The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian

Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent.
ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their
use. Terminology used may not necessarily be consistent with ADB official terms.

Increasing the awareness of universal

health insurance in the ‘missing middle’
Prof. Peter Annear
Head of Health Systems Governance and Financing
Nossal Institute for Global Health

ADB Institute
Effectiveness of Universal Health Insurance in Asian countries
20-22 March 2018 Yogyakarta
 Unacceptable UHC trade-offs

Unacceptable trade-offs are:

• To expand coverage for well-off groups before doing so for worse-off groups
• To first include only those with the ability to pay and not include informal
workers and the poor
• To shift from out-of-pocket payment toward mandatory prepayment in a way
that makes the financing system less progressive
WHO, 2014, Making fair choices on the path to universal health coverage. World Health Organization, Geneva.
 The main policy questions

• The most important questions are:

– How effective is compulsory registration in covering the
informal sector?
– How feasible is it for those in the informal sector to
contribute given the lack of regular income?
– How can government cover the informal sector without
requiring individual contribution?
– What are the pros and cons of full or partial subsidy for the
informal sector?
– What are other methods to engage the informal sector?
Fiscal space for health care
 Policy Brief – Asia Pacific Observatory

A review of the literature:

• Methods: a review of the
evidence to identify contextual
factors – with validation at the
Health Financing Experts’
Meeting in Seoul April 2014
(SNU and WPRO)
• Analysed 30 peer-reviewed
and 21 ‘grey’ literature articles
from Africa and Asia
• Many different approaches
were identified but few
strategies proved completely
successful
 The national context

Contextual issues include:

• policy responses are country specific
• the population is segmented
[questions whether a single scheme can be created]
• the informal sector is large
• it includes a disparate, diverse population
• levels of household income are low
• the shallow income gradient in the lower quintiles makes
differentiation difficult
• the administrative capacity of governments to address insurance
and social protection issues is limited
 THE FORMAL EMPLOYMENT SECTOR
Insurance based – contributory schemes – compulsory

Extend coverage
downward

Compulsory insurance THE INFORMAL SECTOR

Voluntary insurance Mixed approaches –
Tax-based subsidies co-payment – voluntary

Extend coverage
upward

THE POOR
Tax-based subsidies – non-contributory – all-inclusive
 Covering the informal sector

• Balance of supply-side and demand-side protection

– Non-contributory financial protection (Malaysia, Sri Lanka,
Thailand)
– Contribution-based entitlement (fragmented service
provision; danger of a two-tiered system)
• Approaches to financial coverage
– Mandatory SHI; targeted subsidies for the poor; contributions
from the informal sector (targeting; fragmentation of the risk
pool)
– Mandatory SHI; targeted subsidies for the poor; subsidised
contributions for the informal sector (Japan, Hungary, China,
Rwanda, Philippines, Vietnam)
– Mandatory SHI, subsidised and non-contributory for the rest
of the population (Thailand, Mexico)
– Selectively extend service coverage and access; non-
contributory (Cambodia, Barundi)
 Indonesia – informal sector

Informal and uninsured

29.35
 Findings from the literature reviews

• The most common approach is to provide SHI for the formal

sector and subsidies for the poor (the missing middle)
• Compulsory registration suffers from low enrolment
• No strong evidence of an impact on utilization, protection from
financial risk or health status
• A few insurance schemes afford significant protection from high
levels of out-of-pocket expenditures (the impact on the poor is
weaker)
• There are limited avenues to cross-subsidize the informal sector
from formal sector schemes
• Essential to success are strong leadership expressed through
legislation, subsidizing the poor and near-poor, and creation of
shared risk-pools
• Neglecting the supply-side caused reduced enrolment rates
 Strategic issues

Only Costa Rica has achieved this

Fragmentation leads to poor cross-subsidisation and inefficiency
• A mix of different schemes for different population
groups is common, what impact does this have on
the informal sector?
• Can strategic purchasing and contracting
arrangements help to overcome fragmentation? What
benefit package is affordable?
 Technical and policy issues

• Definition, targeting, identification of the informal sector

• Sources of financing: tax, donor, insurance
• Possibility of achieving a single national risk pool
• Contributory vs. non-contributory
• Voluntary vs. compulsory contribution/enrolment
• Willingness to pay/adverse selection
• Co-payment mechanisms
• The benefit package offered
• The use of strategic purchasing or contracting to overcome
fragmentation
• The provider payment mechanism that is most appropriate
 Lessons learned

• Compulsory schemes work only for the formal sector

• Contributory schemes produce only limited coverage
• Collection of contributions outside the formal sector is difficult
• Collecting contributions has high transaction costs
• Voluntary contributions produce small population coverage
• No scheme works without government subsidies
• The tax base is usually limited, mixed methods of revenue
collection are common
• Few developing countries have a single risk pool
• The benefit package is usually a minimum level of service
• Administrative and financial capacity is weak
• Supporting legislation is essential
© Copyright The University of Melbourne 2008