How health insurance affects the delivery of health care in developing countries

Joseph Kutzin and Howard Barnum

No 852, Policy Research Working Paper Series from The World Bank

Abstract: Financial crisis is a common state of affairs in the government health sector of many developing countries, and an increasing number are considering implementing user charges and insurance programs to shift some of the financial burden for health services away from direct budget allocations by a health ministry. Although they are often implemented as ways of mobilizing additional resources, prices and insurance also affect the allocation of health resources by changing the signals sent to producers and consumers of health services. Changes in incentives engendered by these alternative financing programs, therefore, have implications for the efficiency and equity of health services delivery, in addition to their more obvious impact on revenues. This paper examines institutional aspects of insurance programs in four developing countries - Brazil, China, Korea, and Zaire - and assesses the impact of each on the efficiency and equity of the health sector. Much attention is given to insurance reimbursement of hospitals because these represent the largest component of national health expenditures and are the focal point for much of the activity in the sector. The case study countries were selected because their hospitals are financed largely, and in descriptions of their health financing systems exit. Understanding how alternative financing programs have distorted the allocation of health resources and how these distortions might be mitigated is important for these countries and others considering changes to their present system of health care financing.

Keywords: Health Systems Development&Reform; Health Monitoring&Evaluation; Housing&Human Habitats; Insurance&Risk Mitigation; Health Economics&Finance (search for similar items in EconPapers)
Date: 1992-02-28
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Citations: View citations in EconPapers (3)

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