Health insurance

The issue of health insurance is high on the health financing agenda of many developing countries, especially in transition countries where shift from state-planned to market-based economies has produced a decline in public health financing. Insurance programmes are increasingly used to fill the gap (Time for a change? Health insurance systems in Transitional Asia)

There are different types of health insurance including private health insurance (PHI); social health insurance (SHI) and community-based health insurance (CBHI). PHI usually covers workers employed in the formal sector whereby part or the entire premium is paid by the employer (as part of the salary package). Whilst SHI aspires towards universal coverage, in practice, CBHI is the only form of insurance likely to capture people working in the informal sector.

CBHI alone might not be able to protect the poor from health and financial shocks. In the absence of subsidy mechanism, the cost of the premium, even if limited, is very likely to prevent them from adhering to the insurance.

Yet, recent evidence shows that well designed CBHI can prevent households from further impoverishment. Indian community health insurance schemes provide partial protection against catastrophic health expenditures demonstrates how two CBHI managed to half the number of households who experienced catastrophic health care expenditures (by covering hospital costs). Improved design and combination with other assistance mechanisms could enhance this protection effect.

Prerequisites for efficient health insurance include:

• good administrative and management capacity for coordination of payments, premium collection and contracting of the provider
• trust of the population in the insurer
• a large number of interested members for ensuring a sufficient pooling
• regulated quality health providers to be promoted through the insurance mechanism.