Professional Documents
Culture Documents
Keeping healthy in
emerging markets:
insurance can help
01 Executive summary
02 Introduction
06 Healthcare systems
13 The role of private
health insurance
16 The PHI market in
emerging economies
22 Outlook: better health
for more people
30 Conclusion
31 Appendix
Executive summary
The emerging markets need healthy
workers to sustain their strong growth
trajectories.
A healthy population supports economic growth. Since it is widely accepted that the
emerging markets will drive global growth in the future, it is in everyones interest
that people living and working in those markets are fit and healthy. To date, however,
the healthcare systems in many emerging markets have had insufficient investment,
leading to poor infrastructure and quality of services.
Global spending on healthcare in 2012 was USD 7.2 trillion, and 22% of that
(USD 1.6 trillion) was in the emerging markets. Demand for healthcare services in
emerging markets is rising as their economies grow, access to services improves,
populations expand and age, urbanisation continues and as the prevalence of
chronic diseases increases.
In emerging markets, healthcare has traditionally been funded by the state through
general taxation revenues, alongside a significant contribution from private household
savings. The private health insurance (PHI) sector can facilitate an expansion of
services. To date, PHI has covered just a small proportion of total healthcare spending
in the emerging markets: less than 10% in the main emerging markets in 2012.
It can play a larger role. With rising incomes, more people will want to and be able to
spend extra on health and on health insurance.
PHI includes products that reimburse the medical expenses of the insured and those
that pay fixed benefits upon diagnosis of a disease or disability. In countries where
healthcare is mostly state-provided, PHI can be used to fill the gaps in coverage
for example by covering treatments not included in public provision. PHI offers
individuals and households protection against major healthcare expenses. By
pooling the risks of the insured, PHI allows consumers to pay an affordable regular
premium and thereby share the cost of treatments required with the others in the
pool. This is of particular value in the low income emerging market environment
because the cost of treatment, particularly emergency procedures, can be well
beyond the means of the average household. PHI also offers consumers more choice
with respect to place, type and level of treatment as and when it is required. And
with fixed-benefit products, consumers can choose how to use the benefits
received, for instance to cover the cost of treatment or perhaps as income
replacement.
Demand for PHI in the emerging markets has been rising rapidly. Reimbursementtype medical insurance premiums are estimated to have grown by 11.2% in real
annual terms between 2003 and 2013, and are forecast to grow by 10% per year
up to 2020, twice the pace of projected real gross domestic product (GDP) growth.
To maximise the opportunity, insurers need to understand the different healthcare
systems in the various emerging markets, in particular the role of PHI in relation to
other state-funded and social health programmes. Insurers also need to design
products that better meet evolving consumer needs. Innovative use of distribution
channels and awareness campaigns can further increase PHI penetration.
Introduction
Good health is a duty to yourself, to your contemporaries, to your inheritors, the
the progress of the world. Gwendolyn Brooks
Healthy workers drive economic growth
and development.
A study in 1998 found that half of the economic growth differential between Africa
and rest of the world could be attributed to the prevalence of ill-health in Africa and
the low life expectancy there.2 Other studies further support the assertion that good
health means stronger growth. For example, one report found that a 40% extension
to life expectancy from 50 to 70 years increases per capita income growth by
1.4 percentage points (ppt).3 Another study found that tropical countries in which
there had been a 10% reduction in the incidence of malaria experienced a 0.3 ppt
gain in annual GDP.4
Advances in medicine have led to improved health and longer life expectancy in
the emerging markets. Even so, the incidence of chronic disease in these markets
is increasing: according to the WHO, nearly 80% of global chronic disease-related
deaths occur in low and middle-income countries.5 Diabetes, cancer and cardiovascular disease (CVD) are increasingly prevalent. In 2013, about 80% of the worlds
382 million diabetics lived in low and middle-income countries. China had 96 million
diabetics, the world leader, followed by India with 67 million cases.6
The impact of the proliferation of chronic diseases can be assessed using the
disability-adjusted life years measure, which expresses the number of productive
years lost due to illness, disability and early death (see Figure 1). Based on WHO
estimates, chronic diseases accounted for 40% of the productive years lost in
emerging markets in 2000. The ratio has since risen to more than 50%, meaning
that chronic conditions have overtaken communicable and other ailments as the
major disease burden in these markets.
Figure 1:
Lost healthy years of life by cause in
emerging markets, 2000 and 2012, %
2000
49%
40%
38%
2012
0%
20%
11%
51%
40%
60%
11%
80%
100%
To address the challenge of communicable and chronic diseases, and meet the
needs of expanding populations, emerging markets have allocated more resources
to healthcare services in the last decade. Strong economic growth and rising
incomes means healthcare spending has increased faster than the rate of GDP
growth in most emerging countries (see Figure 2). This has come about because
with increasing purchasing power and economic wealth, people and governments
tend to spend an increasing share of income on health and improving quality of life.
Figure 2:
Total healthcare expenditure and GDP
in emerging markets, 2002 and 2012
Nominal GDP,
USD billion
27 812
1 567
15.8%
14.8%
6 992
360
2002
2012
2002
2012
Note: Growth rates are the compounded annual increase between 2002 and 2012.
Source: Global Health Expenditure Database (WHO), Swiss Re Economic Research&Consulting.
Introduction
high as out-of-pocket payments. For example, the WHO estimates that 900 million
people in Asia Pacific are vulnerable to impoverishment due to healthcare costs.9
Health insurance provides for the payment of benefits as a result of sickness or injury.
PHI has historically been characterised as voluntary, for-profit commercial coverage.
The scope of PHI has broadened over the years to include more benefits. For example,
apart from helping the insureds cover the actual cost of medical treatment, products
are also available to protect against loss of income due to disability (disability
insurance) and cover the expenses incurred in old-age dependency care.
Based on the nature of benefits, PHI can be segregated in two broad product
categories: reimbursement-type medical insurance and fixed-benefit health insurance
products. Reimbursement-type medical insurance indemnifies the expenses incurred
by the insured for hospital and other treatments arising from illness or injury (see
Figure 3). There are usually limits to reimbursement and sub-limits for different
procedures. A significant chunk of the medical insurance business is sponsored by
employers as part of the benefits offered to employees (group medical insurance).
Indemnity-type insurance is often short term and premium rates can be adjusted
periodically (although rigid regulation is sometimes applied for re-pricing). Copayments and deductibles are common features of these products, used as a way
to reduce moral hazard and overuse of healthcare services.
Figure 3:
Schematic representation of medical
and health insurance
Fixed-benefit products
Include hospital cash, critical illness
insurance, disability income and
long-term care insurance.
Benefits are usually paid as a lumpsum or as an income stream (eg, in
disability income insurance).
9 Health Financing Strategy for the Asia Pacific Region (20102015), WHO, 2009.
10 More information can be found in sigma 6/2007 To your health: diagnosing the state of healthcare
and the global private medical insurance industry, Swiss Re.
Both life&health (L&H) and non-life insurers can write reimbursement-type medical
and fixed-benefit health insurance. In the case of non-life companies, they can only
write fixed-benefit products if the policy does not include a death benefit. Typically
non-life insurers write short-term policies, while L&H firms write longer-term contracts
and riders to ordinary life products. In many markets there are specialised health
insurance companies that write only medical and health insurance products. Monoline insurers like these sometimes benefit from regulatory concessions such as lower
minimum capital requirements.
This sigma reviews recent developments in the PHI industry in emerging markets,
with particular emphasis on its role in helping people pay for their medical and
health needs within the framework of nation-specific care provision systems.
Healthcare systems
Responding to a populations healthcare needs and expectations
A well-functioning healthcare system
provides treatment
and prevention.
Table 1:
Number of physicians, nurses and
hospital beds per 10000 population,
globally and in the BRIC economies*
Americas
Europe
Western Pacific***
Eastern Mediterranean
South East Asia
Africa
High-income countries
Upper middle-income countries
Lower middle-income countries
Low-income countries
Russia
Brazil
China
India
Physicians
Nurses
Hospital beds
21
33
15
11
6
3
29
16
8
2
43
19
15
7
46
81
25
16
15
12
87
25
18
5
85
76
15
17
23
53
43
8
10
na****
54
32
10
21
97
23
38
7
Notes: *BRIC = Brazil, Russia, India and China; **data is based on latest information available from different
regions / counties between the years 20062013; *** by WHO definition, Western Pacific includes East
Asian markets (eg, China, the Philippines and Indonesia) and also the Pacific countries such as the Solomon
Islands and Vanuatu. **** na = not available.
Source: The 2013 update Global Health Workforce Statistics, WHO, 2013, and Swiss Re Economic
Research&Consulting.
There have been some positive developments in the healthcare infrastructure of the
larger emerging countries in recent years. For example, today the density of health
infrastructure in Russia is among the highest in the emerging markets. This is largely
due to the National Priority Project for Health launched by the government in 2006.
The programme budget for the period 2006 to 2009 was USD 13 billion. It was
spent on higher salaries for primary and emergency care physicians, the purchase
of primary care equipment and vaccination programmes.13
In Brazil, the government initiated reform of its national health system, Sistema nico
de Sade (SUS), in 1996. A central premise of the reform was decentralised universal
access, with municipalities providing comprehensive and free healthcare to each
individual. Key elements of the strategy have been primary care and Family Health
Teams, including doctors, nurses, dentists and other health workers. These have
provided access to healthcare services to more people.14
China has also made significant progress in developing its healthcare facilities over
the last decade. It now has close to the same number of beds and physicians per
10000 people as upper middle income countries. Around 90% of the hospitals in
China are currently state-owned. The remaining 10% are private and are used mostly
by affluent Chinese and foreigners in the urban areas.15 In India, while significant
efforts have been made to expand coverage, the healthcare infrastructure lags many
emerging country peers. Long queues at emergency units, beds in hospital corridors,
and a scarcity of doctors and medicine in rural areas remain common place.
13 Snapshot Report on Russias Healthcare Infrastructure Industry, Deloitte and Informa Life Sciences
Exhibitions, November 2013, p 1.
14 Flawed but fair: Brazils health system reaches out to the poor, Bulletin of the World Health
Organization, vol 86 no 4, April 2008, p 241320, http://www.who.int/bulletin/
volumes/86/4/08-030408/en/
15 F.J. Goguen and J.D. Connolly, Global Wealth Creation: The Impact on Emerging Markets Health Care,
The Boston Company Asset Management, LLC, August 2012, p 4.
16 In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of
economic welfare. Tax incidence is said to fall upon the group that ultimately bears the burden of, or
ultimately has to pay, the tax. Source: http://en.wikipedia.org/wiki/Tax_incidence
17 See, for example, J. Gruber and A.B. Krueger, The Incidence of Mandated Employer-provided
Insurance: Lessons from Workers Compensation Insurance, The National Bureau of Economic
Research, January 1991, pp119139, http://www.nber.org/chapters/c11270.pdf
Healthcare systems
Figure 4:
Healthcare financing mechanism
Healthcare providers
General taxation
Social insurance
Tax collector
Social insurance
revenue collector
PHI
Out of pocket
expenditure
Taxes/contributions
Consumers/employers
Source: Adapted from W. Savedoff and N. Sekhri, Private health insurance: implications for developing
countries, WHO, Discussion Paper no 3, 2004.
Financing channels
The organisation of healthcare systems and the associated expenditure channels
vary across emerging markets. The Appendix describes the systems of select
countries. The following are the main expenditure channels.
Government-provided healthcare is
funded through general taxes,
Social health insurance (SHI). SHI schemes are mostly funded by individuals from
their wages, as they pay taxes or premiums specifically designated for healthcare
services. The schemes can exist in many forms and can be directly administered
by governments or social security offices, or through sickness funds. As with
private reimbursement-type medical insurance, co-payments and deductibles are
included to discourage moral hazard and over-utilisation of medical services.18
Participation can be voluntary or mandatory. Uptake of voluntary SHI depends on
the co-payments and benefit packages as well as the level of government
subsidies (from general taxes) in insurance premiums.
Private health insurance. PHI plans are pre-paid and enrolment is generally
voluntary. Some plans may be subsidised or heavily regulated. Insurance premiums
can be paid by individuals, employers or government subsidies, but are channelled
through private insurance companies. In some countries like the US, many
individuals get PHI from, and share the premium payments with, their employers.
PHI can inject resources into health systems, add to consumer choice, and help
make healthcare systems more responsive.19
18 In an insurance policy, the deductible is the amount that must be paid out-of-pocket before an insurer
pays any benefit. A co-payment is a payment paid by the insured person each time a medical service is
accessed.
19 F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD, 2004, pp 1953.
Other private expenditure. Healthcare expenditure can also come from foreign aid
or domestic charity organisations. This is an important channel in some markets,
particularly in Africa. However, external donor assistance may crowd out domestic
sources and can be variable over time.
In any one system, healthcare expenditure is typically a mix of these channels. In the
emerging markets, healthcare is mostly paid for through government expenditure
or SHI (financed by general taxation). As Figure 5 shows, in 2012 government
spending and SHI accounted for 32% of total healthcare expenditure in India and
76% in Thailand. Another main channel of expenditure in many countries was direct
out-of-pocket payments (58% of total health spending in India and 52% in the
Philippines, but just 7.2% in South Africa). Pre-payment through PHI accounted for
just a small share of total expenditure.
Figure 5:
Breakdown of national healthcare
expenditure by channel, 2012
100%
80%
60%
40%
20%
South Africa
Turkey
Russia
Poland
Hungary
Mexico
Brazil
Argentina
Vietnam
Thailand
Philippines
Malaysia
Indonesia
India
China
0%
With the exception of South Africa and Brazil, less than 10% of total expenditure
in the main emerging markets in 2012 came from PHI. In both China and India,
for example, PHI accounted for just 3.1% of total healthcare expenditure.
Healthcare systems
Some governments have been finding ways to improve the cost efficiency of public
healthcare and to address the issue of the rising strain on public finances. In Mexico,
for example, the government implemented centralised price negotiations in 2008
to keep the cost of drugs down, and introduced reverse auctions in 2009. In this
system, the suppliers of drugs compete to win business from the government and
can undercut one another.20 In Thailand, the government employs a capitation and
case-based payments system through which the government pays healthcare
providers depending on the number of beneficiaries registered, thus incentivising
hospitals and other healthcare providers to be more cost conscious (see Box below).
20 IMSS and its Public Procurement System, Mexican Institute for Social Security and OECD,
January 2012, p 7.
21 Health Financing Reform in Thailand: Toward Universal Coverage under Fiscal Constraints, World
Bank, January 2013, pp 2-4.
22 Designing Health Financing Systems to Reduce Catastrophic Health Expenditure, WHO, 2005, p 2.
Economic growth and wealthier societies. Real GDP in the emerging markets
overall is forecast to grow by an annual average of 5% between 2014 and 2020,24
and around 60% of the worlds middle-income population is projected to be in the
emerging markets by 2020.25 Growth and rising incomes will generate additional
demand for healthcare services: people and governments tend to spend more on
health as wealth increases because they want to improve quality of life.
Population growth and ageing. The emerging markets total population is forecast
to grow from 6.1 billion in 2015 to 8.2 billion in 2050, with more than 14% of the
population aged over 65 years by that time (up from 6% in 2015).26 The much
larger population will require more healthcare infrastructure. At the same time,
the expanding old-age population will increase the financial burden for societies
as a whole, given the relatively high medical costs of the elderly. Many emerging
markets still have a young population profile, but this is changing. In Latin America
and Asia, for example, the number of people aged 65 years and over is expected
to double by 2030.27 Furthermore, healthcare expenditure will rise alongside
better and more frequent screening, leading to higher discovery rates of diseases
such as cancer before they become fatal.
23
24
25
26
27
Cancer Trend Study 2014 Liver Cancer, Swiss Re, November 2014.
Forecast from Swiss Re Economic Research&Consulting.
The Emerging Middle Class in Developing Countries, OECD Development Centre, January 2010, p 28.
World Population Prospects: The 2012 Revision, UN Population Division.
sigma 5/2014: How will we care? Finding sustainable long-term care solutions for an ageing world,
Swiss Re, p 2.
Healthcare systems
In addition, sea levels are rising, glaciers are melting and precipitation patterns are
changing. Increasingly variable rainfall patterns could affect the supply of fresh
water. A lack of safe water can compromise hygiene and increase the risk of
diarrheal disease. Floods also appear to be more frequent and intense. Floods
heighten the risk of water-borne diseases, can cause physical injuries, damage
homes and disrupt the supply of medical and health services. Moreover, increasing
frequency of weather-related natural disasters, often in many of the worlds poorest
regions, will likely disrupt the production of staple foods.
A WHO assessment taking into account only a subset of the possible health impacts,
and assuming continued economic growth and improvement in health infrastructure,
estimated approximately 250000 additional deaths due to climate change per year
between 2030 and 2050.30 All populations will be affected by climate change, but
some are more vulnerable than others. People living in small island developing states
and other coastal regions, megacities, and mountainous and polar regions are
particularly vulnerable. Countries with weak health infrastructure will be the least
able to cope.
These different factors will generate higher costs, demand for and spending on
healthcare. The challenges are many and the authorities in many emerging markets
need to establish a more efficient and sustainable system of paying for care services.
Different options are available, including privatisation of public-sector health
schemes, raising fees or co-payments, increasing SHI premiums, outsourcing part of
healthcare services or stepping up cost containment efforts. One more option is to
grow the PHI sector and thereby the role it plays as one of the channels of national
healthcare spending.
28 World Urbanization Prospects: The 2014 Revision, UN Population Division. Emerging markets are
based on the UN definition of less developed countries, including Africa, Asia (except Japan), Latin
America and the Caribbean plus Melanesia, Micronesia and Polynesia.
29 Climate change and health, WHO Fact sheet No.266, August 2014, http://www.who.int/mediacentre/
factsheets/fs266/en/.
30 Quantitative risk assessment of the effects of climate change on selected causes of death, 2030s and
2050s, WHO, 2014, p. 13, http://www.who.int/globalchange/publications/quantitative-riskassessment/en/
When people buy PHI, they acquire protection against the costs of future care needs.
However, in many countries people can access healthcare services from the public
sector and through SHI schemes. So why then should people want to buy the
protection that PHI offers? Why does PHI exist?
PHI offers a number of benefits. For example, it can be tailored to consumer needs
and give consumers more choice in terms of options such as private rooms for
hospital stays, things that become a growing expectation as incomes rise. It can also
increase efficiency and quality of treatment, and flexibility. For instance, fixed-benefit
products give consumers freedom to choose how to use the benefits paid. They can
use the benefits to pay for the cost of treatment and rehabilitation or, if they wish, to
make up lost income incurred by being unable to work in the period of illness.
It is against this backdrop and rising concerns over the efficiency and sustainability
of existing, mostly publicly-funded healthcare systems in emerging markets that PHI
is gaining more attention. PHI offers the following advantages over other expenditure
channels and can thereby improve the effectiveness of a national healthcare system.
Increases household financial security. The need for precautionary savings can
hold back household spending on other life priorities (eg, education). By pooling
the risks of many, PHI offers households protection against the financial risk of
high-cost medical emergencies without setting aside savings to pay for treatment.
Instead, people pay a regular premium and share the risk of an emergency with
the others in the insurance pool. This lowers the cost of the emergency treatment,
making it cheaper for households than if they were to pay out-of-pocket at the
time of consumption. In similar vein, the risk pool helps households manage
healthcare cost escalation. Some PHI products also protect against loss of
income.
Tailored to customer needs, with choice and flexibility. Health and medical
insurance policies can be designed according to an individuals needs and
financing abilities. This is not restricted to the provision of insurance to high networth individuals or expatriates, but is also available to low-income households
through, for example, micro health insurance schemes. With PHI, consumers can
choose the level of coverage they want based on their individual needs. In this
way, PHI gives consumers choice, more so than public healthcare systems in
which services tend to be standardised for general population requirements.
Timeliness of insurance funding. With PHI, people receive benefits at the time
that they need funds to cover the costs of treatment. For example, cancer
insurance products allow policyholders to draw fixed benefits once illness is
diagnosed, meaning that funds for treatment and other expenses are immediately
available. The scope of PHI products varies across regions and in some areas,
reimbursement-type indemnity insurance is popular. Here the insured pays the
medical bills and is reimbursed, or the costs of the treatment are paid directly by
the insurer. Either way, payment can be timed to reduce unnecessary strain on
policyholders finances.
That the utility PHI offers comes from it being part of an integrated system means
that by definition, PHI is not a universal solution. And nor does it come without its
own limitations. For instance, insurers need to assess individuals to determine their
respective risk level and corresponding premiums. While the industrys ability to
assess and underwrite different kinds of risks has improved over time, certain
consumer segments remain uninsurable or expensive to insure (eg, those with
existing health conditions). These consumers are usually dependent on public health
schemes.
The different forms of private health insurance
PHI can take different forms, depending on its role in a given healthcare system.
It can be a primary source of coverage for population groups without access
to public healthcare (eg, in the US). This could be because there is no public
healthcare, or because individuals or the population groups are not eligible.
PHI can duplicate existing public universal coverage by offering a private alternative
for those who opt out of SHI. Duplicate PHI operates in parallel with the healthcare
provided by the state but typically offers quicker access and a wider choice of
services for the insured.
PHI can also complement SHI or public services. In this case, PHI is used to pay
for expenses not fully covered or reimbursed by the public scheme, for example in
helping to pay for co-payments (ie, it covers the residual costs).
Finally, PHI can supplement SHI and government plans by paying for services not
covered by public schemes. These could be ancillary or selective services such as
dental and optical treatments, LTC, rehabilitation, alternative medicine, upgraded
hospital accommodation and optional (eg, cosmetic) services.
In India, the central and state governments are changing their role from that of
provider of public healthcare, to purchaser of and payer for care services through
insurance. In 2007, the central government launched the Rashtriya Swasthya Bima
Yojana (RSBY) scheme which provides state subsidies to those living below the
poverty line so that they can access authorised health insurance cover.31
31 See Appendix for country-specific details of the existing healthcare systems in major emerging markets.
adverse selection
moral hazard
Moral hazard occurs when the behaviour of the insured changes in a way that
raises costs for the insurer. When individuals buy health insurance, they no longer
bear the full cost of medical services and have an incentive to over-use services,
even in cases when treatment may not be necessary. Or, the insured may
undertake more risky (eg, sporting) activities, knowing that any injuries will be
covered. Coinsurance, co-payments and deductibles reduce the risk of moral
hazard by putting some of the burden of the costs of medical services back onto
the insured, dampening the incentive of the insured to over-consume.
Medical cost trend risks arise from new technologies and drugs (which often
result in higher claims costs), additional availability of care infrastructure and
services, behaviour and lifestyle changes and increasing life expectancy. As these
factors rise, medical expenditures also increase. Cost trend risks are systematic
and cannot be diversified and are also difficult to forecast. Again, the risk can be
exacerbated by regulations that limit insurers ability to react to market
developments.
32 How Adverse Selection Affects the Health Insurance Market, Harvard School of Public Health,
March 2001, pp 12.
Emerging market PMI premiums are estimated to have increased by around 10%
to USD 36 billion in 2013 (3.6% of the estimated global total of USD 1005 billion).
Of these, non-life and L&H companies wrote USD 11.8 billion (33% of total) and
USD 7.6 billion (21%), respectively (see Figure 6). Another USD 14 billion (39%)
was written by specialised health insurers.
Figure 6:
Shares of PMI by carrier in emerging
markets, 2013E
Total:
USD 36 billion
Non-life
L&H
Composite
Specialised health insurers
32.7%
21.0%
7.5%
38.8%
E = estimates.
Source: Swiss Re Economic Research&Consulting.
Figure 7 shows the penetration rate (PMI as a percentage of GDP) in the major
emerging markets in 2012, compared to total healthcare expenditure as a
percentage of GDP. Brazil spends most on healthcare and also has the highest PMI
penetration rate.33 This is due to the success of specialised health insurers there.
Mexico, Chile and Colombia also have relatively high PMI penetration rates, and
advanced healthcare infrastructure. In Central and Eastern Europe (CEE), total
healthcare expenditure is also high but comes mostly from government coffers,
which explains the low PMI penetration rates in individual countries. In Emerging
Asia, both PMI penetration and total healthcare spending are low.
33 In Brazil, PMI mainly refers to medical insurance policies issued by so-called specialised insurance
operators, and excludes PHI issued by other institutions like self-managed operators, philanthropic
groups, medical cooperatives etc.
Figure 7:
PMI premiums and total healthcare
expenditure as % of GDP in select
emerging markets, 2012
10%
9%
8%
Brazil
Hungary
Czech Republic
7%
6% Vietnam
5%
Poland
China
Turkey
Philippines
4%
Russia
Israel
Mexico
India
Malaysia
3%
2%
Chile
Colombia
Saudia Arabia
Thailand
Indonesia
0.0%
UAE
0.1%
0.2%
0.3%
0.4%
0.5%
PMI as % of GDP
Source: WHO, Swiss Re Economic Research&Consulting.
Table 2:
Direct PMI premium volumes by region,
in USD billions
PMI penetration in the emerging markets remains low, but premiums have been
rising rapidly over the last decade. Between 2003 and 2013, premiums rose by a
real compound annual growth rate (CAGR) of 11.2%, compared to 3.5% globally.
In terms of geographical volume distribution, Latin America was the leader with
premiums of USD 14.9 billion (41% of emerging market total) in 2013. Of the
remaining USD 9.4 billion (26%) came from Emerging Asia, USD 7.4 billion (21%)
from the Middle East and North Africa, and USD 4.3 billion (12%) from CEE.
Emerging markets
Latin America
Central&Eastern Europe
MENA
Emerging Asia
World
Direct PMI
2003
Direct PMI
2013E
Real CAGR
20032013E
5.4
3.6
0.1
0.6
1.0
518.7
36.0
14.9
4.3
7.4
9.4
1005.2
11.2%
6.8%
12.1%
18.9%
19.0%
3.5%
Note: MENA = Middle East&North Africa, including also Turkey. Figures include premiums from L&H,
non-life insurers, composite and specialised health carriers. E = estimate.
Source: National insurance regulators, Swiss Re Economic Research&Consulting.
Emerging Asia
Medical insurance premiums in Emerging Asia have grown by a real CAGR of 19%
over the last decade, but the industry is in very early stages of development. Many
governments have earmarked PMI as a key growth area. China and India, for
example, are encouraging the establishment of stand-alone or specialised health
insurers. In recent years, India has improved regulations governing health insurance,
focusing on standardisation and transparency. In China, PMI operates alongside a
rapidly expanding SHI scheme.
In both China and India, a niche segment serving high-end customers is emerging
while in emerging Asia generally, the use of Third-Party Administrators (TPA) is
becoming more common. A TPA is an administrator enlisted on behalf of an insurer
to administer claims and other functions in the insurance value chain, the aim being
to better align the interests of medical service providers and control costs.
Latin America
In Latin America, medical insurance premiums have been growing by a real CAGR of
6.8% since 2003. Large parts of the health sector in the region were privatised in
reforms in the 1990s (Chile initiated reforms much earlier, in 1981). Apart from more
people taking up private insurance, the growth of the PMI industry has also been
driven by escalating healthcare costs pushing up PMI premiums. However, the initial
flourish of the industry in the 1990s and associated rise in number of foreign insurers
in the market has not yielded sufficiently larger access to better healthcare, nor
better insurance products. Brazils universal health system, for example, struggles to
meet the needs of all. Many citizens feel insecure with the limited cover they have,34
and constraints on health insurance underwriting in the form of mandatory restriction
on risk selection means there is little innovation and a lack of incentive to control
costs. Argentina, Chile, Colombia and Peru similarly have large healthcare coverage
gaps.
Central and Eastern Europe
In CEE, PMI has yet to become an important channel of healthcare payments. In
many countries, PMI schemes were introduced in the course of the transition to
market-based economies in the 1990s, supported by health sector reforms and
state-driven pilot programmes to establish PMI as a pillar of the healthcare system
(for example, in Estonia and Hungary). In an environment of escalating healthcare
costs, contributions to private prepaid schemes have increased in many countries in
recent years. Even so, PMI penetration generally remains low. Russia, the largest
market, accounts for over 80% of total PMI premiums in the region.
Middle East and Sub-Saharan Africa
Private expenditure is an important source of healthcare finance in the Middle East
and North Africa, but PMI is a relatively new phenomenon: only Saudi Arabia, UAE,
Israel and Turkey have a sizeable PMI industry. Out-of-pocket payments account for
the bulk of private spending. In Sub-Saharan Africa (SSA) excluding South Africa, a
very small percentage of the population has PMI, and premiums and the breadth of
cover are small. Micro health insurance schemes have been introduced in Burkina
Faso, Cameroon, the Ivory Coast, Ghana, Guinea, Mali, Nigeria, Senegal, Tanzania,
Togo and Uganda. The schemes offer less-comprehensive cover than PMI and the
resulting premiums are low in comparison. Micro health insurance is likely to become
a building block in the financing of future health expenditure in this region.
PMI profitability in emerging markets
The role, regulatory regimes and profitability of PMI in different markets varies
significantly. For example, supplementary and complementary PMI is typically less
regulated than primary and duplicate systems. And competitive pressures in
supplementary PMI tend to be lower because consumers usually stay with an insurer
for many years (existing health issues can make it difficult to switch providers).
Hence loss ratios in supplementary PMI tend to be lower.35 In India, in contrast,
where PMI is largely primary in nature, profitability has remained low. The sector loss
ratio has consistently been above 90% (see Figure 8). PMI premiums have grown
significantly in the past 10 years, but claims have also been high.
34 Brazil Customer Survey Report 2013 Capturing Future Opportunities, Swiss Re. The survey showed
that 40% of Brazilians fear that they would suffer and struggle financially if they were affected by a
long-term illness or disability.
35 Theloss ratiois the ratio of total losses incurred (paid and reserved) in claims plus adjustment expenses
divided by the total premiums earned.
Figure 8:
Loss ratio and real growth rate of
medical insurance industry in India
140%
70%
60%
120%
50%
100%
40%
80%
30%
60%
20%
40%
10%
20%
0%
0%
2006
2007
2008
2009
2010
2011
2012
cash is also available in most emerging Asian markets, usually as a rider to life or
medical insurance policies, although standalone policies are available. Hospital cash
is generally regarded as an affordable alternative to PMI, and there is wide variation
in benefit levels and payment periods.
LTC insurance is undeveloped.
The least developed product in the region is LTC insurance, which is currently
available on a fixed-benefit basis in China only. The Chinese market is small but with
a fast-ageing population, many insurers see potential. Some have been investing in
retirement villages as a means to expand their reach into the old-age care market.
Latin America
In Latin America, critical illness insurance is available and is usually considered to
be an alternative or supplement to medical insurance. It comes as a rider to life
insurance products, particularly in group insurance. Due to the wide coverage of
existing medical insurance products, the development of critical illness insurance
has been slow in many markets. In Brazil, for instance, premiums from critical or
terminal illness cover (doenas graves ou doena terminal) provided by life carriers
amounted to USD 190 million in 2013, less than 1% of total life insurance premiums.
Most products currently offer low benefits and are only for specific medical conditions
(usually five to seven). Insurers are not yet ready to offer long-term guarantees and
most products are relatively short-term in nature. Key obstacles to the development
of the segment are lack of data and consumer awareness, and an unfavourable
commission structure that discourages agents from selling pure protection products.
There is also a need to standardise definitions of critical illnesses. The segment is
seen as having strong growth potential, particularly in more advanced Latin
American markets.
Hospital cash is available as a daily cash benefit or loss of income protection, and is
increasingly being distributed by banks and as microinsurance. In comparison, LTC
insurance is virtually non-existent in Latin America. For example, in Brazil nursing
homes exist almost solely in major metropolitan areas and are mainly supported by
religious institutions.
Central and Eastern Europe
Critical illness insurance products are relatively well developed in many CEE markets,
as a result of rising health awareness and increasing incidence of major illnesses.
Against the backdrop of relatively comprehensive coverage of social security
benefits in most CEE markets, health insurance is mainly used to finance advanced
and additional treatments not covered by the public healthcare system. Critical
illness covers are usually sold as riders to endowment and unit-linked life policies,
while standalone policies are also available. The more difficult economic environment
over the past few years has encouraged a shift from savings to protection products,
thus supporting the popularity of health insurance products. The number of covered
illnesses varies by market, but more complex products are increasingly available, as
agents (the main distribution channel for critical illness products) demand more
conditions to increase product attractiveness to consumers. Additional features like
multiple payments are also available in some markets, for example Poland.
Hospital cash benefit plans are also readily available in most CEE markets. The
plans are sold on both an individual and group basis as riders to life policies or as
standalone cover. Given the relatively comprehensive social security benefits, there
is limited financial need for hospital cash insurance and many consumers prefer
other protection products like critical illness insurance. The main type of cover
provides a daily allowance during a hospital stay (up to a maximum sum assured)
due to illness or an accident.
At present LTC insurance products are generally not available in CEE. State provision
of old-age care is available in some markets. For example, the Czech Republic provides
LTC medical care through a mixture of domiciliary care and nursing homes. The
Czech government has signalled an intention to develop LTC insurance.
Sub-Saharan Africa
Critical illness insurance is not widely available in SSA. Limited covers can be bought
as a rider to a life or personal accident policy, usually on a group basis. A lump sum
benefit is paid in the event of an insured being diagnosed with one of a list of critical
illnesses. These usually include cancer, hepatitis, stroke, coronary artery failure, renal
failure and leukaemia.
Hospital cash benefit is likewise a small segment in SSA, as the health insurance
market is dominated by indemnity-type covers. Hospital cash is available in some
markets such as Zimbabwe, Kenya and Nigeria, as an optional rider on a life or
personal accident policy. Most SSA governments have no provision for LTC, and
private facilities or insurance schemes are very limited. LTC insurance is unlikely to
gain popularity in the near future as the extended family, in which family members
look after the elderly and other members with long-term illnesses, plays an important
role in the local cultures. Moreover, the health insurance and pension provisions
systems in the region would need to be developed much further before attention is
turned to LTC insurance.
Distributing health insurance in emerging markets: challenges faced
Whether reimbursement or fixed benefit, there are challenges in executing effective
distribution of health insurance products in the emerging markets. A fundamental
issue is lack of knowledge about health insurance distributors/providers and the
benefits that PHI can offer, on the part of the consumer. From the outset, this acts as
a constraint on demand.37 It also highlights the importance and prevalence of the
use of insurance agents to distribute health and medical insurance products. Studies
have also shown that consumers in emerging markets generally prefer agents to
other channels when seeking information on health insurance and when actually
purchasing cover.38 Agents can better explain the benefits and coverage available to
potential customers, while also taking into consideration their other insurance needs.
At the same time, consumers can feedback to insurers their needs and requirements
through agents. In some Latin American markets, this feedback loop has underpinned
the rise in number of conditions included in critical illness products.
Telemarketing and online channels are suitable for the distribution of some simple
health insurance products. For example, hospital cash is widely distributed through
telemarketing and online in many emerging markets because the product comes
with standardised features and is easy to understand. In some less developed
markets, insurers have made use of mobile technologies to distribute simple health
insurance products to mobile phone subscribers.39 The use of bancassurance to
deepen penetration has so far had limited success, given that banks are usually more
eager to sell deposit-substitute than pure protection products.
The projected growth in PMI premiums reflects the difficulties emerging markets
will increasingly face with their current over-reliance on state spending and out-ofpocket payments to pay for a functioning healthcare system. The challenges include
lack of incentives to contain costs and higher financial risk to individuals and
households due to unexpected medical expenses. The projected growth in premiums
also reflects the anticipated greater expectations as to the diversity and quality of
healthcare services available that will come as the middle class expands.
Table 3:
Premiums in USD billion and projected
growth of PMI in emerging markets
Emerging markets
Latin America
Central&Eastern Europe
MENA
Emerging Asia
World
Direct PMI
2013E
Direct PMI
2020F
Additional
premiums
20132020F
Real CAGR
20132020F
36.0
14.9
4.3
7.4
9.4
1005.2
78.8
25.3
6.2
15.6
31.8
1475.7
42.8
10.4
1.9
8.2
22.4
470.5
9.6%
6.2%
5.0%
9.7%
15.4%
3.2%
Note: Figures include premiums of both L&H and non-life insurers. E = estimate, F = forecasts.
Source: National insurance regulators, Swiss Re Economic Research&Consulting.
Countries take different views on how much healthcare should be publicly funded.
The more healthcare is provided through government and SHI programmes, the
smaller the market available for PHI. Nevertheless, PHI can expand the scope of
healthcare via supplementary and complementary schemes which increase
consumers options. Emerging markets can benefit from the wider use of PHI from
current extreme low levels through more conducive regulations, for example if
regulations do not limit insurers ability to price and underwrite health risks properly.
In February 2013, the Indian regulator IRDA issued the Health Insurance Regulations,
applicable to all kinds of health, personal accident and travel insurance products sold
by any insurance company (life or non-life) in India. The regulations require, among
other, that all health insurance products henceforth be renewable for lifetime,
without any maximum age cap. At the same time, health insurance shall ordinarily
allow anyone below age 65 to obtain coverage, insurers must pay at least 50% of
the pre-insurance medical check-up fee, and premium rates for renewals cannot
be based on individual policy claims experience. From a medium- to long-term
perspective, the regulations can be seen as a positive for Indias insurers. They
challenge the issues faced by the sector in a structured way, and provide more clarity
and transparency to all stakeholders involved. This will, eventually, help build
consumer trust and demand for health insurance products. However, in the short
term, health insurers will need to adjust their products/practices to comply with the
new regulatory environment, and may also suffer a slowdown in premium growth.
Public-private partnerships have also been gaining traction recently. With the ability
to change regulations and provide financial subsidies, governments can help health
insurers increase penetration, particularly in remote locations and for the poor who
would otherwise not be able to afford insurance. The proliferation of health microinsurance is one example of public-private partnership helping to reduce the
vulnerability of the poor from unexpected medical expenses.
but levels of ownership vary significantly. There is a large gap between high
awareness and low ownership of PHI in India, Indonesia and Thailand in particular.
The reasons given for low uptake were affordability, lack of understanding of
products and the availability of state provisions. The responses point to a market
opportunity for simple, easy-to-issue and affordable products in these countries.
Figure 9:
Awareness and ownership of medical
reimbursement insurance in Asia, 2013
100%
80%
60%
40%
20%
0%
China
Hong Kong
India
Awareness
Indonesia
Malaysia
Thailand
Many respondents in China and Malaysia said they had medical reimbursement
insurance policies. However, out-of-pocket expenditure and family support are still
the main channels of healthcare financing in these markets, pointing to possible low
reimbursement rates and limited coverage from existing products. The high
ownership rates likely reflect the sample population, as many respondents were from
major urban centres where insurance penetration is generally higher than average.
Another finding was that respondents in these markets showed a high intention to
purchase a new medical policy or upgrade existing policies in the next 12 months.
To take advantage of these findings and extend their reach, insurers could introduce
comprehensive coverage features such as hospital networks and semi-private
rooms, and maximise the sum insured for consumers at a price they can afford.
Disease-specific reimbursement
products could also boost sales.
Respondents also expressed concern about their ability to pay for medical expenses
in the case of critical illness. In China, for example, only 9% of respondents said they
were confident that they would be able to afford the costs of cancer treatment if
they were to be hit by the disease. This suggests disease-specific reimbursement
products with a focus on critical conditions, and backed by a range of added
wellness and service solutions, is another area where insurers could do more.
Figure 10:
Intention to buy reimbursement medical
insurance in the next 12 months in Asia
80%
60%
40%
20%
0%
China
Hong Kong
India
Indonesia
Malaysia
Thailand
Finally, respondents in all markets showed a very high level of interest in almost all
of the value-added cover options such as family package benefits, optical and
dental benefits, guaranteed renewability, maternity benefits and gym membership.
Consumers are willing to pay extra for improved products, and value-added services
are highly prized, suggesting another avenue through which insurers could further
extend the reach of PHI.
Building penetration through innovation and efficiency
Private insurance can help sustain and improve the quality of healthcare in emerging
markets. Many insurers have already taken actions to capitalise on the business
opportunity open to them. These include cross- and up-selling to allow preunderwritten offers of new products or riders for existing policyholders, maintaining
more regular contact with clients to better understand their needs, and steps to
improve underwriting processes and pricing.
Health insurers have also been innovating to broaden their reach. Innovations span
the entire value chain including product development, sales and distribution,
underwriting, claims, payment systems and customer services. Insurers have
reached new clients through phone marketing and sales, pricing products in line
with a target segments willingness and ability to pay, and by designing products
that encourage preventive health measures.
43 Telemedicine: opportunities and developments in Member States report on the second global survey
on eHealth, WHO, 2010, p 6, http://www.who.int/goe/publications/goe_telemedicine_2010.pdf
44 What is Telemedicine?, American Telemedicine Association, http://www.americantelemed.org/
about-telemedicine/what-is-telemedicine
Remote patient monitoring. This includes using devices to remotely collect and
send data to a remote diagnostic testing facility for interpretation. Such services
can be used to supplement the use of visiting nurses; and
Health education. The use of wireless devices and online discussion groups by
consumers to obtain health information. It also involves continuing medical
education credits and special medical education seminars for health professionals
in remote locations.
45 MTN Nigeria, Salt&Einstein MTS Launch Yello Health mHealth Insurance Scheme,
www.govtechnology.com, 21 July 2014, http://www.govtechnology.com.ng/top-story/1810/
mtn-nigeria-salt-einstein-mts-launch-%E2%80%9Cy%E2%80%99ello-health%E2%80%9D-mhealthinsurance-scheme/#sthash.WLMNTb9N.dpuf; MTN Nigeria partners NHIS to introduce Mobile Health
Insurance Scheme, www.businessdayonline.com, 28 July 2014, http://businessdayonline.
com/2014/07/mtn-nigeria-partners-nhis-to-introduce-mobile-health-insurance-scheme/
46 NGN 1 = USD 0.006
47 Health and life micro insurance products to Banrural clients in Guatemala, Micro Insurance Innovation
Facility, April 2013, http://www.impactinsurance.org/projects/lessons/health-and-lifemicroinsurance-products-banrural
A key value proposition of PHI is private insurers expertise in improving the quality of
medical service and cost containment. These in turn depend on aligning the interests
of different stakeholders through the medical services value chain. On the demand
side, this can be done by incorporating a blend of deductibles, co-payments and
attractive rates into product design. On the supply side, network management can
make a difference. There has been vertical integration in some emerging markets
with insurers purchasing ownership stakes in upstream suppliers, and this trend is
likely to continue. Further, insurers are increasingly assuming cost containment as
part of their medical management strategies. Holistic risk and medical management
will likely become standard practices as the market develops.
Figure 11:
The three areas of medical management
by insurers
Pre-admission
Medical information
Nurse line
Telemedicine
Pre-authorization
Screening
Wellness
Provider
management
List of preferred
providers
Preferred rates
Value added services
Protocols
Performance review
and audit
Post-diagnosis
management
Disease management
Efficacy
Safety
Cost
Post-diagnosis review
Insurers are also focusing on other parts of the medical management value chain
such as provider management. Here the intention is to align the interests of the
medical service providers (MSPs) with that of the insurer and insureds to make
the delivery of health services more efficient. As an example, a drug maker and a
reinsurer in China jointly developed and marketed a health insurance product that
covers advanced cancer drugs and treatment (see Box below).
49 Audited results and cash dividend declaration for year ended June 2014, Discovery, 2014 https://
www.discovery.co.za/discovery_coza/web/linked_content/pdfs/investor_relations/2014_annual_
results_presentation.pdf
50 Roche Seeks Insurance Policy for the Chinese Market, The Burrill Report, 13 November 2012, http://
www.burrillreport.com/article-roche_seeks_insurance_policy_for_the_chinese_market.html.
51 Roche to boost cancer drug sales in China with Swiss Re health insurance partnership, HIS,
15 November 2012, http://www.ihs.com/products/global-insight/industry-economic-report.
aspx?id=1065973425. See also Li Hong, Gordon G. Liu and C. Glaetzer, Financing Innovative
Medicines in Mainland China: The Role of Commercial Health Insurance, 16 July 2013, p 131
52 http://en.wikipedia.org/wiki/Disease_management_(health)
At the same time, taking heed of the unique business nature of health and medical
insurance, many emerging market regulators have chosen to incentivise participation
by allowing the formation of mono-line health insurers. For instance, in 2006 there
was only one mono-line health insurer in India. Now there are five, and there are more
in the pipeline. The business written by health mono-liners in India grew at real CAGR
of 89% between 2006 and 2012. Mono-line insurers are attracted to the market by
rising health costs, low penetration of health insurance and the focus on universal
healthcare. In China, meanwhile, the government is similarly offering preferential
terms and conditions to encourage healthcare institutions to set up as specialised
health insurers. That said, non-life and L&H insurers will continue to carry a full suite
of health products, thus ensuring the continuation of a diverse set of providers.
Furthermore, health insurers will continue to use TPAs to better align the interests
of the different stakeholders in the value chain. TPAs are normally contracted by a
health insurer to administer services, including claims administration, premium
collection, policy enrolment and management of its network of healthcare service
providers. TPAs can provide policyholders with faster and focused claims
management, immediate access to highly trained claim administrators and access
to cashless services. TPAs can also enable insurers to lower overheads and claims
management costs, and better control possible fraud by the private healthcare
providers.
The use of TPAs has gained traction in many emerging markets over the past decade,
because it is difficult for new foreign and domestic players to manage the whole
medical management process (for example, build provider networks). However,
as markets mature, larger insurers will likely internalise TPAs to better manage costs,
as has been seen in some advanced markets like the US. Meanwhile, regulations
governing the operation of TPAs are still evolving. For instance, the 2013 Health
Insurance Regulations in India designate insurers, not TPAs, as the responsible party
for choosing participants in a hospital network. Furthermore, the onus of accepting
and rejecting claims lies with insurers. The TPAs will only administer and process
claims on behalf of the insurers. In the case of India, the responsibility of TPAs has
been significantly diluted but the added clarity afforded to the respective roles of
different stakeholders should foster more efficient cooperation in the future.
53 Chronic disease management: the role of private health insurance, Parliament of Australia, 4 October
2013, http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_
Library/pubs/rp/rp1314/ChronDisease
Conclusion
Demand for health insurance in emerging
markets is strong
Collectively, the emerging markets spent USD 1.6 trillion on healthcare in 2012, or
22% of the global total. Traditionally, most of that has come from government and
private household spending, but the role of private insurance as a channel of
healthcare spending has expanded in recent years. Demand for health insurance in
emerging markets is rising fast. Medical insurance premiums grew by an average
annual rate of 11.2% between 2003 and 2013 and are forecast to grow by around
10% each year up to 2020, with most demand coming from Emerging Asia. Even so,
the global share of emerging market private medical insurance premiums will be just
5.3% in 2020. There is and will be a large business opportunity for private health
insurance in these markets as household income levels rise in the coming years.
Many emerging market governments recognise the need for a stronger PHI sector.
With rising concerns about fiscal sustainability, higher treatment costs, the greater
incidence of chronic diseases and rising consumer health expectations, the
traditional reliance on government coffers and household savings will become
increasingly strained. PHI can help make the use of scarce funds more efficient:
it offers individuals and households an alternative channel to pay their healthcare
costs by means of regular premiums into prepaid plans and the benefit of risk
pooling. This in turn reduces household financial vulnerability, and introduces
incentives to providers to improve the quality of care services and manage cost
escalation. Depending on its role in a national healthcare system, PHI also offers
more tailored and flexible choices to consumers.
To grow the PHI sector is not an end in itself. PHI offers an alternative choice to help
consumers manage their spending on healthcare, and can be important in helping to
form sustainable national healthcare delivery systems. However, policymakers must
determine what role PHI should play in existing systems, and how it can develop to
better serve future needs. PHI is not the ultimate solution to the healthcare challenge
in emerging markets, but an important component of an integrated response.
Appendix
Private health insurance schemes in select emerging markets54
Asia
Market
Overview
China
India
Type of system
4. P
ublic private
partnership (PPP)
health insurance.
Financing
Funded by government
(general taxes) and by
individuals.
Funded by government
(general taxes) and by
individuals.
Government/non-profit
organisations team up with
commercial insurers to
provide health insurance at
a subsidised rate. Only a
minimal contribution from the
end consumer is required.
54 All country information derived from national supervisors, industry associations, AXCO, Swiss Re ER&C.
Appendix
Asia
Market
Overview
The
Philippines
Indonesia
Type of system
1. National health
insurance.
2. Private health
insurance.
Malaysia
1. National health
The Malaysian healthcare
insurance.
system consists of tax-funded
and government-run universal
services and a fast-growing
private sector. Public sector
health services are organised
under a civil service structure
and are centrally administered
by the Ministry of Health.
2. Private health
insurance.
Financing
Asia
Market
Overview
Type of system
Financing
Thailand
1. National health
insurance.
State-owned
enterprises, public
offices, foreign and
foreign-invested
enterprises, export
processing zones, and
private firms with 10 or
more workers are
required to provide
compulsory medical
insurance to
employees. Demand
for PHI is growing.
Vietnam
2. Private health
insurance.
Appendix
Latin America
Market
Overview
Brazil
Type of system
Mexico
Healthcare provision is
decentralised. Services are
provided by three branches of
public-sector schemes and
through private health cover.
Financing
Primarily financed by
central government via
general taxes; the
remainder by state and
municipal governments
via taxes, development
bank and multi-lateral
borrowing, and PHI.
General taxes.
Contribution from
individuals, employers
and employees.
Latin America
Market
Overview
Type of system
Argentina
Uninsured and
underinsured have access
to public hospitals
providing free healthcare
for most in- and out-patient
treatments.
2. Social insurance trusts (Obras
SHI schemes for employees
sociales) run by trade unions and
and dependants, providing
professional associations under the cover for all types of
supervision of the National Social
medical attention. Certain
Security Administration and
exclusions such as dentistry
Superintendent of Health Services. and psychiatric treatment.
3. Special schemes: Plan Remediar
and Programa de Atencin Mdica
Integral (PAMI).
Chile
Financing
Pay-as-you-go system
funded by employers
and employees via
compulsory payroll
deductions (3% of
wages) and employer
contributions (6%).
General tax funds and
support from the
Inter-American
Development Bank
(IADB).
Privately funded, 28%
from prepaid plans.
Appendix
Latin America
Market
Overview
Colombia
Type of system
3. Special schemes.
Venezuela
Financing
Complementary to POS,
therefore only cover gaps.
For most consumers POS
is the principal cover. It is
common for companies
wishing to attract and retain
talent to offer additional
healthcare covers for their
workers.
Magistrates, armed forces
the police, Ecopetrol,
universities.
State healthcare is
available to those who
contribute to the social
security system. Also to the
old aged and pensioners.
Overview
Type of system
Financing
Russia
1. Government-funded
healthcare.
1. Social health
insurance.
Poland
Czech
Republic
2. Mandatory Health
Insurance (MHI).
3. Voluntary Health
Insurance (VHI).
1. Compulsory social
health insurance.
2. Private health
insurance.
2. Private health
insurance.
Appendix
Sub-Saharan Africa
Market
Overview
Type of system
South
Africa
Nigeria
Kenya
Financing
Middle East
Market
Overview
Saudi
Arabia
1. Ministry of Health:
Healthcare services mostly
free service for all Saudi
public-sector provided through
nationals.
the Ministry of Health. Other
public agencies such as the
2. Public agencies provide free
national oil company ARAMCO,
healthcare to employees
armed forces, securities forces,
and their families.
national guard etc provide
healthcare to employees and
their dependants. In 1999 the
Council of Health Insurance was
established to introduce and
supervise PHI to the country.
Turkey
Type of system
3. Cooperative Health
Insurance: compulsory for
expats and Saudi nationals
working in the private
sector.
1. Universal Health Insurance
System.
Financing
2015
No 1
2014
2013
2012
2011
2010
2009
2008
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Authors:
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Tarun Kumar
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Zerlina Zeng
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