Working Paper: NBER ID: w30996
Authors: Jishnu Das; Quytoan Do
Abstract: Governments in many low- and middle-income countries are developing health insurance products as a complement to tax-funded, subsidized provision of health care through publicly operated facilities. This paper discusses two rationales for this transition. First, health insurance would boost fiscal revenues for health care, as post-treatment out-of-pocket payments to providers would be replaced by pre-treatment insurance premia to health ministries. Second, increased patient choice and carefully designed physician reimbursements would increase quality in the health care sector. This essay shows that, at best, these objectives have only been partially met. Despite evidence that health insurance has provided financial protection, consumers are not willing to pay for unsubsidized premia. Health outcomes have not improved despite an increase in utilization. We argue that this is not because there was no room to improve the quality of care but because behavioral responses among health care providers have systematically undermined the objectives of these insurance schemes.
Keywords: health insurance; low-income countries; middle-income countries; financial protection; health outcomes
JEL Codes: I11; I12; I13; I15; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| health insurance schemes (I13) | replace out-of-pocket payments with insurance premiums (G52) |
| health insurance (I13) | improve health outcomes (I14) |
| increase healthcare utilization (I11) | improve health outcomes (I14) |
| behavioral responses among providers (I11) | higher prices and unnecessary care (I11) |
| higher prices and unnecessary care (I11) | undermine objectives of the insurance schemes (G22) |
| structural problems in healthcare delivery systems (I11) | contribute to adverse outcomes (I12) |
| quality of care offered through health insurance (I13) | cannot be separated from financial protection (G52) |
| health insurance schemes in low and middle-income countries (LMICs) (I13) | increase fiscal revenues for health care (H51) |