Sources of Financial Instability of Community-Based Health Insurance Schemes: How Could Social Reinsurance Help

摘要

Community-based health insurance (CBHI) is a promising component of health financing reform in developing countries, offering protection to individuals against the potentially high costs of a sudden illness or injury. But, because CBHI schemes may themselves run the risk of insolvency, advocacy of CBHI scheme development has brought parallel concerns that the plans themselves need protection from the various kinds of financial risks that could jeopardize their survival. One potentially helpful mechanism is social reinsurance that would cover CBHI schemes for the risks of bankruptcy in return for their payment of relatively small premiums. In principal, social reinsurance offers such 'survival' benefits primarily to relatively small insurance plans that would each have insufficient reserves to weather a bad year (when expenses would greatly exceed income). But, in practice, the requirements of developing a potentially beneficial social reinsurance mechanism are considerable. This paper is an effort to analyze the varied threats to financial stability that CBHI schemes face and to explore what role social reinsurance might play in helping to preserve their solvency. The paper discusses the range of potential threats to the financial stability of CBHI schemes, and distinguishes between those that are avoidable (due to nonrandom events) and those that are unavoidable (due to random events). The paper describes the terms and conditions under which a social reinsurance program could be designed to provide reinsurance coverage of the simplest type - excess loss (stop-loss) coverage. It discusses the requirements for designing and implementing such a program, describes a general rule for determining a fair premium, and explains why substantial (and indeterminate) subsidies would be required for at least five years before a social reinsurer would (at best) achieve breakeven status. It details how the lack of needed data and the threats from avoidable risks make the need for additional subsidies - particularly for technical assistance - virtually certain. With this kind of uncertainty about the requirements for subsidies and the length of time they may be needed, the early emphasis of technical assistance may be most profitably focused on preventing the avoidable risks faced by CBHI schemes, while the long-term prospects for social reinsurance - as designed to address the unavoidable threats - are more fully developed.