NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Meet James. He’s the father of four in Nairobi, Kenya, and he’s been driving a taxi since he was laid off from a petroleum company earlier this year. James and I spent several hours a week together this summer navigating traffic while I was interning in Nairobi. We shared our mutual love of old-school R&B music and laughed at the trashy talk radio topics.

Eventually, though, our conversations began to drift toward more serious topics like health care.

James used to have compulsory insurance provided through his former employer, but after he was laid off he was unable to afford the annual premium and his coverage lapsed. James and his family, like more than 33 million other Kenyans, are now uninsured.

Kenya’s uninsured population, comprised mainly of the working poor, cannot afford to pay the out-of-pocket expenses necessary to see a physician when they are ill and tend to self-medicate, delaying a clinic visit for as long as possible. James has very little disposable income and if he got sick today, he would have to rely on family and friends to help pay his medical bills. If they were unable to raise enough funds, James would have no other recourse than to sell possessions such as the car he uses to make a living.

James’ situation is not unique. More than 90 percent of Kenya’s population works in the informal sector and is ineligible for the employer-sponsored insurance coverage compulsory for the formal sector. For most of these families, the cost of insurance coverage (for future needs) competes with more immediate financial obligations like shelter, food and education. Combined with the lack of affordable, quality care options in Kenya, this contributes to high infant and mortality rates, low life expectancy and thousands of preventable deaths each year.

Tackling the top three barriers to coverage

A company called Changamka MicroHealth Limited is aiming to change this. This summer, I worked with Changamka through my internship with the International Partnership for Innovative Healthcare Delivery (IPIHD). Changamka provides Kenyans like James with a mechanism to save small amounts over time to purchase health insurance through an innovative micro-insurance product called “Linda Jamii” (Swahili for “protect the family”).

Through a partnership with Safaricom, Britam Insurance Co. and Population Services International, Changamka takes advantage of both high mobile phone penetration in Kenya and the popularity of M-PESA, a mobile money micro-financing system, to provide a safe and easy way to purchase insurance with a cell phone.

Linda Jamii solves some of the primary challenges limiting health insurance coverage in Kenya: financing, procurement and distribution. Changamka addresses these barriers in four ways.

1. Dedicated savings: Changamka accounts are sequestered, so once customers have transferred money into the account, those funds can only be used toward health care.

2. Flexible payments: Rather than a set payment schedule, customers can save as much or as little as they like, whenever they can, depending on their current income and fluctuating expenses.

3. Access: Changamka’s plan is affordable, priced nearly 60 percent lower than other private insurers for a family of four.

4. Mobile technology: Customers can dedicate savings on their cell phones using the popular M-PESA technology.

These features make health insurance an attainable goal for most Kenyans, a population that has historically been excluded from government and private insurance schemes.

For approximately U.S. $140 a year, James can insure his entire family, gaining access to both inpatient and outpatient services, as well as income replacement, funeral assistance and dental and vision coverage. This range of services distinguishes “Linda Jamii” from competitors on the market.

Impacting health care providers

“Linda Jamii” also solves existing challenges from the provider perspective. Since the micro-insurance operates on an electronic platform, it reduces administrative burden for hospitals and clinics, which typically use inefficient paper-based systems.

Additionally, since patients now have a way to pay for the medical care, patient volumes increase. And insured patients are less likely to self-medicate and delay going to a physician, resulting in fewer severe and complicated cases. There is also a demonstrable decrease in the number of unpaid claims and the time it takes to process reimbursements.

Impacting Kenyan families

Since its soft launch in late 2012, more than 1,300 people have registered for “Linda Jamii” and have begun saving. More than 300 families have saved enough to purchase insurance, likely for the first time in their lives.

Changamka plans to scale its micro-insurance nationwide through 2014 and is developing partnerships with hospitals in rural areas, as well as testing behavioral change campaigns to communicate the benefits of insurance. The company’s founders believe that “Linda Jamii” can be a critical tool to help Kenya achieve universal health care coverage.

At the end of the summer, James dropped me off at Jomo Kenyatta International Airport so I could begin my long trip back to the United States. Amidst our final goodbyes and wishing each other luck with future endeavors, he shared that he and his family recently subscribed for “Linda Jamii,” bringing his family one step closer to health and financial security and Changamka one family closer to achieving its goal of universal coverage.

Learn more about Changamka: IPIHD Innovator Profile. Read a related BBC news article here.

Colby Warner is a second year MBA student at The Fuqua School of Business at Duke University where she is earning a certificate in health sector management and is concentrating in strategy and social entrepreneurship.