Social Health Insurance Reexamined
Abstract: Social health insurance (SHI) is enjoying something of a revival in parts of the developing world. Many countries that have in the past relied largely on tax finance (and out-of-pocket payments) have introduced SHI, or are thinking about doing so. And countries with SHI already in place are making vigorous efforts to extend coverage to the informal sector. Ironically, this revival is occurring at a time when the traditional SHI countries in Europe have either already reduced payroll financing in favor of general revenues, or are in the process of doing so. This paper examines how SHI fares in health care delivery, revenue collection, covering the formal sector, and its impacts on the labor market. It argues that SHI does not necessarily deliver good quality care at a low cost, partly because of poor regulation of SHI purchasers. It suggests that the costs of collecting revenues can be substantial, even in the formal sector where nonenrollment and evasion are commonplace, and that while SHI can cover the formal sector and the poor relatively easily, it fares badly in terms of covering the nonpoor informal sector workers until the economy has reached a high level of economic development. The paper also argues that SHI can have negative labor market effects.
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Argentina better collection costs Colombia covered December 2006 December deliver delivery system developing countries developing world disemployment effect economy evasion example extend coverage financing system flat-rate Flewitt formal sector workers Gaviria Germany Germany's Gottret and Schieber health financing impact incentives income tax indirect taxes informal sector workers introduced SHI Kazakhstan Kyrgyz Republic labor market labor supply curve Latin America ministry's Network on Health Nguyen nonenrollment nonpoor informal sector OECD out-of-pocket payments payroll financing payroll tax percentage points PhilHealth Philippines Policy Research poor population private insurance private providers private sector purchaser-provider split raising revenues reducing Research Working Paper revenues are raised revenues for health Rural share of GDP SHI agency SHI contributions SHI countries SHI membership SHI purchasers SHI scheme SHI system Social health insurance social insurance subsidized take out private tax base tax rate tax reform tax-financed system Uganda universal coverage Vietnam wages Wagstaff World Bank