Introduction

On 13 October 2023 we all received the sad news of the death of popular singer Garry Mapanzure after he was involved in a fatal car accident that claimed other two lives. We all remember the frustration we got when details were released that Garry did not die on the spot but he passed away ten (10) hours after the accident because he could not receive the life-saving surgery he so needed at the Masvingo Provincial Hospital. It was alleged that he needed an ambulance so that he can be taken to Harare where the equipment for the surgery could be found but the private ambulance that was summoned required a US$2,900 upfront payment to provide the service. Garry’s family and friends apparently could not raise such a stiff amount of money in that short time and sadly Garry passed away.

I am not here to discuss about the high ambulance cost or the policy of upfront payment, that is out of the scope of this article but it is relevant also to the conversation we are going to have. A lot of people really underplay the role which health insurance plays in saving life and that is what we are going to discuss. In Zimbabwe less than 12% of the population have some form of health insurance and most of those people are formally employed. What that means is more than 14 million Zimbabweans will have to pay out-of-pocket medical expenses whenever they require healthcare. I do not need to explain the healthcare sector of Zimbabwe, we all know the story. The public health hospitals, like Masvingo Provincial Hospital, are poorly-equipped to provide any serious medical services(like providing Garry with a life-saving surgery).

That is a known fact and as we all know if you get really sick and want serious care you will have to rely on private institutions. Our private healthcare, like in every other country without Universal Health Care, is expensive to the extent that the majority of Zimbabweans can not afford it. A simple doctor’s visit can cost at least $20 in Harare and that is just for a sole practicing doctor, if your want to go to PSMAS for a doctor’s visit you might pay at least $90. This is before we start adding any other cost that you might incur on that visit, a Full Blood Test will cost you $80 and so on. Those cost really add up and at the end of the day you will find yourself with a US$800 medical bill that you have to pay on the spot and that’s just how expensive it is. And I have to hand it to them, the private sector really provides high standard healthcare that every person needs which is why I understand the pricing.

Now going back to Garry, road accidents are very unfortunate and surviving one is luck that everyone appreciates. However, if you survive a road accident with serious injuries then what comes after will multiply the pain. The medical expenses will leave you with nothing, you can imagine having lost your car in the accident and now you have to pay US$2,900 for an ambulance and who knows how much the surgery waiting for you will cost. As you can imagine, if a popular musician like Garry Mapunzure could not beer the expenses what about any other regular car owner in Zimbabwe who struggles to make ends meet.

Health insurance is supposed to rescue us from this burden of high medical expenses in times of need and I am not here to lash-out and pretend as if our medical insurance system is broken completely when in fact it works (at least in-part). But when you have only 12% of the population having joined a medical policy, something is got to be wrong with the sector right? While I agree that there are other more important economic factors at play like low employment and the ever growing informal sector, those factors can not be an excuse for not providing an essential service to every deserving Zimbabwe. Surely, medical insurance companies need to innovate and by my estimate they are failing in epic proportions.

In this article I am going to introduce the core concept of medical insurance and how it works, I will discuss how community-based health insurance schemes can be a solution to our health insurance problems, I will go further to introduce you all to smart contracts and blockchain technology and finally I will explain to you the platform, Procode, which me and my team are working to build that has the potential of solving our health insurance and healthcare problems.

The basic principles of medical insurance

We all know what insurance is— most of us in the sense of vehicle insurance which is mandatory in Zimbabwe. To provide a definition: An insurance policy is a contract where you pay regular premiums, and the insurance company promises to cover certain risks. This means that a policy holder will pay a certain agreed amount to the insurance company on monthly, quarterly or annual basis to cover a certain risk (e.g. medical risk) and when the covered event happens, the insurance company will have to pay for the cost incurred by the insured individual (in the case of medical insurance, if you get sick you do not have to be worried about any health expenses, your policy has you covered). Obviously this is not a blank check, there are terms, conditions, limitations and provisions in the policy that pinpoint where exactly the insurance company will help and how much it will provide.

You might be wondering how insurance companies really pull the trick because in most cases a person would be paying monthly premiums of say $50 but their insurance policy can provide pay-outs of more than $10,000 which can be pretty impossible for the insurance company to raise from the individual’s premiums alone (it would take them 200 months of premium collection in this case). The answer is simple and it’s just one word, Pooling. Essentially, if you have a lot of people buy the same policy, you then pool together their money and you know that not all of them are going to make any claims, then you can be able to pay those that make the claims and be left with some profits while you are at it. Generally, pooling is understood by the fact that not all policyholders will file claims at the same time. Claims occur at different times, allowing insurance companies to handle them more easily. 

So lets say for example a medical insurance company is providing a policy where people have to pay premiums of say $50 per person and the company manages to get 10,000 people on the pool. This means the company will receive premiums of $500,000 monthly from their members. Lets assume the average medical cost per claim is $500. From the pool of 10,000 people we all know that not all of them will get sick within that month, all the insurance company can hope for in this case is that less than 10% of its policy holders get sick within this month (which is what will happen). This is beneficial to everyone, you are paying $50 in a month and you can make a claim of $500 within that same month provided you get sick.

However, this is not the full business model as medical insurance companies do other things like manage the cost per claim. They need to negotiate with healthcare providers to lower the cost which they can incur per claim. The medical insurance companies also have to manage the pools which they put people in, the idea is to have a balanced people with many healthy people and maybe a few unhealthy people so that the healthy pay for claims made by the unhealthy. They also make strategic investments that can generate returns to cover the claims also.

Another thing which medical insurance companies do in an effort to increase their profits is to manage the number of claims they get. In this process, the companies can Deny or Delay a claim so that they do not incur any cost. This is popular in the United States of America and following the New York shooting of the UnitedHealth CEO in broad daylight, this part of the health insurance pooling model has sparked some debate. The insurance companies are doing some horrific things just to increase their bottom line while at the same time playing with people’s lives.

Why the low adoption in Zimbabwe and any related problems

Health insurance is essential as it can save lives in moments of need especially in the case of Garry Mapunzure, if he had medical insurance he would not have to worry about that ambulance bill and perhaps we would still be getting new releases of his songs right now. But as it stands, a whole lot of people do not have medical insurance in Zimbabwe due to many factors. One would argue that its the economic factors that are causing this low adoption and I would definitely agree with them. There majority of people now work in the unpredictable informal sector and most of those people do not bother buying a medical insurance policy.

I would also want to argue that medical insurance companies are doing a bad job at creating attractive policies and business models. For starters their policies are expensive to the extent that only a few people can afford to pay the premiums. Secondly, they only target the formal sector since people employed in the formal sector tend to have a stable income compared to those working in the informal sector which is as I said, unpredictable. Thirdly, their business model is not motivating to potential policy holders as the insurance companies have that need to make more profits. The profit incentive drives them to the extent of charging high premiums, denying claims and delaying claims. Also, health individuals are not always comfortable paying monthly premiums and never get sick at the end of the year and not receive anything back. Healthy individuals literally give medical insurance companies free money in most cases and it can be tiring.

Introducing community-based health insurance, CBHI

Community-based health insurance is a form of health insurance which is characterized by the principle of mutual aid where people come together as a community and pool together money which will be used to cover healthcare cost in the event that one of the members requires the care. Just to summarize, the following are the key features that differentiate CBHI schemes:

1. Voluntary participation: Community members voluntarily enroll in the scheme and pay regular premiums.
2. Community ownership: The scheme is owned by the community and sometimes administered by the community itself.
3. Risk pooling: The premiums collected from all members are pooled together to create a fund. This fund is used to cover the healthcare costs of members when they need medical services.
4. Non-profit: CBHI schemes are typically non-profit, with the primary goal of providing affordable healthcare access to members.

Now as you have seen in the previous section, community-based health insurance policies are like any other health insurance policy since they use the Pooling model used in the normal health insurance policies. The biggest advantage however of CBHI is the non-profit element, this means that the premiums paid are not overcharged to get extra cash for profits. The removal of the profit incentive does a lot of work in cutting the cost of premiums and removing the possibility of claims being delayed or denied since no one will benefit from that. CBHI schemes are, put simply, affordable.

One other important factor for CBHI schemes is that they cater for a specific community with certain specific needs. Examples of those specific communities can be communities of people with disabilities that find it hard to get conventional insurance, low income communities, civil servants, people working in the private sector, the informal sector, people staying in a specific geographical area, people with chronic diseases etc. What is just needed is that a specific community realize a specific health need that they need covered and they come together and create a CBHI to provide cover for that health need.

One example is the community of motorist/ car owners. As I mentioned in the introduction, medical expenses for people who were involved in car accident and have serious injuries can be expensive. First they need ambulance services from the scene of the accident to the closest hospital and then you need to pay for surgeries and you might be admitted for long times, then there is the cost that comes after that. It can cost a person an upwards of $10,000, this is money which is hard to find and people end up dying because they can not raise these funds in a short time. This is a specific health risk the car owners community face and they can create their own CBHI.

Imagine if 5,000 car owners come together and they decide to pool together just $20 a month specifically for the purpose of emergency funding in case of road accidents. Their CBHI policy will raise about $100,000 monthly and as you know road accidents do happen but they are very rare. In the case that one of the car owners was involved in an accident, there is a lot of money to cover their medical expenses and assuming the average cost per person is $5000, the pool can be able to cover for 20 road accidents within the month. Garry Mapanzure would have been a big beneficiary of such an initiative considering that it is very cheap— who owns a car and can not afford $20 a month. And because there is no need for anyone to make profit, the members can get all the necessary care they need. If at the end of the month or tenure of the CBHI policy there’s still money left in the fund, the members can redistribute back the money proportionally to the members.

Community-based health insurance can really help a lot of people get health cover which they need. The fact that they are affordable and they cater to the needs of a specific community is ground breaking and disruptive. However, a problem arises of how to manage the pools and who can be trusted to process the claims. Trust and Transparency problems arise, introducing Smart Contracts and Blockchain technology to the rescue.

Smart Contracts and Blockchain Technology

You might probably have heard a lot about blockchain and maybe have concluded that it is hard to understand. If that is the case then you are very wrong, blockchain technology is easy to understand and it is not like rocket science, I will try to explain as best as I can.

When you are using Facebook, your device is communicating with one central server which is controlled by Meta. If you want to retrieve an image, your phone will ask the Facebook server for that image and the server will send it to you. However, this creates problems one of which is that the Facebook server is one point of failure. If the Facebook central server goes down, no one will be able to post anything on Facebook at all. The second problem is of trust, you have to trust Facebook that they will handle your data correctly and they do not misrepresent it. Trusting a central system can be a problem as history and recent events have shown with hackers stealing your data, social media companies selling it to third-parties etc. Then there is the issue of transparency, only the Facebook team knows what is in the server and they can make any changes to what is stored and we would not know. All these problems arise because of centralization, and I am not saying Facebook needs to be decentralized (as there are also advantages to centralization) but there are specific situations which require a lot of trust and transparency such as the case of community-based health insurance.

Blockchain solves the problems of centralization by having more than one server store data securely and these servers(nodes) will communicate with each other every time there is an update. The data is stored in form of blocks with each block containing the updates made to the data. For security, all the data blocks are linked in a chain like manner with the current block linked to the previous block and the previous block linked to its predecessor and so on forming a chain (hence block-chain). In this situation, if one of the servers or nodes goes offline, the network can still operate since there are other nodes left online. If one of the nodes decide to act maliciously and misrepresent certain data in an update, all the other nodes will reject that update and that node will fail thereby making the network secure to malicious updates(Trust). Every node can see the data in the blockchain and every node can observe all the updates being made to the data(Transparency). That my dear friends is blockchain technology, obviously there is a lot of other aspects at play under the hood but in principle that is all you need to know. Blockchain technology is a computer science breakthrough.

Moving on to smart contracts, smart contracts are like any traditional contract where different people or parties agree to do certain things and receive certain benefits when set conditions are met. The only difference is instead of having the contract on paper, smart contracts puts the agreements into programming code and the clauses of the agreements are executed by the code. An example can be in our case— people in a community coming together and agreeing to pool together money and then compensate one of the members if they get sick. Normally this would be put on paper and people would come and sign it and as you know if someone tries to not do their obligation as per the contract, that scenario would be resolved by the courts of law in long and boring hearings.

Smart contracts rather put the agreement in code and set the conditions that if a person has made contributions to the pool and the person is sick then that person should receive compensation. Those conditions will be executed without requiring anyone coming and stopping the execution (for as long as everyone has done their part as per the contract). For trust and transparency reasons, this smart contract should not be on a central server(since one party can be able to edit it and no one will see it). Hance the smart contract is better deployed on a blockchain network where everyone can see the contract and they can see that it has not yet been changed and they can see that every party has done their obligations and they can be able to receive their benefits.

Using smart contracts for CBHI

As I have explained, smart contracts represent the agreement and they will execute that agreement without having to rely on one of the parties to the agreement. They are secure because they run on top of a blockchain which we have settled that it is trustworthy and transparent.

It is now clear that we can use smart contracts as community-based health insurance schemes. The smart contracts would allow people to join the agreement, pay their premiums into the pool using tokens/cryptocurrencies (more of that in the next section) and make a claim to the pool when they need healthcare. The advantage is no one will be controlling the contract and everyone can see all the changes and updates being done to the contract as people pay premiums and make claims. Car owners can come and put in their $20 monthly contributions, and when they get into a car accident requiring an ambulance to carry them, they can be able to make that $2,900 claim right.

Tokens and storage of value

In case you have been wondering, how does the CBHI smart contract get to store those $20 contributions in the pool. Will it store the money in a bank or physical vault? Introducing cryptocurrencies, you have probably heard of them in the media. When Bitcoin breaks a certain price mark like reaching $100,000, news outlets report on it and also when people get scammed by crypto thieves, news outlets report on it too. All I am saying is you might have heard only good or bad things about crypto.

A cryptocurrency is a store of value on the blockchain— it is a digital currency and examples of cryptocurrencies include Bitcoin, Ethereum, my favorite Dogecoin, USD Coin etc. There are different classes of cryptocurrencies such as payment-coins ,stable-coins, meme-coins etc. Cryptocurrencies allow people to store value on the blockchain and they can allow people to do transactions(exchange value) on the blockchain. And as you know cryptocurrencies always change in value and some of them are really volatile like Bitcoin and you might be wondering how can we use them in our smart contracts. The specific class of cryptocurrencies I am interested in are the stablecoins, which are basically tokens pegged to the value of something in the real world such as gold, currencies or company shares. The most popular stable-coin with a market cap of more than $100 Billion is the Tether USD coin. Its value is pegged to the US dollar and it is very stable compared to any other coin out there.

Tether USD coin (USDT) is not the only stable-coin, there is also USD Coin (USDC) and other coins pegged to values of different assets. Since they are very stable and have a value equal to that of a currency like USD outside the blockchain meaning you can always sell one(1) USDT coin for one(1) real life US dollar, then it makes sense to use these stable-coins in our smart contracts.

Procode, Platform of choice

I have had an interest with blockchain and technology for a very long time now and I have seen almost all of the booms and hype cycles of cryptocurrencies. I love the technology behind blockchain since it removes central points of failure and to me blockchain technology is a computer science breakthrough that we should all cherish. In that regard, I have been working with my team on creating a platform that can put the ideas we discussed here about community-based health insurance(CBHI). The platform will provide everyday Zimbabweans with different CBHI smart contracts for different communities so that any Zimbabwean can be able to get health insurance which is affordable and not for profit.

The platform will allow users to convert their Fiat currencies e.g. US dollars into stable-coins (tokens) which they can use to pay contributions to any CBHI smart contract they would have joined. The platform will also allow medical practitioners and healthcare providers to make claims on behalf of their patients which are part of certain CBHI smart contracts. The platform is still at prototype phase but anyone can join our wait list where we provide updates and those on our waitlist will get Beta access to the platform when we launch before April 2025. You can also get bonuses when you join the waitlist, bonuses you can use to subscribe to your first CBHI smart contract. Join our waitlist today.

Conclusion

In this article I have covered comprehensively about how medical insurance and insurance works. I have also explained why we have very low adoption of insurance policies with less than 12% of Zimbabweans having a policy. I also highlighted how health insurance can be used to cover for the expensive but quality private healthcare. I went on to introduce the concept of community-based health insurance and how we can use smart contracts and blockchain technology to provide affordable health insurance to everyday people. Please be sure to join our waitlist as we launch Procode soon and receive a lot of benefits.