Joint agency paper - Oxfam, Action for Global Health, Médecins du Monde, Save the Children, Plan, Global Health Advocates, Act Up Paris

Health insurance in low-income countries

Where is the evidence that it works?

Some donors and governments propose that health insurance mechanisms can close health financing gaps and benefit poor people. Although beneficial for the people able to join, this method of financing health care has so far been unable to sufficiently fill financing gaps in health systems and improve access to quality health care for the poor. Donors and governments need to consider the evidence and scale up public resources for the health sector. Without adequate public funding and government stewardship, health insurance mechanisms pose a threat rather than an opportunity to the objectives of equity and universal access to health care.

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Summary

All people have a right to health. In poor countries, the challenge is to finance systems that will deliver that right. After 20 years of one failed health financing mechanism – user fees – some actors in the international community are proposing that health insurance mechanisms will close health financing gaps and benefit poor people. This paper describes those mechanisms and their success or failure to deliver health rights particularly for people living in poverty. The paper shows that although health insurance can have a positive effect on access to health services and on reducing (catastrophic) health expenditure for some parts of the population, it can also pose a threat to equity and efficiency of health systems.

If we are to avoid another 20 wasted years, advocates of insurance mechanisms need to produce evidence that those will work before promoting their implementation in poor countries. Universal access to health care took 100 years to develop in Europe. In a world rich in resources and knowledge, 100 years is too long for poor people to wait.
The mechanisms discussed in this paper are: Private Health Insurance (PHI); Private for-profit Micro health insurance; Community Based Health Insurance (CBHI); and Social Health Insurance (SHI).

More than 25 years after the introduction of private health insurance (PHI) in developing countries, there is still no evidence that it can benefit more than a limited group of people. In low-income countries coverage rates are generally less than 10 per cent of the population. In countries where PHI has shown a strong growth, its contribution to universal access to health care has been insignificant or has even had an adverse impact by increasing inequalities. In Chile, premiums were set 2.5 times higher for women than for men. The costs of regulating PHI and the fragmentation of risk pools make this an inefficient and expensive way of improving health access.

Private for-profit micro health insurance schemes offered to poor people have low premiums but offer limited benefits packages. By excluding important services the effect in reducing out-of-pocket payments has been limited, particularly for those who are most disadvantaged. In India, 12 out of 14 schemes were found to exclude childbirth and pregnancy-related illnesses, and most excluded people living with HIV.

So far community-based health insurance (CBHI) schemes have managed to cover two million people in Africa, out of an estimated population of 900 million (0.2 per cent). There is some evidence that CBHI schemes have, on a small scale, played a role in reducing out-of-pocket payments and CBHI can potentially contribute to the empowerment of poor people in relation to health providers and policy-makers. However, members of CBHI often continue to depend on out-of-pocket expenditure to cover more than 40 per cent of their health needs. Only through linkages with national health systems and heavy subsidisation can CBHI offer even a minimum level of care to poor people.

Social health insurance (SHI) has achieved universal coverage in developed nations, but the context in most low-income countries is not conducive to expanding SHI coverage. Informal sector workers (in some countries 80 per cent of the economically active population) and unemployed people almost always remain excluded as our evidence from Ghana illustrates. The countries that have been able to substantially extend the coverage of SHI towards the poor are those that are heavily subsidised by treasury revenue from taxes and with pre-existing institutional capacity.

Insurance schemes are often evaluated for their performance with regards to their members. But this evidence ignores the impact of such schemes on entire populations, and particularly on people living in poverty who cannot afford prepayments. This paper therefore recommends:

• Countries and donors should evaluate insurance mechanisms not just in terms of the advantages to the sub-populations they serve but also with regards to the contribution they make towards universal coverage, horizontal and vertical equity and efficiency within a country.

• Health financing should specifically focus on the needs of vulnerable groups, such as women, poor and elderly people, and people living with HIV, who are most likely to be excluded by insurance mechanisms.

• Governments should increase national budgets for health, by improving the generation of tax income, and donors through greater budget/sector support. This is the only proven method for achieving universal coverage and access in the short term. Governments particularly need to ensure sufficient funding for vitally important preventive services (which suffer particularly under PHI models) and to increase public health awareness. 

• National health plans developed within (and outside of) the International Health Partnership (which was launched in 2007) should respond to the needs of the population at large, should include a national coverage plan, and should be fully financed. In this context donors must acknowledge the existing evidence, or lack thereof, relating to health insurance mechanisms as a way of financing health care.

• Countries wishing to abolish user fees and expand free health care through funding from general revenues should be supported to do so, as this could be a more promising and more equitable route to universal access.

• While donors are supporting risk-sharing mechanisms in developing countries, they are failing to show adequate levels of solidarity on the global scale by consistently falling short on their international aid commitments. Urgent action is needed to enable people in developing countries to exercise their right to health.

Date of publication: May 2008