an Eldis Resource
Is there a market for voluntary health insurance in developing countries?
Voluntary health insurance schemes should be segmented by income
Authors:
M Pauly; F Blavin; S Meghan
Publisher:
National Bureau of Economic Research, USA, 2008
In many developing countries about half of all spending on health care is out-of-pocket. This study, from the National Bureau of Economic Research, examines the distribution of such spending according to income and type of health care in order to assess whether it would be possible to supply voluntary private health insurance to reduce variation in spending. Using data from the World Health Survey for 14 developing countries, the report finds that out of pocket spending varies depending on income but that most spending usually occurs in the quintiles below the top income quintile.
The authors use estimates of the variance of total spending, hospital spending, physician spending, and outpatient drug spending tends to generate estimates of the amounts of money risk averse consumers might pay for insurance coverage. For hospital spending and total spending, these amounts are larger than the authors consider reasonable, suggesting that voluntary insurance might be feasible. However, the strong relationship between spending and income suggests that insurance markets may need to be segmented by income.
