Understanding inactive membership in voluntary contributory schemes: A case study of micro-traders in Kenya

Motivation: The provision of health insurance is a public policy response to address the problem of catastrophic health expenditure, which leads to deprivation. Studies show a low uptake of health insurance among informal workers, but the focus has been on understanding enrolment behaviour. Little attention has been paid to understanding inactive membership among informal workers. Purpose: This article asks why informal workers in Kenya are abandoning health insurance schemes. It uses micro-traders as a case study to understand inactive membership among voluntary contributors in Kenya's national health insurance scheme. Methods and approach: Based on primary data combining qualitative and quantitative methods, the article compares inactive members with active and non-members to identify factors contributing to inactive status. Findings: This article contends that unmarried voluntary contributors who consider themselves to be healthy and are own-account workers with low and irregular earnings are more likely to drop out of the scheme. The key drivers of “inactiveness” are the inability to commit to the payment of regular premiums, due to the irregularity of earnings, the change of employment status from formal to informal, and dissatisfaction with scheme services. Policy implications: Since unmarried, “healthy,” voluntary contributors are more likely to drop out, this creates problems of adverse selection in cases where the scheme retains “unhealthy” members, who are more likely to claim benefits. When “healthy” members drop out, this may force the scheme to increase the level of premiums, since contributory schemes rely on members' contributions. An increase in premiums may trigger further dropouts, which is counterproductive in relation to the global agenda of increasing access to essential health care.