Display

Should insurance be considered as a means of financing healthcare in developing countries? This brief introductory guide was written for the UK Department for International Development (DFID) by the DFID Health System Resource Centre (HSRC). It is aimed at those thinking about introducing health insurance including senior staff of Ministries of Health and for people in development agencies, and considers some of the issues involved in health insurance.

The basic terms and principles of insurance are first outlined and then compared with other funding mechanisms. The guide identifies both the advantages and the possible problems and drawbacks. It focuses on social insurance and analyses the key issues that should be addressed by policy makers in considering whether or not to proceed with it as a means of financing health care. Finally, it presents the key lessons learnt.

The paper finds that in determining whether social insurance should be considered an appropriate method of financing healthcare, one must ask the following questions:

• Is it desirable? Issues around equity have to be answered. The poor are often too poor to pay. Social insurance will not target these groups directly. The question is whether it can be designed in such a way as to achieve national health goals, and have a positive impact on the health sector. Various interested parties and stakeholders may desire, and try to achieve different outcomes. Historical and cultural conditions may or may not allow for its introduction.
• Is it feasible? The economy must be able to support such a significant development. The administrative capacity has to be sufficient, such as the existence of skilled staff to manage the system. There must be an adequate earnings base to supply the revenue.
• Should it be introduced? Do the advantages of having a separate health insurance fund outweigh the extra costs of setting it up?

If insurance is to be considered, what lessons have been learnt about its design and functioning?

• Most social insurance schemes are compulsory for the employed. Whilst coverage of dependents is popular, it pushes up costs. Low wages in low-income countries necessitate limited packages. There can be several funds, competing or on a regional basis, which are managed independent of the administration.
• The benefits from community insurance schemes should be limited, attractive and clear to all.
• With strong management and careful design social insurance can channel resources to primary health care and priority services.
• Large informal and rural sectors in most low-income countries make collection of contributions costly and unlikely to broaden healthcare coverage beyond the employed. Governments must be convinced that social insurance will lead to better results in terms of performance and equity/health outcomes.
• Private insurance schemes should be regulated to maximise health benefits and avoid problems of cost escalation and increasing equity.

• Full text of document
• Publisher details
• Send to a friend