Community-based health insurance schemes in developing countries: facts, problems and perspectives
Discussion paper, Number 1/2003
Scarce economic resources, low or modest economic growth, constraints on the public sector and low organisational capacity explain why the design of adequate health financing systems in developing countries, especially the low income ones, remains cumbersome and the subject of significant debate. Earlier on, cost-recovery for health care via user fees was established in many developing countries usually as a response to severe constraints on government finance. However, most studies alert decision-makers to the negative effects of user fees on the demand for care, especially that of the poorest households.
Alternative health financing systems exist, de-linking utilisation from direct payment, and thereby protecting the population, especially the most vulnerable groups, from having to resort to various coping mechanisms. Financing is based either on general tax revenues and/or social health insurance contributions. Risk-pooling is a core characteristic of these systems, enabling health services to be provided according to people’s need rather than to their individual capacity to pay for health services. A tax funded health system may not be easy to develop, due to the lack of a robust tax base and a low institutional capacity to collect taxes and weak tax compliance. Social health insurance has traditionally started by insuring workers. A further nationally organized expansion of social health insurance to the self-employed and non-formal sector is especially demanding. Other financing methods which would circumvent these organisational difficulties are therefore explored, including the direct involvement of communities in health financing.
In this paper, the focus will be on voluntary health insurance, organized at the level of the community, or community based health insurance (CHI). In the next section, we return to the issue of CHI as a response to obstacles to the implementation of universal coverage. In this paper, we look at how community based health insurance schemes (CHIs) have been performing in practice so far. This evidence is analyzed using a simple framework that is presented in section 3. In section 4, we discuss the international evidence, using this particular framework. We also analyze factors that influence the performance of CHIs in the same section. In section 5, we study the impact of CHI on goals of the health system. Perspectives regarding the future role of CHIs are offered in section 6. Concluding remarks are in section 7.