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Presentation

Session: Comparative Health Systems
Room: Meeting Room 21
Time: Thu 14:30-15:45

Presenter: Philipa Mladovsky (London School of Economcs and Political Science. LSE Health)

Abstract

Private health insurance (PHI) has been proposed as a viable alternative or complement to public health financing mechanisms such as taxation and social health insurance (SHI) and private mechanisms in the form of user charges, both of which are argued to have largely failed in providing efficient and equitable health financing systems in low and middle income countries(LMIC).

This study presents case studies of PHI in three LMIC (Brazil, Egypt and India) and considers the extent to which these countries’ experiences support this and other perspectives on PHI presented in the literature. The use of detailed case study evidence is an important development in the debate on PHI in LMIC, which has been largely theoretical to date. While three case studies cannot be used to generalise about PHI in LMIC, they do lend themselves to the task of testing some of the assumptions identified in the PHI literature.

One of the main arguments in favour of promoting PHI in LMIC in the literature is that PHI is needed to address the problem of high out-of-pocket payments. However, the case studies suggest that on the ground, PHI is not designed to fulfil this function. In order to cover the main sources of out-of-pocket spending, PHI operators need to provide comprehensive coverage for high frequency, low cost events. It is not clear that PHI provides this type of coverage in LMIC.

All three bodies of literature essentially view PHI in LMIC as a second-best option, to be introduced in response to the failures of public financing for health care. It is envisaged then, that in most countries PHI will develop in parallel to existing weak public sector health financing mechanisms. This has been the case in all three countries. However, the case studies provide little evidence to support the assumption that PHI will strengthen public financing by covering the formal sector only, thereby allowing indirect targeting of limited government resources to those who cannot afford to pay for themselves. The experience in Brazil, Egypt and India does not support this view. Rather, in these countries, as in many other LMIC, while PHI does indeed cover the formal sector, there is minimal public sector expenditure on health care for non-formal sector workers and indigents, who are instead left with high out of pocket expenditure, a scenario not promoted in any of the literature on PHI. Rather, there is evidence to support the opposite view that PHI is likely to further weaken existing health financing arrangements.
Other important questions addressed in the study are:
 Does regulation reduce (or increase) the efficiency and equity of PHI?
 Does removing the profit motive make PHI more responsive to the needs of poorer population groups?
 Does group coverage reduce administrative costs and risk selection?
 Does demand (or supply) side regulation increase the efficiency and quality of care?
 Is PHI likely to evolve into a universal system of mandatory coverage?
 Does globalization bring new opportunities for expanding PHI?

Key Terms

private health insurance, equity, low and middle income countries

Authors:

Philipa Mladovsky (London School of Economics and Political Science. LSE Health) , Wael Fayek Saleh (African Development Bank) , Emma Pitchforth (London School of Economics and Political Science) , Stéphane Jacobzone (OECD) and Sarah Thomson (London School of Economics and Political Science)

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