Private Voluntary Health Insurance in Development: Friend or Foe?

by Preker, Alexander S.

• ISBN13: 9780821366196
• ISBN10: 082136619X
• Edition: 1st
• Format: Paperback
• Copyright: 2006-12-01
• Publisher: World Bank

Summary

Private voluntary health insurance already plays an important role in the health sector of many low and middle income countries. The book reviews the context under which private insurance could contribute to an improvement in the financial sustainability of the health sector, financial protection against the costs of illness, household income smoothing, access to care, and market productivity. This volume is the third in a series of in-depth reviews of the role of health care financing in providing access for low-income populations to needed health care, protecting them from the impoverishing effects of illness, and addressing the important issues of social exclusion in government financed programs.

Table of Contents

Foreword	p. xv
Preface	p. xvii
Acknowledgments	p. xxv
Abbreviations and Acronyms	p. xxvii
The Evolution of Health InsuranceinDeveloping Countries	p. 1
Overview	p. 2
Objectives of Review	p. 6
Methodology	p. 7
Review of Opportunities for Expanding VHI Markets	p. 12
Annex: Model Specification for Impact Evaluation Studies	p. 16
Notes	p. 21
References	p. 22
Economic Underpinnings	p. 23
Insights on Demand for Private Voluntary Health Insurance in Less Developed Countries	p. 25
Introduction	p. 25
Toward an Applicable Theory of Medical Insurance Demand	p. 26
The Theory of Insurance Demand	p. 27
When Is Insurance Most Valuable?	p. 31
Moral Hazard: What If Insurance Affects the Amount of Loss?	p. 32
Insurance Demand- and Supply-Side Cost Sharing	p. 36
Adverse Selection and Voluntary Insurance Markets	p. 36
Cream Skimming and Demand	p. 39
Insurance Reserves and Demand	p. 39
Group Insurance Demand	p. 41
Effect of Insurance Subsidies on Demand	p. 42
Demand for Protection against Risk Reclassification	p. 42
Health Insurance, Income, and Demand	p. 43
New Technology, Cost Containment, and Insurance Demand	p. 44
Other Reasons for Nonpurchase of Insurance or Market Failure	p. 45
Applying Theory to Demand for Health Insurance in Developing Countries	p. 48
Note	p. 52
References	p. 52
Supply of Private Voluntary Health Insurance in Low-Income Countries	p. 55
Introduction	p. 56
Benefit Package	p. 56
Risk Selection Effort	p. 65
Loading	p. 68
Vertical Restraints/Vertical Integration	p. 78
Conclusions	p. 99
Types and Efficiency Effects of Regulation	p. 100
Corruption	p. 105
Quality of Governance	p. 106
Notes	p. 107
References and Other Sources	p. 107
Market Outcomes, Regulation, and Policy Recommendations	p. 115
Market Equilibria in Voluntary Insurance Markets	p. 116
Structure and Intensity of Regulation of Health Insurance	p. 117
Policy Recommendations	p. 125
Subsidized and Regulated Insurance	p. 134
Ideal and Alternative Public-Private Combinations	p. 135
Ideal Model of Private Insurance Purchasing and Markets in LICs	p. 141
Conclusion	p. 143
Notes	p. 143
References	p. 143
Provision of a Public Benefit Package alongside Private Voluntary Health Insurance	p. 147
Introduction	p. 147
Background	p. 148
The Model	p. 151
A Public Choice Perspective	p. 160
Conclusions	p. 164
Notes	p. 165
References	p. 166
Economics of Private Voluntary Health Insurance Revisited	p. 169
Introduction	p. 169
Why Is Demand for Insurance So Low?	p. 170
What to Regulate and How to Regulate It	p. 172
What Is the Optimal Subsidy?	p. 174
How Might Voluntary Insurance Affect the Public Package of Care?	p. 176
Notes	p. 178
Empirical Evidence	p. 179
Scope, Limitations, and Policy Responses	p. 181
Introduction	p. 181
Data and Methodology	p. 182
Growth of Private Health Insurance in Low- and Middle-Income Countries	p. 183
Regional Challenges to Integrating Private Health Insurance into a Health System	p. 202
Conclusions and Outlook	p. 205
Notes	p. 205
References	p. 206
Lessons for Developing Countries from the OECD	p. 211
Introduction	p. 211
Roles and Scope of Private Health Insurance in OECD Countries	p. 212
Lessons for Developing Countries	p. 229
Conclusion	p. 234
Notes	p. 235
References	p. 236
Trends and Regulatory Challenges in Harnessing Private Voluntary Health Insurance	p. 241
Background and Context	p. 241
Patterns of Health Financing	p. 242
Experience with Private Health Insurance	p. 246
Using Private Health Insurance to Serve the Public Interest	p. 251
Conclusions	p. 260
Notes	p. 261
References	p. 261
From Theory to Practice	p. 265
Financial and Management Best Practice in Private Voluntary Health Insurance	p. 267
Introduction	p. 267
Voluntary Health Financing: Institutional Capacity from a Management Perspective	p. 272
Institutional Capacity from a Technical, Financial, and Balance Sheet Perspective	p. 279
Solvency	p. 288
Regulation	p. 289
Best Practices for Individual Insurers	p. 291
Best Practices for an Insurance Industry	p. 292
Summary of the Current State of Voluntary Health Insurance	p. 293
Voluntary Health Insurance in Developing Countries	p. 293
Notes	p. 294
References and Other Sources	p. 295
Opportunities and Constraints in Management Practices in Sub-Saharan Africa	p. 297
Introduction	p. 297
Context of Voluntary Health Insurance in Sub-Saharan Africa	p. 298
Voluntary Health Insurance in South Africa and in the Countries of West Africa and East Africa	p. 301
Issues in South Africa	p. 302
Issues in West Africa	p. 303
Issues in East Africa	p. 305
Conclusion	p. 305
Note	p. 306
References and Other Sources	p. 306
Facilitating and Safeguarding Regulation in Advanced Market Economies	p. 309
Introduction	p. 309
Overview of Regulation in Advanced Market Economies	p. 310
Solvency Regulation	p. 311
Regulation of Pricing and Risk Selection	p. 317
Conclusions	p. 321
Notes	p. 322
References	p. 323
Financial and Other Regulatory Challenges in Low-Income Countries	p. 325
Introduction	p. 325
Out-of-Pocket Payments and Private Voluntary Health Insurance	p. 325
General Challenges in Developing a PVHI Market	p. 326
Regulatory Issues and Challenges in LICs	p. 328
Regulatory and Supervisory Authority	p. 332
Conclusion	p. 334
Note	p. 334
References	p. 334
Review of the Literature on Voluntary Private Health Insurance	p. 335
Introduction	p. 335
Methods and Results	p. 338
Definitions and Frameworks	p. 343
Demand for Voluntary Health Insurance	p. 354
Supply of Voluntary Health Insurance	p. 361
Performance and Impact of Voluntary Health Insurance	p. 366
Conclusions and Recommendations	p. 382
Note	p. 386
Bibliography	p. 386
About the Coeditors and Contributors	p. 399
Index	p. 409
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