Ethiopia’s community-based health insurance based on a flexible contribution
system: the way to equitable access to care and better health services

In order to promote equitable access to health care services and thereby improve the health sector for the entire population, the Ethiopian government introduced Community-Based Health Insurance (CBHI) in 2010, which was designed to end excessive out-of-pocket health care expenses for more than 80% of Ethiopians working in the informal sector.

However, the premium, which is the same for everyone regardless of their financial capacity, has resulted in the distorsion of the distributional effect and has affected people’s take-up of the CBHI. Indeed, low-income households cannot always afford to join the scheme, and the low quality of health services does not attract high-wealth households. This reality contributes to inequity in the system and disinterest in CBHI.

The introduction of a new flexible contribution system, based on the socioeconomic status of households, has the potential to encourage vulnerable populations to seek health care. It can also influence health financing in Ethiopia to achieve equitable, quality, efficient, and sustainable services for the entire population.

Based on evidence from Rwanda, Partnership for Economic Policy (PEP) is leading a team of local researchers to analyze the cost-effectiveness of the new sliding scale system, adjusted depending on individual’s income, in terms of health gains and financial risk sharing, compared to paying the same amount of contributions to all households regardless of their resources.

At the same time, the study aims at educating and sensitizing communities to use health services.

With funding from FID, the impact evaluation is being conducted in three major regions. It collects data at the household and health facility levels and conducts qualitative and statistical analyses to inform policy decisions.

The PEP project aims at improving the distributive impact and sustainability of community-based health insurance by strengthening the capacity of health facilities to provide better care through increased household enrollment in CBHI.

• Reduced inequities in health financing and access between very poor and rich households
• Increased utilisation of health services (increased health revenues)
• Improved overall health status of communities