Why we put low premium on health insurance saving

Insurance firm Sanlam, has been running a catchy twitter campaign on ways in which Kenyan families cut expenses in their daily lives. I am not sure what the objective is, but it seems geared towards promoting a saving culture, ultimately perhaps to highlight where we can save money to meet expenses like insurance.

Specifically as regards saving for health insurance, Kenyans in monthly income groups of Sh40,000-100,000 are surprisingly likely to have none despite a high potential for savings. More so if on erratic income.

Despite individual variations, a trend is noted on comparing three generations of Nairobians starting with the first cohort of pre and independence era migrants, the second lot being the 80’s and the current millennials. They seem to have different attitudes to and methods of saving.

The last group in particular despite relatively higher starting incomes may spend more on “luxury” than others.

But why this shift in saving cultures and how does present day society prioritise its expenses?

Maslow’s hierarchy of needs described eight decades ago, put “safety” just after physiological needs. This seems out of context with the current generation where a prioritisation between basic needs and “actualisation” expenditure exists.

Anthropologists and behavioural scientist have weighed in on this from different angles. Observations from natural habitats show diversity of animal and social insects behaviour in their “future emergency” preparations.

To their advantage perhaps, such behaviour seems to be biologically engrained in their DNA from generations ago: possibly as a result of regular extremes of cyclical weather patterns. Still, opportunity for largesse and not-saving exists even within these groups too.

Would they fare similarly without repercussions of “compliance enforcing” groups like soldier bees and ants?

READ: Where to put your cash in healthcare this year

Saving or “sparing” behaviour seems to be influenced by a complex interplay of multiple neural circuitry involving previous experiences, future expectations of rewards or punishments and ultimately the goal. They revolve around current gratification versus future safety.

Of all these, the motivation or “goal”, seems to have dominance and is greatly driven by previous individual experiences of others nearby.

In saving for health needs, the battle lies between possible risk of occurrence of future catastrophe versus opportunity lost by sparing such funds.

Astonishingly, despite the many cases of financial disaster arising by not having health insurance, we seem to make little headway in inculcating this habit.

Inferences from classical reward and punishment laboratory mice studies show if risk and scale of punishment is low, instant gratification appeal wins.

The debate is choosing between communicating benefits of health insurance, statistics on catastrophes suffered from not having it or epidemiology on mortality rates among uninsured patients.