Nepal complemented a number of specialized programs to improve access to healthcare services.

The aim of this study is to compare the outcomes of CBHIs in Nepal, both CBHIs offered by government health facilities and those offered by community groups, in terms of benefit packages, population coverage, inclusiveness, healthcare utilization, and promptness of treatment.

In this study, a comparison of the outcomes of the government and the co-operative health insurance plans in Nepal was performed. In the government CBHI, 4,364 households with 22,691 individuals were enrolled, and in the co-ops, 2,152 households with 10,106 individuals were enrolled, showing that the average family size was higher (5.2 person) in government group than that in the co-ops (4.3 person). The composition of men and women was almost equal; the adult population was dominant, and most people were of the Hindu religion and there was mixed ethnicity. Enrollment was not satisfactory (low), and population coverage was minimal. The demographic features were not much different during the piloting of the projects. The benefit package was slightly higher for the co-op group, while population coverage was better for the government group. Inclusiveness, overall management, and proxy activities were better in the co-op group (Table 3).

The characteristics of the two models of CBHI in Nepal are clearly shown in this study. The population coverage was significantly higher in the government-conducted CBHI, but inclusiveness and institutional capacity were stronger in the co-ops. Health insurance has been in operation in Nepal for a long time on a small scale, but the Ministry of Health (MoH) has been unable to establish milestone targets for UHC. Existing government CBHI programs are not attractive to people and the co-op CBHI has poor coverage as well, but they have a positive direction. User fees, community drug programs, and free health service policies in the past have created confusion among individuals looking to enroll in CBHI (34). We found comparatively large coverage and relatively flexible premiums (in terms of payment schedules) and subsidies for the ultra-poor in the government-run CBHI. However, in this model, the local communities were unable to take ownership, and there was very low utilization of the resources. By contrast, in the co-ops, prepayment CBHI engendered trust and a feeling of ownership. A similar conclusion was drawn by Mebratie et al. (35) in a systematic review published in 2013.

In looking at our results and comparing these with other studies, we found similar trends. Enrollment is the first step in any CBHI model. Based on the large number of enrollees, the average enrollment was significantly higher in the government CBHI model, but the number of disadvantaged minorities was significantly higher in the co-op group. This finding is similar to results in a study in India that women in self-help groups found more inclusiveness among minority populations (36). In both groups, healthcare utilization increased significantly (up to two times), and this condition was also observed in the Sky Community Group in Cambodia (37); the Grameen Bank group in Bangladesh (38); the Government Amhims group in Ghana (39); Jaminan Kesehatan Aceh (JKA) scheme in Indonesia (40); and the Mutelleus Government Centre in Rwanda (41), Kerala (India) (42), and Vietnam (43). At the same time, coverage of the population in the catchment area was low in both groups. The same trend was observed in the People’s Democratic Republic of Laos (11). New enrollment and retention of current enrollees was low in both models due to uncertain financial viability, quality of care, long waiting time when seeking care, and the poor management skills of healthcare providers that was found in Ghana too (44). Yeshavani is a co-operative CBHI provider in India (45), and Urban Resident Basic Medical Insurance (URBMI) has the same function in China (46) similar to the government CBHI model in Nepal. In both cases, people from remote areas and those in the higher education class were not interested in enrollment, similar to a trend in Mali (47), and findings are similar to our results. The number of new enrollees has been decreasing in the Hanang district of Tanzania (48), as in the government CBHI in our study. Enrollment of members of the Terai disadvantaged group was significantly higher in the co-op insured group; this finding is similar to the results from the SEWA group in India (49), but the Nouna community health organization in Burkina Faso (50) and the Mutual Health Organizations in Senegal (51) have not been able to cover disadvantaged groups.

The discounts provided during service contracting with hospitals were significantly larger (p < 0.05) for the co-op group (by effective negotiation skills) versus the government CBHI. This is not only beneficial for the sustainability of the health insurance industry but also empowers individual and institutional capabilities.

In India, it was concluded that people’s negotiating power reduced the costs and improved the quality of service (52). In Canada, per-patient cost was 17% lower than the average price; hospitalization rates were up to 30% lower, and 21% less money was spent on prescription drugs (53) in co-operative health insurance compared to private health insurance. In China, the operating capacity of a CBHI is significantly higher in a new NCMS than it is in a government health insurance scheme (54). In addition, health service quality and profit-generating activities were launched in co-operative health insurance in Canada (55). In a Nigerian co-operative model, awareness of sustainable health financing through counseling was better, and there is a low dropout of enrollee (56). The above results from India, Canada, Nigeria, and China were similar to our findings.

The health insurance industry in Nepal has been in existence for a long time, but coverage is still low, and there are only a few successful CBHI models. The health insurance plans offered by co-operative groups are a newly growing strategic movement in health service in the country. With proper subsidies from the government and long-term contracts with advanced hospitals, health insurance offered by community groups could be more effective as an almost zero cost financing model, and health equity and quality of service in Nepal could be more accessible to people. However, as a whole, CBHI has achieved limited success in terms of community participation, self-health care, and social unity. Thus, significant support such as enough training, awareness increasing in the community, and performance-based subsidies are still necessary for both CBHI models as shown in the case of East Africa (57). There are different minority groups in Nepal and inconsistency region by region. So, overall inclusiveness of religious minorities and the disadvantaged Terai group is not in equal proportion to government-operated and co-operative groups in this study. There are some limitations in our study. There were no sufficient variables to compare co-operative and government health insurance. The results of this study are from the supply side (government health facilities and community groups), and findings may differ when the demand side (consumers/user) is examined. The interpretation of results needs treated with care generalization. In addition, some information from the key people interviewed may be more subjective, and there is a risk in generalization.

Community health insurance programs have multiple and long-term impacts because they can reduce financial pressure on the government and would be responsible for maintaining health and empowering people. More importantly, it is necessary to reduce the out-of-pocket expenditures and CHEs (58) for newly designated community groups in developing countries, especially those in remote areas and for people in urban areas who cannot afford private health care. Government should provide subsidies based on the performance for both groups, and NGO should have supporting role such as training and logistic support. Ultimately, successful CBHI models could be a milestone to achieve Universal Health Coverage.

CR took overall responsibility for manuscript publication, from concept formation, study design, information collection data management, manuscript preparation, compilation of comments, and feedback to manuscript submission. C-BK monitored and suggested the framework for article preparation, review of the manuscript, cross checking of references, and adjustment of article content. MP and DS cross-checked the data and results and reviewed of the manuscript. All authors have read and approved the final manuscript.

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.