A functional model for monitoring equity and effectiveness in purchasing health insurance premiums for the poor: Evidence from Cambodia and the Lao PDR
Abstract
Objectives: To assess the impact on equity and effectiveness of introducing targeted subsidies for the poor into existing voluntary health insurance schemes in Low Income Countries with special reference to cross-subsidisation.
Methods: A functional model was constructed using routine collected financial data to analyse changes in financial flows and resulting shifts in cross-subsidization between poor and non-poor. Data were collected from two sites, in Cambodia at Kampot operational health district and in the Lao People's Democratic Republic at Nambak district.
Results: Six key variables were identified as determining the financial flows between the subsidy and the insurance schemes and with health providers: population coverage, premium rate, facility contact rate, capitation rate, cost of treatment and changes in administration costs. Negative cross-subsidization was revealed where capitation was used as the payment mechanism and where utilisation rates of the poor were significantly below the non-poor. The same level of access for the poor could have been achieved with a lower Health Equity Fund subsidy if used as a direct reimbursement of user charges by the Health Equity Fund to the provider rather than through the Community Based Health Insurance scheme.
Conclusions: Purchasing premiums for the poor under these conditions is more costly than direct reimbursement to the provider for the same level of service delivery. Negative cross-subsidization is a serious risk that must be managed appropriately and the benefits of a larger risk pool (cross-subsidization of the poor) are not evident. 51²è¹Ý from combined coverage may accrue in the longer term with an expanded base of voluntary payers or when those with subsidized premiums are lifted out of poverty
Citation
Annear, P.L.; Bigdeli, M.; Jacobs, B. A functional model for monitoring equity and effectiveness in purchasing health insurance premiums for the poor: Evidence from Cambodia and the Lao PDR. Health Policy (2011) 102 (2-3) 295-303. [DOI: 10.1016/j.healthpol.2011.03.005]