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Community-Based Health Financing

Where out-of-pocket spending for health services is required of households, either by user charges for government or privately provided services, demand often develops for financial protection mechanisms.

One response has been the development of community-based health financing (CBHF) schemes, also known as mutual health organizations (MHOs), mutuelles (in Francophone countries), and other names. These schemes have been growing rapidly both in number and in numbers of people covered since the late 1990s in many regions of the developing world, and particularly in sub-Saharan Africa.

CBHF schemes involve community groups organizing themselves to recruit individual or household members on a voluntary basis. They regularly collect contributions or premiums from the members that are used to pay charges for a set of health care benefits when needed from specified government or private providers. The schemes sometimes require household or group membership, but not always. They usually require that those who join the scheme make an initiation payment before the date at which they are eligible to have the scheme pay for services they use (to reduce adverse selection).

Often, but not always, the schemes have a specified contractual relationship with the provider(s) their members may use. The contracts usually specify the payment amounts for the services covered. Some of the schemes require members to make small out-of-pocket co-payments for some services.