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Health insurance schemes are leaving the poor behind

by Anna Marriott – Oct. 15, 2013

Manana Mikaberidze, 52, is a doctor from the Gori region of Georgia ©Justyna Mielnikiewicz, OxfamHealth insurance schemes introduced as solutions to achieve universal health coverage (UHC) are excluding the majority of people and leaving the poor behind, but they continue to be promoted by governments and donors globally. A recent Oxfam report produces the evidence and calls for an alternative way forward.
There has been a lot of interest in UHC following last year’s UN General Assembly landmark resolution and there are now calls for its inclusion in the post-2015 development agenda. But lots of things are being done in the name of UHC – like promoting health insurance models – that are not helpful and risk driving up inequality.

Health insurance doesn’t pass the test

To date, hopes that health insurance would raise significant amounts of additional revenue for health have not been realized. If health insurance has worked in a number of high-income countries, the situation is different for low-and middle income countries that are faced with low wages (80% of the population) and large informal sectors (e.g. street vendors or subsistence farmers). Even when insurance premiums are considered to be low they are still unaffordable for most poor women and men.
Evidence from countries that have gone down the health insurance path shows that it is impossible to scale up and reach high levels of coverage. Ghana’s National Health Insurance Scheme has been labelled a success but excludes 64% of the population and the vast majority of these are poor people. Ten years after health insurance was introduced in Tanzania, only 17% of the population are covered and Kenya’s National Hospital Insurance Fund insures just 18% of Kenyans, despite the fact it was established nearly 50 years ago. Health insurance is beneficial to people who can afford to join but in countries with high levels of poverty most people cannot afford the premiums and they remain excluded.
Governments and donors should be particularly cautious with regards to private health insurance, which is an inefficient, inequitable, and an expensive way of financing health care, and as such poses a threat to achieving the objectives of UHC. South Africa and the USA are among the only countries globally that rely heavily on private insurance and it is significant that neither of these countries has achieved UHC and they are currently amongst the most inequitable health systems in the world.
The dominant focus on insurance has served as a distraction from alternative approaches which have the potential to raise significantly more money, especially tax.

Tax financing has a proven record

Combining all sources of revenue from health - from payroll contributions, taxes, and aid – is essential to maximize coverage and redistribution. A number of developing countries are rejecting conventional insurance models and are building financing systems that are working to advance UHC. These countries have prioritized general government spending for health – on its own or pooled with formal sector payroll taxes – to successfully scale up UHC.
Some countries – like Sri Lanka and Brazil - rely exclusively on tax financing. Other successful UHC countries – like Thailand and Kyrgyzstan - combine general government revenue with formal sector payroll taxes and use these to cover the health care costs of the entire population.
Even the poorest countries can increase the amount of money available for health by improving existing tax collection systems, removing unnecessary tax exemptions, and introducing new progressive taxes. Gabon, for example, raised $30 million for health with a tiny levy on the profits of companies that handle remittances and a tax on mobile phone operators.
Universal health coverage means making sure that people have equal access to a range of high quality health services, regardless of their employment status or ability to pay. It’s about social solidarity and creating large risk pools so that financial and health risks are shared across a large number of people. Funding health care through tax and aid is the fairest way to ensure that people receive health care according to their need and contribute according to their means. 
Anna Marriott is a health policy advisor for Oxfam GB. Join the debate on health care financing and delivery at