Combining Microfinance and Health in Reducing Poverty-Driven Healthcare Costs: Evidence From the Philippines

Abstract

The role of microfinance in alleviating poverty and poor health is significant. Its health programs have been shown to improve healthcare utilization and strengthen a healthcare system. In the Philippines, microfinance's widespread presence is seen as instrumental in achieving the objectives of Healthy Philippines 2022 , particularly in reducing poverty-driven healthcare costs. However, little is known on how microfinance can reduce the cost of healthcare services and treatment. Also, few studies that consider the practice of integrated microfinance and health programs in the Philippines have been seen. Secondary data was used to explore the structure and function of microfinance and health initiatives and their influence in mitigating healthcare costs. A review criterion was developed to examine the data using the three key elements identified in Ruducha and Jadhav's framework: organisational arrangement, health products and health outcomes. Findings revealed that most health initiatives are delivered through partnerships and collaboration, could favour a reduction in healthcare costs and protection from out-of-pocket health expenditure. They are designed to operate in three structures—subsidised or outreach, microinsurance and health loans, and patronage refunds. The cooperative's business venture providing pharmaceuticals facilitated access to affordable medicine and offered its members financial viability. Health loans and microinsurance also offered healthcare cost reductions; however, uptakes are low. The study found no data to assess the output of the completed health initiatives. More studies that will evaluate the integrated MFI health initiatives are recommended to further identify gaps, outcomes, or impacts of the program.

Utilization of health insurance by patients with diabetes or hypertension in urban hospitals in Mbarara, Uganda

“…Microfinance schemes may thus be used for priming participants to the behaviour of regular payments when designing and implementing the forthcoming NHIS. Studies in the Phillipines have observed that microfinance schemes when combined with health can enhance service delivery and uptake of policies [ 18 ]. In Kenya microfinance schemes have put in place health care financing schemes which provide access to preventive and curative health services as well as financing in form of health saving plans and emergency health loans for the poor [ 19 ].…”

“…This prepayment mechanism is particularly useful for cushioning households from catastrophic poverty, injury and death resulting from treatable and chronic diseases [14][15][16][17]. Studies show that microfinance schemes could potentially act as intermediaries in this effort as they could put in place financing mechanisms which favour a reduction in healthcare costs for their members [18,19].…”

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“…However, MFIs are rarely used to fund healthcare start-ups, and are instead used to pay for healthcare. 46 Many caveats exist with MFIs. MFIs are established on the premise that impoverished business owners will eventually make sufficient profit to be able to pay back the loan with a high level of interest.…”

“…This venture model provides entrepreneurs with initial working capital, which individuals can then pay back when their business grows to a substantial enough size to afford the repayments. However, MFIs are rarely used to fund healthcare start‐ups, and are instead used to pay for healthcare 46 …”

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“…Thus, emphasizing the need to extend PhilHealth's coverage to the poor and to anyone with greater need of assistance. Aranas et al (2020) studied the importance of microfinancing in the Philippines and found that microfinancing plays a significant role in the improvement of poverty, health situations, and out-of-pocket healthcare expenditure of the country and is foreseen to be of big help in attaining the objectives of Healthy Philippines 2022. Aside from microfinance, health loans and microinsurance can also help reduce healthcare costs.…”