Privatization of health services in less developed countries: an empirical response to the proposals of the World Bank and Wharton School.

Academics and World Bank officials argue that, by reducing out-of-pocket expenditures, expanded private insurance may improve access to needed health services in less developed countries. In this empirical response, the authors examine this recommendation through observations from their research on privatization of health services in the United States, Argentina, Chile, and Mexico. Privatization, either through conversion of public sector to private sector insurance or by expansion of private insurance through enhanced participation by corporate entrepreneurs, generally has not succeeded in improving access to health services for vulnerable groups. Although the impact of privatization has differed among the Latin American countries studied, expansion of private insurance often has generated additional co-payments, which have increased rather than decreased out-of-pocket expenditures, thereby worsening access to needed services. Privatization usually has improved conditions for private corporations and has led to higher administrative costs. To address the devastating problems of access to services worldwide, we must find ways to enhance the delivery of public sector services and must move beyond conventional wisdom about market-based policies such as privatization.     

Efficiency and quality in the public and private sectors in Senegal

It is often argued that the private sector is more efficient than the public sector in the production of health services, and that government reliance on private provision would help improve the efficiency and equity of public spending in health. A review of the literature, however, shows that there is little evidence to support these statements. A study of government and non-governmental facilities was undertaken in Senegal, taking into account case mix, input prices, and quality of care, to examine relative efficiency in the delivery of health services. The study revealed that private providers are highly heterogeneous, although they tend to offer better quality services. A specific and important group of providers--Catholic health posts--were shown to be significantly more efficient than public and other private facilities in the provision of curative and preventive ambulatory services at high levels of output. Policies to expand the role of the private sector need to take into account variations in types of providers, as well as evidence of both high and low quality among them. In terms of public sector efficiency, findings from the study affirm others that indicate drug policy reform to be one of the most important policy interventions that can simultaneously improve efficiency, quality and effectiveness of care. Relationships that this study identified between quality and efficiency suggest that strategies to improve quality can increase efficiency, raise demand for services, and thereby expand access.     

Household utilization and expenditure on private and public health services in Vietnam

The private provision of health services in Vietnam was legalized in 1989 as one of the country's means to mobilize resources and improve efficiency in the health system. Ten years after its legalization, the private sector has widely expanded its activities and become an important provider of health services for the Vietnamese people. However, little is known about its contribution to the overall objectives of the health system in Vietnam. This paper assesses the role of the private health care provider by examining utilization patterns and financial burden for households of private, as compared with public, services. We found that the private sector provided 60% of all outpatient contacts in Vietnam. There was no difference by education, sex or place of residence in the use of private ambulatory health care. Although there was evidence suggesting that rich people use private care more than the poor, this finding was not consistent across all income groups. The private sector served young children in particular. Also, people in households with several sick members at the same time relied more on private than public care, while those with severe illnesses tended to use less private care than public. The financial burden for households from private health care services was roughly a half of that imposed by the public providers. Expenditure on drugs accounted for a substantial percentage of household expenditure in general and health care expenditure in particular. These findings call for a prompt recognition of the private sector as a key player in Vietnam's health system. Health system policies should mobilize positive private sector contributions to health system goals where possible and reduce the negative effects of private provision development.     

Public and private imperatives of Greek health policies

Health care in Greece has historically developed into a multi-tier system, a mosaic of public and private providers of services covering the members of occupational social insurance organizations. In 1983 PASOK's socialist government established a unified National Health System. The aim was to arrest the growth of the private sector and promote the public sector to a dominant position. The socialist legislation has recently been reviewed by a conservative government that aims at a competitive mixed market of public and private providers. The growth of private health care, however, is not solely a matter of political support but also of new opportunities for profitable investments that arise from a shrinking public sector under economic and fiscal constraints.     

Respiratory illness in the Dominican Republic: what are the predictors for health services utilization of young children?

Respiratory illness and diarrhoea continue to be the leading causes of paediatric morbidity and mortality in the Dominican Republic. An important first step in alleviating this disease burden is to understand patterns and predictors of health services utilization for these conditions. This study examines the predictors of (a) health services utilization, and (b) public versus private sector use, for respiratory illness in the under-five population in the Dominican Republic. The DHS-2 dataset (1991) was utilized for analysis. Logistic regression models for predicting use and non-use, and for predicting private versus public sector use, were constructed using the Andersen Behavioural Model as the conceptual framework. Our findings indicate that sex, location and possession index quartile are factors that influence the decision to seek care or not for respiratory illness in under-fives. In contrast, the choice between the public and private sector is determined by location and insurance status. From the policy perspective, if the Dominican Republic were to undertake steps to increase private insurance coverage, our results indicate that this would lead to increased utilization of private sector providers for respiratory illness by children having private insurance, but would not have an impact on overall utilization (i.e. use vs. non-use). On the other hand, one of the ways to deliver cost-effective interventions by the publicly financed system would be to improve facilities in the rural areas.     

Health care in China: the role of non-government providers

While China's health services are primarily financed by out-of-pocket spending (private financing), health care providers, especially the hospital industry, are still dominated by state ownership and government control (public provision). Even though the private sector plays an increasing role in the ambulatory sector, private services are not included in the social insurance benefit package, and thus, it primarily serves self-paying patients. The ambiguity of the government policy toward private provision stems from concerns that an increasing private sector would drive up costs and its services may be of questionable quality. This paper tries to gather evidence on the relative performance of private and public sector in China. Neither literature review nor our primary data analysis provides any support for the notion that the private sector charges a higher price and they serve primarily the better-off people. Quite on the contrary, available data seem to suggest that not only the private sector tends to serve disproportionately the low-middle income groups (this may well be due to its relative lower direct and indirect costs), consumer satisfaction also seems to be higher with regards to certain dimensions of the private than public sector.     

Changing geographic access to and locational efficiency of health services in two Indian districts between 1981 and 1996

In developing countries, including India, the role of the private sector in the provision of basic healthcare services is gradually expanding, since the public sector provides limited services and covers only limited areas. Using location-allocation models (LAM), this paper (1) examines the changing geographic access to and locational efficiency of basic public healthcare vis-à-vis private healthcare services in two districts located in northwestern part of India, and (2) interrogates the factors that govern their geographic accessibility and locational-efficiency. Although this research confirms regional inequalities in geographic accessibility and locational efficiency of both public and private healthcare services in the selected districts, the locational efficiency of private health services is significantly lower than that of public health services. This paper further demonstrates the use of LAM for new site identification (keeping the existing healthcare sites intact) that will, in the future, improve locational efficiency of these services. This paper not only recommends improved geographic access to both public and private health services and their enhanced complementary role, but also stresses the need to evaluate geographic access from the service-users' perspective and the use of more realistic data on demand and supply in future research. The findings of this paper can be extended to areas with similar geographic settings, and socio-economic and demographic conditions.     

Health technology assessment in Greece

In 1983 a health reform aimed to assure universal coverage and equity in the distribution of services in Greece. The reform implied state responsibility for the financing and delivery of services and a reduction of the private sector. The model was a Bismarckian scheme for social insurance. However, healthcare delivery remains fragmented and uncoordinated and the private sector is getting stronger. The dominant payment system is fee-for-service for the private sector and administered prices and salaries for public hospitals and social insurance funds. The many insurers have their own eligibility requirements, validation procedures, etc. Coverage of services by social security funds, probably among the most comprehensive in Europe, is determined more on historical and political grounds than on efficiency or cost-effectiveness. The system is plagued by problems, including geographical inequalities, overcentralization, bureaucratic management, poor incentives in the public sector, open-ended financing, inefficient use of hospital beds, and lack of cost-effectiveness. There are no specific legal provisions for the control of health technology. Technologies are introduced without standards or formal consideration of needs. There are no current efforts to control health technology in Greece. However, health technology assessment (HTA) has gained increasing visibility. In 1997 a law provided for a new government agency responsible for quality control, economic evaluation of health services, and HTA. The hope is that the new law may introduce evaluation and assessment elements into health policy formulation and assure that cost effectiveness, quality, and appropriate use of health technology will receive more attention.     

Universal Health Insurance in India: Ensuring Equity, Efficiency, and Quality

Indian health system is characterized by a vast public health infrastructure which lies underutilized, and a largely unregulated private market which caters to greater need for curative treatment. High out-of-pocket (OOP) health expenditures poses barrier to access for healthcare. Among those who get hospitalized, nearly 25% are pushed below poverty line by catastrophic impact of OOP healthcare expenditure. Moreover, healthcare costs are spiraling due to epidemiologic, demographic, and social transition. Hence, the need for risk pooling is imperative. The present article applies economic theories to various possibilities for providing risk pooling mechanism with the objective of ensuring equity, efficiency, and quality care. Asymmetry of information leads to failure of actuarially administered private health insurance (PHI). Large proportion of informal sector labor in India''s workforce prevents major upscaling of social health insurance (SHI). Community health insurance schemes are difficult to replicate on a large scale. We strongly recommend institutionalization of tax-funded Universal Health Insurance Scheme (UHIS), with complementary role of PHI. The contextual factors for development of UHIS are favorable. SHI schemes should be merged with UHIS. Benefit package of this scheme should include preventive and in-patient curative care to begin with, and gradually include out-patient care. State-specific priorities should be incorporated in benefit package. Application of such an insurance system besides being essential to the goals of an effective health system provides opportunity to regulate private market, negotiate costs, and plan health services efficiently. Purchaser-provider split provides an opportunity to strengthen public sector by allowing providers to compete.     

A new face for private providers in developing countries: what implications for public health?

The use of private health care providers in low- and middle-income countries (LMICs) is widespread and is the subject of considerable debate. We review here a new model of private primary care provision emerging in South Africa, in which commercial companies provide standardized primary care services at relatively low cost. The structure and operation of one such company is described, and features of service delivery are compared with the most probable alternatives: a private general practitioner or a public sector clinic. In a case study of cost and quality of services, the clinics were popular with service users and run at a cost per visit comparable to public sector primary care clinics. However, their current role in tackling important public health problems was limited. The implications for public health policy of the emergence of this new model of private provider are discussed. It is argued that encouraging the use of such clinics by those who can afford to pay for them might not help to improve care available for the poorest population groups, which are an important priority for the government. Encouraging such providers to compete for government funding could, however, be desirable if the range of services presently offered, and those able to access them, could be broadened. However, the constraints to implementing such a system successfully are notable, and these are acknowledged. Even without such contractual arrangements, these companies provide an important lesson to the public sector that acceptability of services to users and low-cost service delivery are not incompatible objectives.     

Compared supplementary healthcare policies in the context of public health systems: European Union and Brazil

This paper analyzes the supplementary healthcare policies adopted in recent years in Brazil and in European countries. The proposed approach is a comparative analysis of the private health plan and insurance policies in the context of the European Union and Brazilian public health systems. This comparison allowed establishing parameters and categories capable of showing the differences and similarities between these experiences. These variables served as a basis for analyzing the Brazilian case using recent results of studies on private health insurance in the context of the Unified Health System (SUS), the Brazilian Public Health System. The main topics investigated were: the contracts and agreements between the public and the private sector, the attributions of the private health care services in the public system, the production, available capacity and financing of the public and private health systems and finally, the regulations regarding reimbursement of the SUS in those cases, where users covered by the private sector made use of the public services. We conclude retaking the discussion of the theoretical and conceptual perspective in the comparative analysis of health system policies based on the insights originated by this work.     

The public and private sectors in health: economic issues

Major changes in the public/private mix of health services are occurring in many countries. These changes may be analysed by examining the financing and provision of services and subsidization of the purchase of the factors of production. The public sector and not-for-profit and for-profit elements of the private sector must be viewed as separate entities in such analyses due to their differing objectives, motives and form of operation. The issues to be dealt with by countries in finding the public/private mix which is appropriate for their health system and achieves their objectives include efficiency, quality, regulation, equity and consumer choice and satisfaction. The recommendations for action for countries include: promoting collaboration between private and public sectors; testing different public/private mix models; identifying appropriate expansion paths for private sector services; improving information for policy and planning decisions; enhancing management capacity; and, reviewing programme and project support. International agencies also have a role in this process by supporting countries through the provision of technical assistance, financial aid, promoting policy reviews, and facilitating the sharing of information and experiences among countries concerning these public/private mix issues.     

Public policy and private sector provision of health services

Public sector policies often try to extend access and redirect public resources, depending on private sector actions. These strategies focus on reducing demand, improving efficiency, and generating increased revenues in the public sector. In order to provide incentives for efficiency, acquire capital, and redirect limited public resources to public priorities, there must be an expanded role for the private market in the provision of health services. This presents opportunities to improve the focus of resources on high-priority health activities in the public sector and to make more effective and efficient use of the resources of the private sector. The authors discuss the form that such policies may take. However, while the overall set of options available to policy makers can be identified, what is an effective strategy in one country may be neither appropriate nor feasible in another. The challenge to policy research is not to identify what works, but rather to understand the conditions that make a policy effective in some settings but not in others. The objective is not to prescribe the actions to take but to understand the factors that create the current experience in a specific setting.     

Child outpatient mental health service use: why doesn't insurance matter?

BACKGROUND: Several recent studies of child outpatient mental health service use in the US have shown that having private insurance has no effect on the propensity to use services. Some studies also find that public coverage has no beneficial effect relative to no insurance. AIMS: This study explores several potential explanations, including inadequate measurement of mental health status, bandwagon effects, unobservable heterogeneity and public sector substitution for private services, for the lack of an effect of private insurance on service use. METHODS: We use secondary analysis of data from the three mainland US sites of NIMH's 1992 field trial of the Cooperative Agreement for Methodological Research for Multi-Site Surveys of Mental Disorders in Child and Adolescent Populations (MECA) Study. We examine whether or not a subject used any mental health service, school-based mental health services or outpatient mental health services, and the number of outpatient visits among users. We also examine use of general medical services as a check on our results. We conduct regression analysis; instrumental variables analysis, using instruments based on employment and parental history of mental health problems to identify insurance choice, and bivariate probit analysis to examine multiservice use. RESULTS: We find evidence that children with private health insurance have fewer observable (measured) mental health problems. They also appear to have a lower unobservable (latent) propensity to use mental health services than do children without coverage and those with Medicaid coverage. Unobserved differences in mental health status that relate to insurance choice are found to contribute to the absence of a positive effect for private insurance relative to no coverage in service use regressions. We find no evidence to suggest that differences in attitudes or differences in service availability in children's census tracts of residence explain the non-effect of insurance. Finally, we find that the lack of a difference is not a consequence of substitution of school-based for office-based services. School-based and office-based specialty mental health services are complements rather than substitutes. School-based services are used by the same children who use office-based services, even after controlling for mental health status. DISCUSSION: Our results are consistent with at least two explanations. First, limits on coverage under private insurance may discourage families who anticipate a need for child mental health services from purchasing such insurance. Second, publicly funded services may be readily available substitutes for private services, so that lack of insurance is not a barrier to adequate care. Despite the richness of data in the MECA dataset, cross-sectional data based on epidemiological surveys do not appear to be sufficient to fully understand the surprising result that insurance does not enable access to care. IMPLICATIONS FOR POLICY AND RESEARCH: Limits on coverage under private mental health insurance combined with a relatively extensive system of public mental health coverage have apparently generated a situation where there is no observed advantage to the marginal family of obtaining private mental health insurance coverage. Further research using longitudinal data is needed to better understand the nature of selection in the child mental health insurance market. Further research using better measures of the nature of treatment provided in different settings is needed to better understand how the private and public mental health systems operate.     

Chilean health insurance system: a source of inequity and selective social insecurity

More than 20 years after its radical market-oriented reform, the Chilean health care system shows serious equity and fairness problems. Private insurance companies have used ex-ante as well as ex-post risk selection to avoid the affiliation of poorer and older enrolees presenting higher risks. The coexistence of a solidarity-driven public sector and a for-profit private sector operating with risk-adjusted premiums has led to a two-tier health insurance system. Unpredictable, often existentially threatening co-payments have become an serious problem for the users of the Chilean health care system, and coverage-lacks have become a major menace for patients. Private insurers supplement “Cream Skimming” and risk selection with contracts calling for significant out-of-pocket payments for health services. This article develops and applies a methodology to measure and compare systematically the impact of user charges for varying levels and complexity of treatment in the public and private health care sector. Co-payments in the private sub-sector show enormous variation, are hyper-regressive and discriminate not only against the ill, but also against the members of the lower socio-economic classes once they have passed the high access barriers. As cost-sharing affects the financial coverage and thus the accessibility of health care, it has become an important mechanism of quality skimping and active disenrolment. Private health insurance companies are relatively well prepared to cover costs for a wide array of traditional health problems; they fail, however, to respond for the costs of other leading diseases in Chile. The private system seems to be poorly prepared to face the challenges of the epidemiological transition in emerging countries.     

Institutional features of health insurance programs and their effects on developing country health systems

Many developing countries are considering insurance as an option for increasing resource availability in the health sector in order to alleviate financial crisis. In addition to its impact on revenues, however, an insurance program also affects the efficiency and equity of health service delivery. This article examines these consequences of health insurance by reviewing a number of critical institutional characteristics of insurance programs in four developing countries—Brazil, China, Korea and Zaire—and assessing their impact on the efficiency and equity of the health sector. The characteristics highlighted in the article are: the system for reimbursing providers; the services covered by insurance; the role of the insurer; the extent of beneficiary cost-sharing; and, the extent of the population covered by the insurance program. Indicators of health sector efficiency and equity affected by these characteristics reviewed are: cost escalation; resource allocation; the use of specific medical technologies; and, equity of access to services. Efficiency and equity problems are found to arise from the financial incentives facing providers coupled with their powerful influence over both the supply and demand for personal health services. Experience suggests that these problems are magnified when an insurer serves merely as a financial conduit for reimbursing providers. Efficiency and equity goals can be more effectively promoted by an insurance institution which actively organizes the entry of consumers into the health system and removes the financial incentives that encourage providers to increase the volume and cost of services.     

Health care plans: interfaces between the public and private system in the dental sector

The present work presents a brief history of health plans in Brazil examining the interface between the public and the private sector. The evolution and regulation of the supplementary care system is analyzed, the different care modalities are defined and the main differences between health plans and dental care insurance are pointed out. The coverage provided by the supplementary care system and its relationship with the public health system is shown on the basis of current data. On the other hand, the study focuses on the care services, health plans and the labor market in the sector correlating, also on the basis of current data, the challenges and new opportunities of the supplementary care market, mainly in the dental sector. Although the dental sector is living an extraordinary moment within the private health care system and given that ANS data are pointing to a growth of this sector of 210% over last the 7 years, the service coverage of the supplementary care sector mainly directed to medical and inpatient care does not meet the real demand for integrated health care.     

The first private sector health insurance company in Ghana

This article analyses the development of Ghana's first private sector health insurance company, the Nationwide Medical Insurance Company. Taking both policy and practical considerations into account (stakeholders' perspectives, economic viability, equity and efficiency), it is structured around key questions which help to define the position and roles of stakeholders--the insurance agency itself, contributors, beneficiaries, and providers--and how they relate to one another and the insurance scheme. These relationships will to a large extent determine Nationwide's long-term success or failure. By creating a unique alliance between physician providers and private sector companies, Nationwide has used employers' interest in cost containment and physicians' interest in expanding their client base as an entrée into the virgin territory of health insurance, and created a hybrid variety of private sector insurance with some of the attributes of a health maintenance organization or managed care. The case study is unusual in that, while public sector programs are often open to academic scrutiny, researchers have rarely had access to detailed data on the establishment of a single private sector insurance company in a developing country. Given that Ghana is planning to launch a national health insurance plan, the article concludes by considering what the experience of this private sector initiative might have to offer public sector planners.     

Market reforms and public incentives: finding a balance in the Republic of Macedonia

The Republic of Macedonia is undertaking sweeping reforms of its health sector. Funded by a World Bank credit, the reforms seek to improve the efficiency and quality of primary health care (PHC) by significantly strengthening the role of the market in health care provision. On the supply-side, one of the key reform proposals is to implement a capitation payment system for PHC physicians. By placing individual physicians on productivity-based contracts, these reforms will effectively marketize all PHC provision. In addition, the Ministry of Health is considering the sale or concessions of public PHC clinics to private groups, indicating the government's commitment to marketization of health care provision. Macedonia is in a unique position to develop a new role for the private sector in PHC provision. The private provision of outpatient care was legalized soon after independence in 1991; private physicians now account for nearly 10% of all physicians and 22% of PHC physicians. If the reforms are fully realized, all PHC physicians-over 40% of all physicians-will be financially responsible for their clinical practices. This study draws on Macedonia's experience with limited development of private outpatient care starting in 1991 and the reform proposals for PHC, finding a network of policies and procedures throughout the health sector that negatively impact private and public sector provision. An assessment of the effects that this greater policy environment has on private sector provision identifies opportunities to strategically enhance the reforms. With respect to established market economies, the study finds justification for a greater role for government intervention in private health markets in transition economies. In addition to micro-level payment incentives and administrative controls, marketization in Central and Eastern Europe requires an examination of insurance contracting procedures, quality assurance practices, public clinic ownership, referral practices, hospital privileges, and capital investment policies.     

Private health care in Nigeria: walking the tightrope.

The persistently low quality and inadequacy of health services provided in public facilities has made the private sector an unavoidable choice for consumers of health care in Nigeria. Ineffective state regulation, however, has meant little control over the clinical activities of private sector providers while the price of medical services has, in recent years, grown faster than the average rate of inflation. Reforms that are targeted at reorganizing the private sector, with a view to enhancing efficiency in the supply of services, are urgently required if costs are to be contained and consumers assured of good value for money.