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Abstract

Virtually every developing country with a functioning government uses publicly funded and publicly managed systems for third party payment for medical care. Either the government directly provides and finances services in a national health service, or it compels other entities (employers, sickness funds) to finance insurance which pays both public and private providers of care. In very many developing countries, this system has failed to provide adequate financial protection for its citizens and adequate access to care. The gap shows up in the form of private out of pocket spending for services that the “universal insurance” cannot or does not supply. Although both history and ideology in these countries and in the global organizations that advise and support them are sometimes skeptical, the limits to public systems suggest that, as one possible alternative, there might be a role for private insurance. This possibility—the reasons for it to be considered or opposed, and the possibilities for it to happen—were recently discussed at a conference in March 2005, at the University of Pennsylvania, organized by the Wharton School and the International Finance Corporation-World Bank. Two of the present authors, economists Mark Pauly from Wharton and Peter Zweifel from the University of Zurich developed background studies to set the stage for consideration of this option. This paper summarizes those analyses and the further discussion of implementation issues at the conference.

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