Public and private pathways toward universal health coverage Feb 29, 2016

Public and private pathways toward universal health coverage

How to achieve universal health coverage (UHC) can be a polarizing topic when public and private sector proponents square off. One view is that all aspects of health care belong in the domain of the public sector, while another is that private markets and players offer solutions to address the challenges and constraints of government-financed and government-provided health care. The good news is that a middle ground has been emerging for some time now and it calls for increased collaboration between the two sectors.

Governments’ efforts to raise revenue and provide social protection can be well-complemented by the private health sector, where innovation, technical know-how, and efficiency are more abundant.

As governments strive to make meaningful progress toward UHC, two things can be observed: 

  • Private insurance products that cover a wide range of services typically serve only wealthier citizens or those in formal employment (often a sliver of the population in a low-income country).
  • The majority of a country’s population relies on out-of-pocket spending and other means such as informal borrowing to finance health care. Often this leads to financial hardship, especially when health care is sought in the private sector. Alternatively, people are forced to forego care.  

What are some public-private pathways out of this common situation? In 2012, the ILO’s Impact Insurance Facility published a conceptual framework to describe pathways for private health insurance to help countries achieve UHC. The analysis showed that private health insurance can, and should be designed and regulated to complement government-sponsored insurance programs and other benefits made available to all citizens. 

Achieving this in practice is a challenge. However, the pathway in the figure shown here depicts the dynamic nature of public and private health insurance provision.

Many governments are making insurance a cornerstone of their financing approach to pursue UHC. As government capacity to provide health insurance grows, the idea illustrated by our framework is that private health insurance gradually assumes a more confined role as a supplement to government initiatives—but it does not go away. This is because no government can provide all health services to all people all the time; rationing is always present.

We note that reciprocity between public and private health financing can be observed in developed and emerging health insurance markets with products that serve both high- and low-income clients, as described in a recent article in Best’s Review. For example, private insurance providers in diverse markets such as Jordan, Nigeria, and the Philippines target low-income clients with simple hospital cash products bundled with loans or mobile phone contracts. These products complement government hospitalization benefits by helping beneficiaries offset lost wages and costs incurred when hospitalized (e.g., for transportation).

There are other more complex and integrated roles portrayed in the framework that private health insurance providers can play in scaling up government-sponsored health insurance schemes. For example, community-based health insurance schemes, or mutuelles, can lay a foundation for public health insurance by establishing a culture of insurance and mobilizing communities to pool health risks. Community level schemes may ultimately merge under a national government scheme, such as what happened in Ghana. In another role, private health insurers can partner with governments to distribute and administer government-sponsored health insurance programs. An example of this type of partnership exists in India, where the government outsources enrollment, claims administration and financial risk to private insurers under Rashtriya Swasthya Bima Yojana (RSBY), an insurance program that serves nearly 120 million poor households.

The potential role of the private sector may be better recognized with service delivery than insurance. In an end-of-project forum and a subsequent webinar late last year, experts from the USAID-funded Strengthening Health Outcomes in the Private Sector (SHOPS) project highlighted lessons from five years of supporting more than 30 countries to increase access to priority health information, products, and services through private providers, such as: 

  • As governments’ fiscal capacity grows, so does the opportunity to expand health insurance and other health financing, driving greater demand for services, such we are seeing with family planning.
  • Affordable and comprehensive health insurance products that allow access to private health providers can improve access to care and reduce overcrowding at public facilities, particularly for HIV and AIDS care and treatment. Alternatives to paying fee-for-service are needed to avoid cost escalation and unnecessary utilization.
  • Government payments to private health providers with limited working capital must be adequate, reliable and timely.

The government’s role and responsibility to regulate health markets for quality and efficiency is clear, as is its obligation to prioritize the poor. This can include partnering with the private sector—not only for service delivery, but for insurance and other financing mechanisms.

To accelerate development of these partnerships, governments should adopt policies to enable private insurance providers to serve low-income populations. Governments are also responsible to ensure adequate protection for consumers by setting standards for and supervising quality and financial stability of programs—these standards must be reasonable for private partners to comply with. Successful public-private partnerships require significant planning and oversight to minimize cost escalation and fragmented markets where adverse selection and small risk pools can be problematic. Challenging, yes – but the public and private players are talking like never before about achieving UHC together, and drowning out the radical dichotomy of the past.

The opinions expressed in this commentary are solely those of the authors and do not reflect those of Abt Associates.