Enhancing the Inclusion of Vulnerable and High-Risk Groups in Demand-Side Health Financing Schemes in Cambodia: A Concept for a Risk-Adjusted Subsidy Approach

Ralf Radermacher, Siddharth Srivastava, Matthew Walsham, Chhorn Sao and Francesco Paolucci
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Ralf Radermacher: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), 10/319, Mtendere Drive, Lilongwe 3, Malawi
Siddharth Srivastava: Swiss Tropical and Public Health Institute, Socinstrasse 57, 4002 Basel, Switzerland
Matthew Walsham: Independent consultant, U.K
Chhorn Sao: Social Health Protection Association (SHPA), #54, St. 598, Sangkat Beong Kok II, Khan Toul Kork, Phnom Penh, Cambodia
Francesco Paolucci: Sir Walter Murdoch School of Public Policy and International Affairs, Murdoch University, South Street, Murdoch 6000 WA, Australia

The Geneva Papers on Risk and Insurance - Issues and Practice, 2016, vol. 41, issue 2, 244-258

Abstract: Efforts are currently under way in Cambodia to expand the population coverage of social health protection schemes (health equity funds and voluntary insurance). Aligning the benefit packages for members of such schemes poses particular challenges in relation to the insurance component, as the financing of direct benefits in the insurance relies largely on the collection of voluntary premiums. This paper develops the concept of a targeted “risk-adjusted subsidy” approach to address this issue. Data on the health-seeking behaviour of insured households from Kampong Thom district over the course of one year (2010) are used to illustrate the concept. To retain the currently applied community rating and set incentives for cost effectiveness in administrative costs, as well as to avoid cream skimming (focusing on “good risks”), a risk-adjustment mechanism is proposed that would provide ex ante subsidies to insurance schemes according to the expected additional cost of a person joining the scheme. Although the concept is developed using the example of Cambodia, it is equally applicable to all developing countries facing fragmented risk pools while aiming for universal health coverage.

Date: 2016
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