• Trade in health services

Trade in health services

This note provides background on the treatment of health insurance services by GATS, and explains the relevance of current GATS negotiations for health insurance trade. It begins with a general description of GATS, indicates how health insurance is classified in GATS-defined service sectors, and outlines options countries have when making insurance-related market access commitments. It then explains why GATS commitments made to date have not yet had any measurable effect on changes in insurance markets. It reviews some of the issues addressed in current GATS negotiations and their potential implications for market access commitments covering health insurance. It concludes by reviewing the opportunities, risks and challenges presented by GATS for national policies and regulations affecting health insurance.

Conclusion:

• The GATS negotiations currently under way hold both opportunities and risks for health insurance systems and suppliers in developed and developing countries alike. To the extent that the negotiations result in greater market access for health insurance companies to enter and compete in foreign markets, there is the potential for greater competition which could result in less expensive coverage, depending on local health market dynamics. But evidence from countries where private insurers compete indicates that, even with strong regulatory systems, greater competition among health insurers segments and destabilises the market and undermines the ability to build larger, more equitable risk pools that spread costs between rich and poor, healthy and sick
• with or without commitments under GATS, greater entry of foreign health insurance suppliers presents a major challenge to national and sub-national health insurance regulatory systems. The entry of foreign suppliers makes it more urgent for countries to create an effective regulatory framework, and build capacity to enforce those regulations, for the health insurance sector. Until such a system is in place, it could be harmful for developing countries to make full binding commitments in the health insurance sub-sector under GATS financial services schedules
• the GATS negotiations, like other WTO deliberations, also highlight the need for greater dialogue among trade and health officials at the national level. At a general level, health officials can help trade officials understand the health interests at stake in the GATS negotiations, and clarify the implications of GATS commitments for health insurance, as well as for other services in the health sector, e.g. hospital, physician and nursing services. More specifically, health officials can help trade negotiators identify appropriate limits and safeguards that should be incorporated into GATS schedules, and specify the conditions under which trade-restrictive health measures might qualify as necessary for the protection of equitable health financing policies. In the absence of such dialogue and coordination, countries may find that trade liberalisation comes at the expense of important domestic health objectives

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