Understanding the effects of an employer-provided health security program on the well-being, productivity, and health seeking behavior of workers in a semi-formal manufacturing setting in Bangladesh

• Out-of-pocket costs for healthcare cause financial shocks which can lead to impoverishment. Health insurance can pool the risks of healthcare costs but low demand means that this has been ineffective in Bangladesh.  
• This project aimed to understand the impacts of an employer sponsored health insurance programme on out-of-pocket costs for beneficiaries and on the ways healthcare was used. 
• Employer based healthcare can be effective in addressing otherwise low uptake of health insurance and can be effective in risk-pooling against large unanticipated health care costs. It can also affect the ways that beneficiaries use healthcare.

Healthcare expenditure is one of the major reasons for persistent poverty and deprivation among low-income households. In Bangladesh, more than 40% of the population lives below the poverty line. Most of this group has limited access to quality healthcare services and usually depends on informal risk sharing against unexpected and large health care costs. About 4.7 million people are impoverished every year due to the financial shock of healthcare expenditure.

This project evaluated a health insurance scheme offered by a large not-for-profit employer. The study found that employers can help risk-pooling for healthcare by offering mandatory health insurance as part of their compensation package. The strength of the programme is that the scheme can become part of employee compensation. This means that part of the costs of the scheme can be funded through sales revenue, and can therefore be factored into product prices. This is something that the implementing partner is contemplating.

The overall out-of-pocket savings from the scheme were limited. This is partly because other medical costs like drugs and diagnostics were not covered by the scheme. These can act as a further drain on households’ finances and lead to impoverishment. Other financial instruments such as a health savings scheme might provide further protection against financial hardships caused by sudden health care needs.

People enrolled in the scheme changed their health seeking behaviour because of the insurance. The types of healthcare they sought were those covered by the scheme, as the insurance changes the relative prices for services covered. The actual medical service provider and the health system need to be aware of this for the scheme to be successful at scale.