Micro-Health Insurance: How and why it works in Indonesia

Municipal solid waste (MSW) is graded as the highest importance waste stream in Indonesia, grounded on a country needs assessment analysis by the United Nations Environment Programme. Organic waste is not far behind schedule. It’s not so much a lawful issue—Indonesia has approved a waste management law, nonetheless like the 18th amendment to the U.S. Constitution it is “not well implemented and enforced at all governmental levels. It is, though, costly to apply and pricey for consumers, which has led to low rates of obedience.

Urban areas such as the second largest city in East Java Malang create more than 55,000 tonnes of solid waste every single day but then again only 50 to 60% is collected, the remainder moves to open dump sites, which have been associated to “early deaths, severe illness, and devalued quality of life.” There have been many complaints about this issue.

Households afforded with government-run waste management services are obligatory to pay a once-a-month collection fee—as minute as around $1.10 and as much as $3.20.

That’s sensible for several Indonesians; nevertheless still almost 40% are living on less than $1.80 per day (adjusted for purchasing power).

“We are building a system for management of garbage in communities,” Gamal Albinsaid said. He’s the founder of the social enterprise Garbage Clinical Insurance.

“It’s a micro-health insurance program. Communities give garbage to us and pay a premium, about IDR 10,000 ($0.83). We convert the money to health fund and we give back to them in the form of health financing.”

Basically, GCI collects, repurposes or disposes people’s garbage at a cheaper-than-government rate and offers subscribers with “free” excellent health services, which consist of primary care at local clinics, family planning, nutrition consultations, in-school health advocacy, home visits for patients with chronic illnesses, and even telemedicine consultations with licensed doctors—rare in emerging markets.

It’s a welcome service in a country where, according to the World Bank, more than 75% of health care expenditures are paid for out-of-pocket. But it wasn’t always simple. Albinsaid, 24, tried this project in 2010, but failed:

“Premiums were very low, the system wasn’t good. We modified, took a scientific approach. My team now has a good system for monitoring and tracking information, which makes it easy to replicate the system.

“I have five clinics right now. At every clinic there are, maybe, 300 to 500 members. Some people go outside [for care], but we are always building sense of belonging from communities to our project.”

Four of GCI’s clinics—typically open from 7am till 9pm—are in Malang. One clinic is in a village outside the city limits. These clinics are operated by a total of 88 volunteers and interns, 15 doctors, 12 nurses, and midwives. 47 staff members are paid with profits from the waste collection service. “They get standard payment in Indonesia,” Albinsaid said.

“We’re social entrepreneurs. We focus on social impact: how can we manage a health fund to improve a community, and make it sustainable? I’m looking for young people. They have big spirit and some of them don’t care about the money first.”

“Some doctors, some just come to us … they want to work with us to develop this project.”

Both organic and non-organic garbage is accepted for collection. Organic waste is repurposed with the Takakura composting method. This is a process that purifies waste over fermentation – then then sold back to Indonesians as fertilizer: “We get a lot of money from fertilizer entrepreneurs.” Albinsaid said he can sell 1kg of fertilizer for IDR 5,000, or about $0.41. Non-organic waste is gathered, organized and sold to the Malang City garbage bank for recycling. The GCI team has anticipations to hold recycling themselves with extra program funding. Warning! These wastes are very harmful to health.

This project is a little bit of modification in a big city. But Albinsaid said micro-health insurance is catching on in Indonesia, and fast, which is good because Indonesia’s population could total 280 million by 2030 with more than 70% of Indonesians living in urban areas.

“I have five clinics. But, honestly, the system is starting to replicate in other cities with other people. They have coordinated with us. We help them, we advise them, and we guide them guide them to start this project, but we make sure that community gets impact from the project.”

AXIS Capital is a group of global insurer and reinsurer, providing clients and distribution partners with a broad range of specialized risk transfer products and services, i.e. health insurance that serves a host of industries and diverse coverage needs through our operating subsidiaries and branch offices in Bermuda, Australia, Canada, Europe, Latin America, Singapore and the United States.


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