on the road to social health insurance: the asian experience

Pergamon World Development Vol. 26, No. 4, pp. 717-732, 1998

0 1998 Published by Elsevier Science Ltd All rights reserved. Printed in Great Britain

0305750X/98 $19.00+0/00 PII: SO305750X(98)00009-6

On the Road to Social Health Insurance: the Asian

Experience

PAUL J. GERTLER University of California, Berkeley, USA

Summary. - In order to deal with the fiscal crises of public health care systems, many low and middle income countries are considering introducing or expanding mandated social health insurance. This paper reviews the Asian experience, We find that social insurance has lead to rapid medical care cost inflation and that design problems has mitigated many of the expected benefits. We conclude with a series of design recommendations for countries that are beginning social insurance. 0 1998 Published by Elsevier Science Ltd. All rights reserved

Key words - social insurance, health insurance, health economics, Asia

1. INTRODUCTION

Most Asian countries are growing at fast rates. A by-product of this growth is an increased demand for high quality human resources both by industry and by the population itself. The engine of economic growth requires more productive labor and individuals desire a higher quality of life. A key aspect of human resources is health status. A healthy work force is more productive (Strauss and Thomas, 1996) and health is a critical dimension of human welfare and capabilities (Sen, 1985).

During this time of rapid economic transition, developing country governments are making key decisions regarding the structure of their health care delivery systems. These choices will have important consequences for the health outcomes and the cost of delivering health care services. As we can see from the huge controversies regarding health care reform in most developed countries, the long-run consequences of these choices have important implications for how a large portion of GDP is spent on health and create huge vested interests that will make sector reform more difficult the future.

In the 1960s and 1970s most developing countries created large public health care delivery systems. These public systems were funded through general tax revenues and managed directly by the public sector. They were universal in the sense that all individuals were eligible and user fees were kept low in order to insure that the poor did not have financial access barriers to care. This public expansion created

vast networks of primary, secondary and tertiary care facilities in most countries. Physical infrastructure and health manpower were greatly expanded. Many populations were, for the first time, given access to Western medical care.

While these investments greatly improved the health care delivery systems of many countries who were in the early stages of development, a number of critical problems remain. First, public health care systems tend to be of low quality, especially in rural areas. Second, public facilities tend to be located in urban areas, implying that the poor who are concentrated in rural areas have to travel further to obtain health care. In this sense, the poor have lower access to health care. Third, the majority of pubic funds subsidize high end hospital care. Because these services have the highest income elasticity of demand, they are mostly used by the non-poor, and as a result, most of the benefits of public subsidies tend to accrue to the non-poor. Fourth, because of insurance market failure, a large number of individuals still face huge financial risk associated with uncertain illness.

The problems of public health care systems have led many countries to seriously consider health care reform (World Bank, 1993a). In particular, there have been calls for increasing the resources in health care systems in order to improve quality and reduce inequality. In addition, there is concern about the way in which

Correspondence to: Paul J. Gertler, Haas School of Business, University of Califoromia, Berkeley, CA 94720, USA. E-mail: [email protected]

717

718 WORLD DEVELOPMENT

health care resources are allocated within the system. Not enough resources are allocated to prevention and too few resources reach the poor. However, developing countries are under pressure not to finance health care reform strictly through general tax revenues.

Tight fiscal budgets and international donor pressure have led governments to explore user fees as a means of mobilizing private resources (World Bank, 1987; Jimenez, 1987, 1989, 1996). The policy was motivated by the belief that increased spending on quality and access is productive in terms of improving health status. However, altering prices will change incentives and consequently change utilization patterns. As a result there is concern that raising fees will reduce access to medical care, especially by the poor (e.g. Cornia et al., 1987). Some countries are experimenting with user fees, but have had difficulty developing practical price discrimination mechanisms that effectively and efficiently exempt the poor from paying the fee. Thus the resource mobilization motivation for user fees may undermine one of the key tenets of universal public health care systems, namely universal access to health care regardless of income (Gertler and Van der Gaag, 1990).

As an alternative many countries are looking at compulsory social insurance (SI) and private sector delivery (World Health Organization, 1994). SI is seen as a way to shift a good portion of the public burden of delivering and financing health care to the private sector (Gertler and Strum, 1997). SI plans typically finance medical care benefits through earmarked taxes, and the benefits are used to purchase medical care from the private sector. SI reduces the out-of-pocket prices of higher quality private care relative to lower quality public care, thereby providing an incentive to choose the private sector over the public sector. In this way, SI shifts the delivery of care to the private sector, and finances expenditures through additional off-budget earmarked income taxes, thereby relieving pressure from the general budget. Since most countries are mandating SI to wage sector employees, the public sector is left to care for the families in the agricultural and informal sectors and the poor.

While the lure of social insurance and expanding the role of the private sector has great appeal, there has been limited experience with the policy in most low- and middle-income countries. In this paper, we examine the Asian experience in detail in order to draw policy lessons for those low- and middle-income countries who are about to move down the road towards SI.

The paper is organized as follows. In next section, we analyze the performance of health sectors in these low- and middle-income countries in order to identify policy issues that have a key role in existing social insurance programs. In section 3, we examine the Asian experience with SI. In the final section we discuss the implications for low- and middle-income countries who are considering social insurance.

2. HOW ARE HEALTH SECTORS FINANCED?

(a) Public and private roles

In setting up their post-colonial health care systems, Asian countries looked to both the West and East for health care models, since the socialist and communist systems were still viable. Some countries opted for socialized medicine systems where the government financed care publicly out of general tax revenues and directly operated facilities as public institutions (e.g. China and Vietnam). Others publicly financed social insurance plans that financed the purchase of medical care from the private sector (e.g. Korea and Taiwan). Most developed mixed systems of public and private finance and delivery.

Table 1 reports on health care expenditures as levels and as percentages of GDP for selected Asian countries arranged by income. As expected, total (public and private) expenditures per capita rise with income. However, the relationship between the percentage of health expenditures accounted for by the public sector and GDP is weak. The public sector accounts for a greater share of total expenditures in some of the poorer countries (e.g. China and Pakistan) than in several wealthier countries (e.g. Thailand and Korea). These weak associations with income reflect different health priorities across countries both on the part of government and private citizens.

A characteristic common to most countries is the focus on improving access to medical care, especially for the poor. To this end, beginning in the early 1960s and continuing into the 1980s most countries created large universal public health care systems. The systems were universal in the sense that all citizens had the right to use them and fees were kept close to zero to ensure that individuals from all income groups could afford public health care. Many of the low- and middle-income countries that established universal public health care systems allowed individuals the choice of opting out of the public

ON THE ROAD TO SOCIAL. HEALTH INSURANCE

Table 1. Annual health care eqenditures for selected Asian countries, 1991

719

Country GDP per Total expenditures capita (US$) per capita

Expenditures as % of GDP

Public expenditures as % total

Nepal Lao PDR Bangladesh India Pakistan China Sri Lanka Indonesia Philippines Papua New Guinea Thailand Malaysia Korea Taiwan Singapore

$170 $220 $220 $310 $420 $450 $540 $670 $770 $950

$1,840 $2,790 $6,790 $9,750

$15,730

::

!i: $12 $11 $18 $12 $14 $36 $73 $67 $77

$405 $456

4.5% 2.5% 3.2% 6.0% 3.4% 3.5% 3.7% 2.0% 2.0% 4.4% 5.0% 3.0% 6.6% 4.6% 3.1%

48.9% 40.0% 43.8% 21.7% 52.9% 60.0% 48.6% 35.0% 50.0% 63.6% 22.0% 43.3% 40.9% 52.2% 57.9%

Source: World Bank (1993).

sector into the higher priced and higher quality private and non-governmental organization (NGO) sectors. Public-sector delivery dominates some of these mixed systems (e.g. Bangladesh, Indonesia and Nepal), while in others, the private sector captures very large shares of the market (e.g. Malaysia, Pakistan, the Philippines and Thailand).

In contrast with the poorer countries, the fast- growing countries (e.g. Korea, Singapore and Taiwan) tend to rely on private-sector delivery and public finance. In these countries, individuals make compulsory contributions to a social insurance plan, which finances care purchased in the private sector. Financially vulnerable groups, such as the poor, unemployed and retired, usually receive subsidies for their participation in social insurance plans. While only the wealthiest countries have achieved universal coverage through social insurance, a number of poorer but fast-growing countries are mandating social insurance for individuals (and their families) employed in the formal wage sector. For example, countries such as Indonesia, Malaysia, Mongolia, the Philippines and Thailand have passed legislation to create or expand such plans. Other countries, such as China and Vietnam, are actively pursuing plans to develop social insurance that uses mandated payroll taxes to fund benefits that can be purchased through the private sector.

(b) Sources and uses of finds

While the data presented in Table 1 are informa- tive about the size of public expenditures, they

lack important detail regarding the source of public expenditures and how the money is spent. A useful method of summarizing the role of the public sector are National Health Accounts (NHA), which are systematic accountings of sources and uses of funds. The accounts make explicit how much is being spent, where the money comes from, and what is being done with the money.

The NHA for Vietnam, presented in Table 2, are typical of many low- and middle-income Asian countries. The sources of funds (columns) are broken down into public, and private out-of- pocket. The uses of funds (rows) are split between public and private, and then further subdivided into specific programs (e.g. hospitals, primary care, drugs, etc.). Public subsidies are sources of funds, while public expenditures are uses of funds.

While the public sector accounts for a large share of total expenditures, public subsidies are relatively small. Total public expenditures-the row sum-account for 50.8% of total expenditures. Total public subsidies-the public sources column sum-account for about 16.2% of total expenditures and for about 32% of total public expenditures. The rest of public expenditures is financed through user fees for treatment and drugs collected from both insured and uninsured patients.

Vietnam’s public subsidy allocation places priority on hospital care. While only 17.7% of total expenditures is spent on hospitals (excluding drugs), hospitals account for 35% of public expenditures and over 90% of public subsidies. Only a small amount of public expen-

WORLD DEVELOPMENT

Table 2. National health accounts for Vietnam 1993 (% of total expenditures)

Uses of funds (expenditures) Sources of funds

Public subsidies (%) Private sources (%) All sources (%)

Total public expenditures Hospitals Drugs Primary care Public health activities Other

16.2 14.8 na 0.4 0.4 0.7

Total private expenditures 0.0 Providers 0.0 Drugs 0.0

All uses 16.2

34.5 2.9

31.5 0.0 0.0 0.1

49.3 0.7

48.6 83.8

50.8 17.7 31.5

4.5 1.4 0.7

49.3 0.7

48.6 100.0

Source: World Bank (1995a).

ditures goes for primary care and prevention, and all of it is financed through public subsidies.

Most of the private sources of funds are used to purchase drugs and account for about 80% of total spending. Private purchase of drugs from the public sector accounts for 62% of public expenditures and 31.5% of total spending. Private purchases of drugs from private providers represents half of total spending and almost all of private sector expenditures. Except for drugs, user fees finance a trivial amount of public and private expenditures. They account for 3.6% of total expenditures, 5.7% of public expenditures, and only 1.4% of private uses of funds.

Three general patterns emerge from NHA for China (World Bank, 1996), India (Berman, 1997), Philippines (Herrin and Racelis, 1994), Sri Lanka (Rannan-Eliya and Nishan, 1996), and the Vietnam case discussed above. First, the bulk of both public and private expenditures is out of private sources. Second, little is spent on preventive and public health. Third, hospitals and drugs account for the bulk of public subsidies and private spending.

(c) Public subsidies

Allocating government subsidies, as with government intervention in any sector, needs to be justified in terms of the benefit the investment would have for society above and beyond what would have happened without public intervention (Gertler and Hammer, 1997; Hammer, 1997). The way to assess the benefit of a proposed public intervention is to identify the failures of private markets and quantify the loss from these failures. Priorities should be based on the degree to which the subsidy ameliorates

these losses, and the importance governments place on the types of losses and the individuals who incur the losses. There are three important market failures in the health sector that justify public subsidy: public goods and externalities, universal access and equity, and imperfections in health care and insurance markets.

(i) Public goods A health service is a public good if its use

generates benefits to society above and beyond the benefit to the private individual. The most important public goods in the health sector are the prevention and treatment of infectious diseases. Left to their own devices, individuals will prevent and treat infectious diseases less than is socially optimal. For example, many individuals are not willing to pay the full cost of immunization because they know that they will be protected if enough other people get immunized. Even with worthwhile medical benefits to individuals, the cost may impede seeking treatment soon enough to prevent the spread to other individuals or from completing the full course of treatment. Also, the conse- quence of not completing drug therapies may not only lead to a resurgence of the disease, but also to an increase transmission and the risk of promoting resistance to known drug therapies. For example, tuberculosis is a virulent, communicable disease, and although the drug therapy is both available and effective, it is expensive. Individuals feel better after partial treatment and tend to want to stop treatment long before the course of drugs is completed. They remain a public hazard as they can still transmit the disease.

ON THE ROAD TO SOCIAL HEALTH INSURANCE 721

To get individuals to obtain the proper levels of prevention and treatment, the government needs to use public subsidies to lower the price of these services so as to encourage utilization. In some cases, the government must fully subsidize the activities. This occurs with pure public goods, which are activities in which no one can be excluded from benefiting even if they refuse to pay. As a result, no one is willing to individually pay for these activities. Examples include the general control of pests or vectors of disease (e.g. mosquitoes, rats, snails that carry schisto- somiasis, etc.), and the collection and dissemina- tion of information (e.g. epidemiological surveillance, and the monitoring of food and drug safety).

While there are good reasons to subsidize public health activities, governments spend very little money on them. According to the NHAs, less than 10% of total sector resources are spent on preventive and public health programs in all four countries. Moreover, consistent with the definition of public goods, no private money is spent on these activities.

The fact that so little money is spent on public health activities is surprising given the huge positive effects it is likely to have on health outcomes. Spending public subsidies on the prevention and control of infectious diseases is an extraordinarily productive use of public subsidies. Not only does the clinical literature suggest that there are cost-effective inventions, but there is evidence that even very poor countries can achieve huge improvements in their health indicators through subsidizing public health activities (World Bank, 1993b). For example, Taiwan used public health interventions to achieve health status indicators that are comparable to OECD countries, while its GDP per capita was less than $400 in today’s terms (Lo, 1995).

(ii) Equity Most countries recognize that poor individuals

may not be able to afford health care and therefore subsidize their access to care. Some subsidize participation in social insurance schemes (e.g. Japan, Korea, Taiwan and Singapore). In countries where health care is delivered through public delivery systems, subsidies are used to keep user charges low so that even the poorest families can afford medical care.

Overall, this use of public subsidies is based on the idea that nobody, regardless of income, should be denied access to basic minimal health care. While these commitments are not bound-

less, they are pervasive throughout the world. This has important implications in that redistribution policies are an inseparable part of health care policy.

Many governments try to promote equity through subsidizing the public health care system. Because low income countries have trouble implementing means testing (i.e. identifying the poor individually by examining their financial resources), they keep fees low for everyone. This amounts to across the board subsidies. Moreover, as demonstrated by the NHAs, governments tend to allocate most of their public subsidies to the services used least by the poor, i.e. hospital services. As a result, public subsidies tend to benefit the wealthy more than the poor.

Indonesia is typical of countries that try to subsidize the poor’s access to medical care through low-fee public health care systems. However, The wealthiest quintile captures about 29% of total government health care subsidies, whereas the poorest quintile obtains only about 12% of total subsidies (World Bank, 1993b). That the wealthy capture more subsidies is not only because of they have much higher utilization of hospital inpatient and outpatient services than do the poor, but that hospital services are subsidized at much higher levels than are health center and health subcenter services. A similar story is reported for Vietnam (World Bank, 1995b).

With across the board subsidies, a major cost of subsidizing the poor is the subsidies that leak to the non-poor. The greater the income elasticity of demand, the higher is this leakage cost of targeting. In Jamaica, like in Indonesia, Vietnam and the four NHA countries, the government heavily subsidizes hospital care, which is very income elastic. In order to target $1.0 dollar to the poor, the government must give the non-poor about $3.25 in subsidies (Gertler and Strum, 1997). Similarly, Baker and Van der Gaag (1993) shows that while expousing equity as a goal, countries such as China, Cote d’Ivoire, Peru and Tanzania also provide higher subsidies to the wealthy. Solon et al. (1992) shows that in the Philippines high income individuals receive much more in public health care benefits than they pay in taxes.

(iii) Insurance market failure The classic reason for most developed

countries to intervene in health markets is the inherent uncertainty in health status (Arrow, 1963). No one knows what tomorrow will bring.


Seemingly healthy individuals can be struck by cancer, injured in accidents or experience bouts of severe diarrhea. The uncertainty is com- pounded the longer one looks into the future and the less one knows about one’s current health. While most families are able to finance routine care out of their own budgets, most are not able to finance the rare but expensive incidents. In fact, in all countries, expenditure on health care is extremely skewed in that a quite small proportion of the population accounts for a large fraction of total expenditures. Therefore, while most families have only small expenditures in a given year, a relatively small number have very large expenditures.

Given aversion to risk and the strong positive relationship between earnings and health, individuals would prefer to have predictable health care expenditures. Predictable health care expenditures relieve the worry of how one will finance costly unexpected illnesses and allow families to better plan other consumption. Thus, individuals will seek to insure themselves against the financial loss associated with uncertain illness. Without formal health insurance individuals would have to informally finance the losses out of accumulated savings, transfers from relatives and friends, credit markets, or help from charities.

However, informal insurance seems to be inadequate. Using household panel data from Indonesia, Gertler and Gruber (1997) show that these informal sources of insurance are not suffi- cient for Indonesians to be able to fully finance the costs of severe illnesses. They find that when illnesses are severe enough to affect labor supply and income, the economic costs of illnesses are in part financed by reduction in the family’s consumption of non-medical goods and services. As a result, there is demand for insurance for both the medical and income costs associated with illness.

Despite the demand, most individuals are unable to buy formal insurance from private sources because of market failure from adverse selection (Rothchild and Stiglitz, 1976). Adverse selection arises from insurers not being able to observe heterogeneity in the population regarding health status. Individuals are born with different genetic makeups making them more or less predisposed towards illness, and have different life-course experiences with respect to exposure to environmental contagion and accidents. For both reasons there is substantial variation in the propensity to become ill. Because insurers do not observe each individual’s propensity to become ill, they cannot

write individual-specific contracts, but rather are forced to offer the best community-rated insurance plans. The terms of these contracts can be quite unfavorable to relatively healthy individuals. The good risks tend to subsidize the bad risks, and the value of the insurance to the goods risks, or healthy people, drops signifi- cantly. The incentive is for the good risks to drop out of the market, leaving the bad risks to insure among themselves thereby substantially driving up the cost of insurance, making it a financially bad deal for both insurers and beneficiaries.

A related problem is “risk-rating” or “cream- skimming” which occurs when individuals of poor health are observable. on their

to select risks leads to avoid individuals with condi-

tions as cancer AIDS who “certain” bad who will predictably high care expenditures. do not to provide individuals with at the

rated (average) Instead they explicitly deny or effectively

coverage by an actuarially premium. In high risk the actuarially

cost of (expected expenditures a loading to cover

costs) is than the cost of medical care paid out-of-pocket. a result,

becomes prohibitively and these are effectively

Insurance market occurs when ance is rather than The problems adverse selection cream- skimming not occur everyone is the insurance Most countries the insur-

market failure either a public system subsidized low or through social insurance which the

enrollment is In public heavily subsidized hospitals

provide against large loss associated a catastrophic However, public provide lower of insurance

they provide quality than could be in the sector with insurance

funds. allocation of subsidies in

countries is with trying ameliorate losses private insurance failure. Evidence the NHAs from the tion of in Indonesia Vietnam show

the bulk public subsidies spent on However, the of public

does not to be to adequately families against risk of loss from

ill-health. In the NHAs


that, despite the large subsidy of public hospitals, individuals are still incurring large out-of-pocket expenditures. Moreover, Gertler and Gruber (1997) show that families in Indonesia finance the economic costs of illness by reducing consumption, and this is a country with a heavily subsidized public health care system.

(d) Pressures mobilize resources

of the differences, there a general among health

that health in many and middle-income are underfunded

Bank, 1993b). are allocating few subsidies infectious disease

and other Without these the private is unable

adequately control diseases and, a result, status indicators below what

could be. lack funding also caused for efforts improve equity.

health care tend to of low especially in areas, and be located urban areas. a result, poor who concentrated in areas have travel further

obtain health and, in sense, have access to care. These in

addition the fact the majority pubic funds high end care, means

few public accrue to poor. Finally, though most public subsidies

used for care, individuals still at for large expenditures.

In to the financial problems health sectors the demands

resources are to grow the near because of demographic transition Bank, 1995b). countries have tremendous reductions fertility as result of

growth, the status of and aggressive planning programs. a result improved health life expectancy

risen dramatically Table 3). quently, the age-structure is and associated aging is epidemiological transition. populations age burden of

shifts from childhood diseases as diarrhea AR1 to long-term chronic

such as and coronary of older Countries with care systems towards caring patients with

childhood diseases need to the systems be able effectively treat chronic diseases with older tions. This the adoption new more

technologies. In chronic diseases substantially more to treat.

problems have to pressures increase expenditure to better public subsidies. there is pressure to expenditure, there also a

to find to financing

Table 3. The demographic transition and its impact on support ratios for selected Asian countries

country GDP per capita

(E?

Total fertility

rate 1991

% Population age 65+

1991 2025

Support ratio (no. of workers/

to elderly dependents

1991 2025

Nepal Bangladesh India Pakistan China Sri Lanka Indonesia Philippines PNG Thailand Malaysia Korea Singapore Japan

170 220 310 420 450 540 670 770 950

1.840 21790 3.7 6,790 1.8

15,730 1.8 28,190 1.5

5.5 4.4 3.9 4.6 2.4 2.5 3.0 3.6 4.9 2.3

2.9 4.5 33.5 21.2 0.9 4.8 110.1 19.8 4.0 8.0 24.0 11.5 2.5 4.9 39.0 19.4 6.6 4.1 1.3 1.7 2.5 1.7 2.9 3.9 6.4

12.3

11.7 12.6 8.0 7.5 4.5 9.7 8.5

15.2 18.2 25.7

14.2 23.4 75.9 57.8 39.0 7.8

33.5 10.8 24.6 5.6 14.6 4.5 7.1 2.9

7.5 6.9

11.5 12.3 21.2 9.3

Source: World Bank (1993b).


tures through subsidies from general tax revenues. Tight fiscal budgets and international donor pressure have led governments to explore altering user fees as a means of mobilizing private resources for public expenditures, and for providing incentives for more efficient use of resources and better targeting of subsidies to programs that further government priorities (Jimenez, 1996; World Bank, 1987). This proposed policy is motivated by the belief that increased spending is productive in terms of improving health status and that families are willing to pay for medical care. However, altering medical care prices changes utilization patterns, and equity proponents are concerned that increased user fees would become a financial barrier to poor, thereby reducing their access to care and, consequently, their health outcomes (e.g. Cornia et al., 1987). Moreover increased user fees put families at greater risk of financial loss associated with uncertain illness (Gertler and Hammer, 1997).

3. SOCIAL INSURANCE

A popular alternative to user fees is social insurance (SI) and private sector delivery (World Health Organization, 1994). SI plans typically finance medical care benefits through mandatory taxes and use the proceeds to purchase medical care from the private sector. A large number of countries in Asia have either passed legislation or are actively considering introducing, expanding or modifying SI. Examples include China, Indonesia, Malaysia, Mongolia, The Philippines, Thailand and Vietnam. In a number of countries including Korea, Taiwan and Singapore, SI coverage is universal. In this section we discuss several reasons why SI is attractive as a means of reducing the financial burden on the public sector, and as a way to mitigate some of the costs of mobilizing resources through user fees.

While social insurance holds promise, it creates a host of other problems that, if not addressed as part of insurance design, could outweigh its benefits. The most obvious problem, already raised earlier, is that SI cannot be voluntary. Voluntary insurance markets fail because of adverse selection and cream skimming. This is not to say that they need to enroll the whole population, but rather segments of the population such as the wage sector. In this section, we also discuss a number of additional problems in current SI programs that are related to finance, the insurance value of SI and moral hazards.

SI is attractive, in part, because it may be a politically feasible means of raising tax revenue for the health sector. SI tax revenues are placed into a trust fund that can be used only to pay for the beneficiaries medical care costs. Tax revenues earmarked for health insurance serve two important political purposes. First, it is easier to introduce a tax if people know what it is for and value what they are getting for the tax. Second, earmarking creates a feeling of entitle- ment in the public’s eyes that makes it politically difficult for a government to downsize the program in later years by reallocating the revenues to other purposes. The current debate in the United States over Medicare and Social Security illustrates this point.

SI is also attractive because it is an administratively feasible method of mobilizing resources, at least from wage sector employees and their families. Governments can easily enforce compliance by collecting SI taxes as part of a wage sector employee’s tax withholdings. The costs of collection are small since it is piggy- backed on the existing tax collection system. However, compliance and collection outside the formal wage sector may be administratively difficult and costly. This explains why a number of countries have mandated SI to the wage sector and only a few have gone universal.

(b) Shifting the burden to the private sector

SI is often hypothesized as a way to shift a good portion of the public burden of delivering and financing health care to the private sector (Gertler and Strum, 1997). SI reduces the out-of- pocket prices of higher quality private care relative to lower quality public care, thereby providing an incentive to choose the private sector over the public sector. In this way, SI shifts the delivery of care for wage sector families to the private sector, and finances their expenditures through additional off-budget earmarked income taxes, thereby relieving pressure from the general budget. The public sector is then left to care for the families in the agricultural and informal sectors and the poor.

There is mixed empirical evidence on the hypothesis that an expansion of insurance will shift the burden of care from the public sector to the private sector. Gertler and Strum (1997) used cross-sectional household survey data from Jamaica to show that controlling for income, demographic characteristics and location,


individuals with insurance demanded 30% more outpatient care from the private sector. In a similar analysis using longitudinal panel data from Indonesia, Dow and Gertler (1997) found a 43% increase in private-sector demand. How- ever, these two studies differ on the implications for the public sector. While insurance in Jamaica was found to lower demand for the public sector, there was no effect on public demand in Indonesia.

(c) Mitigating the problems with user fees

SI is also seen as a way to mobilize resources for the health sector that mitigates some of the problems of user fees. With SI, individuals are still insured against the risk of financial loss from illness when governments raise user fees. Under SI, individuals prepay their medical care expenditures (i.e. premiums) into a fund that is used to pay for their medical care if and when they becomes ill or injured. Thus, they avoid paying unexpected fees when ill and are therefore insured against the risk of financial loss from illness. With insurance, an individual’s medical care expenditures (premiums) are predictable and can be planned. Both public and private providers mobilize private resources to finance quality improvements by raising the fees charged in insurance plans for health services provided by the plan’s beneficiaries. Because increases in fees raise premiums and not the out-of-pocket charges at the time of treatment, there is no loss in the insurance value from raising fees. Raising fees still causes a loss in welfare as families must pay increased premiums at the expense of other consumption or savings, but that loss is predictable and can be spread throughout the year and across individuals.

The problem of equity in access to medical care does not disappear with government subsidy and the introduction of SI. However, using government subsidies to improve equity in access to medical care is fundamentally easier in the context of SI. The policy mechanism is for the government to subsidize the enrollment of the poor into the insurance plans. For this to be budget neutral, subsidies directly provided to public facilities would have to be reduced to finance the enrollment of the poor in the insurance plan. Public facilities would either be replaced by private providers or recoup the lost revenues through providing care for insured patients and being reimbursed. In this way, public subsidies would be better targeted to the poor, and the facilities who get the subsidies

would be the ones who care for the poor. The administration of this program would be easier than price discrimination by facilities at the time care is needed because: (i) it would be central- ized, (ii) it would only need to be done periodic- ally outside the pressure of having to treat an illness, and (iii) it could be done by a trained dedicated staff that did not have other responsibilities.

However, relying on the private sector to deliver care to the middle- and upper-income classes has its dangers for the poor. Once the politically influential middle- and upper-income classes leave the public system, the political will to sustain funding in the public sector, which is the only source of care for the poor, may not remain. Hence, a movement to a mixed public- private system will make the poor worse off, if it leads the disenfranchised to pressure governments to substantialy lower public health care spending (Gelbach and Pritchit, 1997). Indeed, in the United States, there is strong political pressure to reduce Medicaid - the program that subsidizes health care for the poor.

(d) The insurance value of SI

One of the major purposes of SI is to insure against the financial risk of unexpected medical care expenses associated with uncertain major illness. However, the movement toward SI has been motivated more out of fiscal pressure than out of the desire to ensure against the out-of- pocket financial risk associated with uncertain health status. In fact, the SI plans are, in part, replacing large public health care delivery systems modeled after the British National Health Service (NHS). These NHS-like systems deliver medical care through publicly operated delivery networks financed through general tax revenues. They typically charge, at most, a nominal user fee to ensure that income is not a barrier to medical care (World Bank, 1987). Since the “free” public systems already provide insurance against the financial risk associated with uncertain illness, there is little insurance gain from switching to social health insurance. Moreover, the design of SI systems minimizes the real insurance value. Two examples illustrate this point.

In Korea, NH1 appears to provide limited insurance against the financial risk of illness. Out-of-pocket payments account for about 74% of total medical costs, with insurance picking up the small remainder (Myung, 1994). One reason for this is that NH1 does not cover expensive


services such as computer-aided tomography (CAT) scans, magnetic resonance imaging WW, radiotheray, electrocardiograms and utlrasonographology. These services are usually required by the small percentage of extremely ill patients who account for the majority of health expenditures and, therefore, account for a large share of expenditures.

One reason why NH1 fails to cover expensive high technology services is the way it pays providers. Korea uses a uniform fee schedule to reimburse the providers. Providers receive a set fee for services covered under NHI, but this will not cover the costs. Therefore, they are free to charge what the market can bare for non-covered services. While profit margins are low and in some cases negative for covered services, profit margins for these non-covered services are quite large (Table 4).

Because the NHIs fee schedule is quite restrictive, private physicians and hospitals have small profit margins on covered services and large margins on uncovered services. Hence there is a strong provider lobby to exclude new technologies from coverage. It is also in NHIs interest not to include new technologies as it is a means of controlling its cost inflation. As a result, the private out-of-pocket costs of care are quite large and medical care expenditures are rising, in part, because of lack of controls on the introduction of new technology.

In the Philippines, Medicare is a compulsory social insurance plan that covers government workers, private sector employees and their dependents. It provides limited coverage for inpatient hospitalization up to a cap. In 1994, the average program benefit spending per claim was $8.5, an amount that is roughly equal to a third of the average cost of hospitalization in the private sector, leaving over two-thirds to be paid out-of- pocket. Moreover, the medical care provider charged higher prices to Medicare patients. Private hospitals charged a 23.4% price markup to Medicare patients and doctors charged a 68.7% markup. These price markups account for more than 85% of total Medicare benefit payments. Therefore, less than 15% of Medicare

payments actually financed health care utilization (Gertler and Solon, 1997).

(e) Finance

Most SI plans are pay-as-you-go systems, which means they use current revenues to cover current expenditures. Pay-as-you-go systems are financially unstable in aging populations. While in principle everyone benefits from SI, the burden of financing is placed on the current work force. As the population ages, the ratio of the number of workers contributing premiums to the number of elderly dependents falls - implying that revenues per beneficiary will fall. In addition, since older individuals spend more on health care, aging will lead to increased expenditures per beneficiary. This implies that as a population ages, insurance liabilities will outpace insurance premium revenues, forcing insurance fund managers to deficit finance if they intend to maintain benefits without raising taxes. Deficit financing is not sustainable without government subsidy.

For example, Korea’s national health insurance (NHI) plan is expected to start deficit financing in the middle of the next decade, which will erode asset reserves by the end of that decade (Gertler et al., 1996). As a pay-as-you go system funded through a combination of earmarked payroll taxes and government subsidies, the NH1 uses current revenues to cover current expenditures. Rapid population aging is expected to reduce the number of workers that contribute premiums to the number of elderly dependents from about 2.5 to 1 in 1995 to about 6 to 1 in 2015.

While the NH1 is currently in a strong financial position, the burden of population aging is beginning to set in. Figure 1 shows that expenditures are expected to rise exponentially, while revenues will rise linearly. The exponential rise in expenditures is driven by the exponential increase in the proportion of the population that is elderly. The difference between the expendi-

Table 4. Price markups over cost for selected services not covered by the Korean NHI

Service Cost (%) Market price ($) Markup (price/cost) ($)

CAT Scan 57 240 4.21 MRI 163 475 2.91 Ultrasonograph 10 63 6.30

Source: Yang (1995).


ture and revenue curves measures the annual thereafter (Figure 2). This deficit financing will budget surplus (deficit). Budget deficits are erode NH1 reserves by 2111. expected to begin in about 2004. When NH1 The Korean experience is relevant for many experiences annual budget deficits, it must other Asian countries about to create or expand finance the deficit out of its asset reserves. The SI. As indicated in Table 3, many countries are forecasts indicate that the NH1 asset reserves will expected to age rapidly, and, as a result, support continue to increase through 2004 and decline ratios will fall dramatically. However, many of

these countries will face this problem at much lower levels of income that Korea.

Year

Figure 1. Korean NHI expeditures and revenues.

These countries should not adopt pay-as- you-go finance structures. In this case, they will have to cut benefits and/or raise taxes in times of short falls. Of course, these options are not always politically feasible and create intergenerational conflict. Older populations who supported their parents health care through taxes expect their children to do the same. Children who have to pay the increased taxes are forced to pay a much larger intergenerational transfer to their parents than their parents paid to their parents.

This implies that financing plans for SI funds must take into account expected population aging by breaking the pay-as-go system and asking workers today to save for their medical care spending when they retire. This can be done by increasing contributions to social security funds and having individuals pay health insurance premiums out of their social security when they retire. Since individuals have saved for this, it is not an extra burden. By having individuals save when young to pay premiums when old, insurance revenues move procyclically with liabil-


ities, thereby removing the need for increases taxes on workers or reduced benefits for retiree.

(f) Moral hazard

While health insurance increases welfare by reducing the financial risk of unexpected illness, it also introduces a market failure known as moral hazard. Specifically, health insurance lowers risk by spreading the cost of health care across the healthy and sick times of all individuals, and thereby lowering the out-of- pocket price of medical care at the time of purchase. Because of the implicit price reduction, consumers demand more services. This extra consumption is inefficient, since individuals are purchasing health care beyond the point where the marginal benefit equals the marginal cost (Arrow, 1963; Pauly, 1968).

In addition, insurance facilitates the introduction of new more expensive medical technology, especially pharmaceuticals, before they are cost- effective, which further fuels medical care cost inflation. Technological change plays a key role in health care markets and is the root of the cost/quality trade-off in health policy (Weisbrod, 1991). If health care allocation decisions were driven by market prices, then, as with technology in other sectors (e.g. computers), the market would introduce them efficiently and we would not worry about the expansion of a sector in the economy (e.g. information technology). However, health care is different for two reasons. First, in societies with health insurance, consumers almost never have to pay the true price of the medical care resources they use. In most cases, patients pay very little at the time care is received. As new therapies become available and are able to treat illnesses that were incurable 10 years ago, individuals will demand those therapies and, because of insurance, will consume more of them than is efficient. Second, technological changes in health care tend not to be labor saving and in many cases are labor using. Technological change in most industries reduces the amount of labor needed to produce a given amount and therefore is cost-saving. However, the adoption of new technology in health care increases the costs of treating illness. This increase, in combination with the incentive to consume more care and technology than is efficient, leads to a continual spiral of inefficient medical care cost inflation.

Moral hazard - both in terms of increased utilization and increased costs of utilization through faster than optimal adoption of

technology - may explain the rapid medical cost inflation in both Korea and Taiwan, both of whom recently adopted social insurance plans with universal coverage with regulated fee-for- service payment.

In Korea, National Health Insurance takes the form of a series of plans funded through a combination of “earmarked” income taxes and government subsidies (Yang, 1995). Coverage is universal as participation is mandatory and benefits are used to purchase services from the private sector. Beginning in 1977, the government implemented the first stages of National Health Insurance (NHI) which would eventually cover every citizen. Korea’s strategy was to expanded coverage first in those sectors that were administratively simple, whose participation would be easiest to enforce, and who, in the eyes of the government, could afford the extra taxes. Initially, in 1977, individuals employed in firms with more than 500 employees were enrolled. NH1 was expanded to include civil servants, teachers, military personnel and pensioners in 1980. In 1983, NH1 included firms hiring 16 or more workers. Finally, in 1989, NH1 began to cover the self-employed informal and agricultural sectors. A separate program for means-tested poor individuals, Medicare, was enacted in 1977 along with the initiation of NHI.

This expanding insurance coverage has lead to an increase of the health sector as a share of GDP. Medical care expenditures were growing at the same rate as GDP up until 1978. After 1978, the first effective year of NHI, medical expenditures started to grow faster than the economy. Between 1978 and 1992, medical care expenditures grow from about 3% of GDP to over 5%. The periods of greatest increase are commensu- rate with periods in which NH1 expanded its coverage. Moreover, the period in which medical care expenditures were rising as a percentage of GDP is the same period in which GDP was growing at around 10% per annum.

Similarly, in Taiwan, medical expenditures started to grow faster than the economy, as its SI program expanded its insurance coverage (Lo, 1995). Between 1990 and 1993, health care expenditures increased 66% compared with a 45% increase in per capita GDP.

It is important to note that in both countries, the period in which medical care expenditures were rising as a percent of GDP was the same period in which GDP was growing at rate of over 10% per annum (Lo, 1995). Korea and Taiwan were able to absorb the high moral hazard cost of insurance, in part, because of their fast pace of economic growth. If economic growth had


been slow, the insurance induced expansion of the health sector may well have out-paced economic growth by much more than it did.

The threat of moral hazard means that governments need to adopt cost-control measures as part of any social insurance plan. Both Korea and Taiwan used out-of-pocket cost-sharing in the form of annual deductibles and copayments, and strict price controls to try to control moral hazard, but as evidenced above, these mechanisms did not seem to solve the problem.

One country that introduced universal health insurance, but did not experience rapid medical care cost inflation, was Singapore (Phua, 1995). Singapore achieved universal health insurance coverage through the introduction of Medical Savings Accounts (MSA) in a plan called Medisave 1984. At the same time, Medicare, a government funded insurance plan, was introduced to provide insurance for the poor. The Medisave plan mandates that individuals place 6-8% of monthly income into a medical savings account, which they can draw on when they become ill. This compulsory savings accumulates over time and acts as insurance by spreading the cost of care over time.

Because Medisave funds accumulate from personal savings and can only be used for individual care, they provide demand-side incentives to keep costs down. However, because MSAs do not risk-pool across individuals, they are not effective insurance against catastrophic illness. Therefore, one needs additional mandatory catastrophic insurance, but it can be financed cheaply. This system has the advantages of using market incentives to control costs and of being administratively simple. However, its does not allow income redistribution, and, for MSAs to work, one must be forced to save much more than is necessary to finance health insurance. Poorer economies may not want to devote this much of income to health care.

Medisave includes some limits that retard expenditures. In particular, Medisave has limits on withdrawals for some services, such as limited payments per day of hospitalization and a maximum for each surgery. In this way, Medisave has a copayment for some services, which acts to help preserve lower expenditures and preserve the fund. A similar approach is taken for new expensive technologies.

While Medisave seems to provide powerful cost-containment incentives, it provides limited insurance against catastrophic illness as it only lets an individual risk-pool over time, which is not enough to completely diversify the risk. In fact, individuals are usually not able to save

enough to offset the costs of a serious long-term illness. Singapore recognized this problem and introduced Medishield in 1990. Medishield is privately supplied insurance that provides coverage for costs associated with catastrophic illness. Except for a few groups, participation in Medishield is voluntary. The premiums are age-adjusted and are low relative to incomes, ranging from $12 per person under age 30 to $96 for a person between 60 and 65. Since the plan is meant to insure against catastrophic illness, deductibles and copayments are kept high. Medisave accounts can be used to pay for Medishield insurance premiums and for the copayments and deductibles.

The combination of incentives from MSAs and copayments seems to have controlled medical care inflation in Singapore. Since the introduction of Medisave, Medical care expenditures have remained at there pre-Medisave level of about 3% of GDP. However, this interpretation of the data must be taken with some caution, since Singapore has experienced substantial economic growth in the last 20 years. During periods of economic expansion, medical care expenditures have greatly expanded; however, they have expanded at the same rate as economic growth. It not clear that these policies would have the same effect in periods of slow growth.

4. SHOULD LOW AND MIDDLE INCOME COUNTRIES ADOPT SI?

While the lure of SI is great, there has been limited experience with the policy in low- and middle-income countries. Some lessons may be gleaned from the wealthier countries such as Japan, Korea, Singapore and Taiwan who have successfully implemented universal SI. The most important lesson is that these countries achieved successful implementation only when they were at relatively high levels of income, were largely urbanized, and had large wage sectors relative to informal sectors.

Table 5 compares the conditions in these wealthier countries at the time they introduced universal insurance to the conditions today in other countries that are in the process of implementing SI or considering it. The information in parentheses in the three columns for the four italicized countries represents the year universal insurance was instituted, the real-dollar GDP per capita at the time universal insurance was instituted, and the percentage of the country that was urban when universal insurance was instituted.


Table 5. Economic conditions when universal health insurance was instituted in wealthy countries compared to other Asian economies in 1992

Country Real $GDP per capita Real GDP growth 1960-92 % Urban

Bangladesh 220 China 450 India 310 Indonesia 670 Japan (1961) 9,290 Korea (i 989) 5,371 Malaysia 2,790 Pakistan 420 Philippines 770 Singapore (1986) 8,464 Sri Lanka 540 Taiwan (1995) 9,750 Thailand 1,840

1.85 5.05 1.90 3.50

10.49 3.39 2.50 1.54 7.90 2.19 9.17 5.04

17 28 26 32

- 66 44 33 44

100 22 51 35

For example, Korea had a GDP per capita of $5,371 and was 65.9% urban when universal health insurance was instituted in 1989.

Notice that the four countries all waited until their GDP per capita was between $5,000 and $10,000. Most of the other countries in the region are an order of magnitude below that amount. Similarly, countries that went to universal SI experienced much faster economic growth than the other countries. Finally, they were much more urbanized and had much larger wage sectors than the other countries have today. The fact that low- and middle-income countries are at much lower stages of development will make implementing social insurance more difficult.

Poorer economies that are considering SI need to ask themselves whether they are able to absorb the forced savings necessary to finance social insurance. The wealthier countries adopted universal insurance at incomes where relatively small portions of income could finance health care delivered in the private sector. The income tax rates required to fund SI that purchases high-quality care from the private sector will require a much larger percentage of income in poorer countries. If the tax rate reaches high enough levels (e.g. Mongolia is considering a 30% rate), it could place a serious drag on the labor demand and, thus, on economic growth.

In addition, the wealthy countries were largely urbanized and had big wage sectors when they moved to universal coverage. Administratively, this facilitated the expansion of coverage. Enroll- ment compliance and administration is easier in a wage sector where individuals are already paying taxes. Administrative costs are likely to be higher in poorer countries.

However, the greatest problem may be the management of medical care cost inflation from moral hazard incentives. The wealthier countries were able to absorb this inflation, in part, because of tremendous real economic growth. It is not clear whether the slower-growing low- and middle-income countries can absorb the moral hazard or whether the health sector will signifi- cantly increase its share of the economies.

In fact, the moral hazard problems might be greater in these low- and middle-income countries. Losses from moral hazard occur because insurance lowers the price of medical care at the time of purchase. Therefore, the bigger the price elasticity of demand for medical care, the greater the loss from moral hazard. The are a large number of estimates of demand for medical care in developing countries, which suggest that the price elasticity of demand is in the range of -0.5 to -1.0 (see Gertler and Hammer, 1997). This suggests that there is likely to be substantially more moral hazard in developing countries than in developed ones, where the price elasticity of demand is about -0.2 (Newhouse, 1995). More important, Cretin and Duan (1989) found that the experimentally designed introduction of insurance in rural areas in China increased demand substantially, which suggests a substantial moral hazard. Similarly, Gertler and Strum (1997) in cross-sectional analysis of Jamaican household data found that insurance dramatically increased health expenditures, and Dow and Gertler (1997) in a longitudinal analysis of Indonesian household data found insurance to also dramatically increase expenditures.

Of course, demand studies understate the total effect of SI on medical care cost inflation because they ignore the likelihood that private


providers will not adjust prices in response to the increased demand associated with SI. However, there is evidence that private prices will rise in response to increased demand. In Indonesia, private providers increased their prices in response to increased demand, which resulted from increased user fees in the public sector (Gertler and Hammer, 1997). In the Philippines, Gertler and Solon (1997) show that private hospitals charge insured patients a 23.4% price markup and private patients are charged a 60% markup

The threat of moral hazard cost inflation means that governments need to adopt cost- control measures as part of any social insurance plan. Almost all insurance plans use some form of annual deductibles and copayments to try to control moral hazard. However, the larger the price elasticity of demand, the greater the copayments need to be (Newhouse, 1995). Since the price elasticity of demand appears to be bigger in developing countries than in developed countries, cost-sharing probably needs to be significant to control moral hazard. To get an idea of the range, copayments for indemnity insurance are in the range of 20%, with a cap on total out-of-pocket payments in the United States. Since the price elasticity of demand is higher in low income countries, cost sharing may need to be higher that in the US. However, a cap on total out-of-pocket payments would still maintain insurance against the financial risk of rare but expensive illness.

These results do not say that low- and middle- income countries should abandon the use of social insurance as a mechanism to achieve universal insurance and access. Rather, the results lend a word of caution about when and how to introduce social insurance with private- sector delivery and the role of the public sector.

The experience of the wealthier countries suggests that most low- and middle-income countries should consider first introducing SI into the wage sector where income levels are

relatively high, where economic growth is the fastest, and where they are able to enforce enrollment through the existing income tax collection systems. It is important to remember that even Korea and Taiwan did not jump to universal coverage immediately. Rather, they expanded insurance slowly, sector by sector. As a result, there will remain for a period of time, a key role for the public sector in terms of financing and deliviring care in poor rural areas where private provider coverage is less.

Moreover, poorer countries need to carefully plan both the financing and benefit structure of their SI programs. The financing policy must be concerned with population aging. New programs are not politically tied into pay-as-you-go financing and are able to institute life-cycle financing. Benefit policies must be concerned about controlling costs through both demand side (cost-sharing) and supply side (provider payment) policies.

There seems to be a financial razor’s edge associated with the choice between SI and public system delivery. In societies that have public delivery, fiscal and political pressures on the public budget generally lead to underfunded systems. However, as societies switch to SI, more resources are mobilized than are efficient and the result is rapid cost inflation. While in public systems it is easy to maintain a global cap on expenditures through the public and individual budget constraints, under social insurance plans with private sector delivery, market incentives take over, which leads to rapid medical care cost inflation.

ACKNOWLEDGEMENTS

This paper has benefited from useful inputs from Yang Min Bong, Phua Kia Hong, Tei Wei Hu. Joann Lo, Sudipto Mundle, and the participants of the Workshop on Financing Human Resource Development, ADB, Manila, November 1995.

REFERENCES

Arrow, K. (1963) Uncertainty and the Welfare Berman, P. (1997) National Health Accounts in Economics of Medical Care. American Economic developing countries: appropriate methods and Review 53, 941-973. recent applications. Health Economics 6(l), I l-30.

Baker J. and Van der Gaag, J. (1993) Equiry in the Cornia G., Jolly, J. and Stewart, M. (1987) Adjustment Finance and Delivery of Health Care. Oxford Univer- With a Human Face. Oxford University Press, sity Press, New York. Oxford.


Cretin, S. and Duan, N. (1989) Modeling the effect of insurance on health expenditures in the People’s Republic of China. Health Services Research 24(4), 667-685.

Dow, W. and Gertler, P. (1997) Insurance and the demand for public and private medical care in Indonesia. RAND, Santa Monica, CA.

Gelbach, J. and Pritchit, L. (1997) More for the poor is less for the poor: the politics of targeting. World Bank Research Working Paper 1799, World Bank, Washington, DC.

Gertler, P. and Gruber, J. (1997) Insuring consumption against illness. NBER Discussion Paper #6035, Cambridge, MA.

Gertler, P. and Hammer J. (1997) Strategies for pricing publicly delivered health care services. In Znnovu- tions in Health Care Financing, ed. G. Schieber, pp. 127-154. World Bank, Washington DC.

Gertler, P. and Solon, 0. (1997) Who benefits from social health insurance in low income countries. RAND, Santa Monica, CA.

Gertler, P. and Strum, R. (1997) Private health insurance and public expenditures. Journal of Economet- rics 71, 237-257.

Gertler, P. and Van der Gaag, J. (1990) The Willingness to Pay for Medical Care in Developing Countries. Johns Hopkins Press, Baltimore.

Gertler, P., Yang, B. Y., Lee, S. W. and Peabody, J. (1996) Financing health care in an aging society: a crisis on Korea’s horizon, RAND, Santa Monica.

Hammer, J. (1997) Economic analysis for health projects. World Bank Research Observer, in press.

Herrin, A. and Racelis, R. (1994) National health accounts of the Philippines. School of Economics, University of the Philippines, Diliman.

Jimenez. E. (1987) Pricina Policv in the Social Sectors: Cost Recovery for Educavtion and Health in Developing Countries. Johns Hopkins Press, Baltimore.

Jimenez, E. (1989) Social sector pricing policy revisited a survey of recent controversies. Proceedings of the World Bank Annual Conference on Development Economics. World Bank, Washington, DC.

Jimenez, E. (1996) Human and physical infrastructure. In The Handbook of Development Economics, ed. S. J. Behrman and T. Srinanvasan. North Holland Press, Amsterdam.

Lo, J. (1995) Health Financing in Taiwan. Academica Sinica, Taipei.

Myung, J. (1994) Trends and structure: national health expenditures in Korea. Korean Institute of Health Services Management, Seoul, Korea.

Newhouse, J. (1995) Free For All. Harvard University Press, Cambridge.

Pauly, M. (1968) The economics of moral hazard. American Economic Review 58,92-101.

Phua, K. (1995) Health financing in Singapore. Singa- pore National University, Singapore.

Rannan-Eliya, R. and Nishan, N. de mel (1996) Resource mobilization in Sri Lanka. Harvard School of Public Health, Boston.

Rothchild, M. and Stiglitz, J. (1976) Equilibrium in competitive insurance markets: an essay on the economics of imperfect information. Quarterly Journal of Economics 90, 629-650.

Sen, A. (1985) Commodities and Capabilities. North- Holland, Amsterdam.

Solon, O., Gamboa, R., Schwartz, J. and Herrin, A. (1992) Health sector financing in the Philippines. Department of Health, Republic of the Philippines, Manila.

Strauss, J. and Thomas, D. (1996) The family and human capital development. In The Handbook of Development Economics, eds J. Behrman and T. Srinanvasan. North Holland Press, Amsterdam.

Weisbrod, B. (1991) The health care quadrilemma: an essay on technological change, insurance, quality of care, and cost containment. Journal of Economic Literature 29(2), 315-356.

World Health Organization (1995) Proceedings of inter-regional consultation on health insurance reform. World Health Organization, Geneva

World Bank (1987) Financing Health Care in Developing Countries: an Agenda for Reform. World Bank Policv Studv. World Bank. Washineton. DC.

World Bank’ (199%) Indonesia:’ Public Uexpenditure, Prices and the Poor. World Bank, Washington, DC.

World Bank (1993b) World Development Report: Investing in Health. World Bank, Washington, DC.

World Bank (1995a) Vietnam Poverty Assessment. World Bank, Washington, DC.

World Bank (1995b) Averting the Old Age Crisis. World Bank, Washington, DC.

World Bank (1996) China: Issues and Options in Health Financing. World Bank, Washington, DC.

Yang, B. M. (1995) Health financing in Korea. Seoul National University, Seoul.

on the road to social health insurance: the asian experience

Documents