Microfinance and Healthcare Loans

The financial burden of paying for health care is one of the main barriers to accessing care for people in developing countries. As described in the study by Leive and Xu, formal mechanisms for financing health care such as insurance and loans are almost non-existent and the poorest households in developing countries turn to selling their assets and borrowing from friends and family members to cover costs in the case of health emergencies. In many of these same developing nations, microfinance institutions are helping people to start businesses and generate income by providing small structured loans outside of the regular banking system to members of the population. Many of these microfinance institutions are already starting to offer health protection for their current clients – as one of the major reasons for loans defaulting is illness and its associated costs. Programs such as the Microfinance and Health Protection program from Freedom from Hunger are helping microfinance institutions to establish health protection programs with education and savings programs but currently most of these programs are only in place for borrowers who have business loans with the microfinance institution. It seems that there is a space for established microfinance institutions to step in and assist with health care financing such as loans and savings plans for people in the communities that they serve even if they are not business borrowers.

As these institutions are already established in communities in developing countries, they already have the access and mechanisms in place to provide financing to those in need. In an article In the Ghana Medical Journal Akua Ofori-Adjei discusses this point by pointing out that microfinance institutions can “leverage the outreach and rapport that they have established with their clients and the community to reach a greater number of people.” Utilizing current infrastructure and community access would allow loans to be set up quickly and could help to provide access to people who would otherwise have no way of financing their health care costs. Organizations such as Kiva which promotes social lending, allowing those with funds to lend money to individuals in developing nations (through microfinance organizations), could help raise the initial funds needed to provide health care loans.

Microfinance institutions offering health care loans is not a panacea for the problem of affordable health care in developing nations. These loans would still need to be paid back, and microfinance institutions tend to charge high interest rates on the money they lend. Other mechanisms for financing or even the removal of the need for financing such as micro-insurance and the removal of user fees as discussed in the article by Yates are being tested in developing nations, but the availability of funds to people in developing nations could allow people to get access to healthcare without having to sell off their assets or borrow from their communities.

“Microfinance and Health Protection :: Freedom from Hunger.” Combining Microfinance, Education, and Health Protection to End World Hunger. :: Freedom from Hunger. Web. 09 Nov. 2011. .

Kiva – Loans That Change Lives. Web. 09 Nov. 2011. .

Leive, A., & Xu, K. (2008). Coping with out-of-pocket health payments: Empirical evidence from 15 African countries. Bulletin of the World Health Organization, 86 (11), 849-856.

Ofori-Adjei, Akua. “Microfinance: An Alternative Means of Healthcare Financing for the Poor.” Dec. 2007. Web. 09 Nov. 2011. .

Yates, R. (2009). Universal health care and the removal of user fees. The Lancet, 373, 2078-2081

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