Should governments encourage private sector involvement in healthcare? What happens when private health insurance schemes are implemented? Does going private really mean a better system of health insurance? Researchers from the UK University of Hertfordshire studied the growth of private health insurance in Latin America.

Since the 1980s, many Latin American countries have encouraged private health insurance schemes, in an attempt to cut state spending on healthcare and improve services through competition. However, increasing the role of the private sector cannot solve Latin America’s healthcare problems, the study found. Private health insurance leads to increased costs and inequality between the poor and the wealthy.

Health sector reform in many Latin American countries has included an expanded role for the profit-making sector, for example in providing private hospitals. The structure of health insurance plans has also changed. Alongside state-funded schemes, governments are encouraging the growth of private health insurance.

This study compares healthcare reform and the effects of private health insurance in three countries. Reform in Chile began in the 1980s, followed by Argentina and Columbia in the 1990s, and shares many common features. However, only Columbia took specific measures to protect the poor and vulnerable in the new system.

Significant findings of this research include:

• In Chile, inadequate regulation means that high-income households opt for private insurance, while vulnerable groups have no choice but to remain in public schemes.
• Chilean private health insurers have little incentive to cut costs and have been largely responsible for rising healthcare spending in the country.
• Chile’s reforms have led to a divided health system, where public and private care undermine rather than complement each other.
• In Argentina, private insurers are entirely unregulated. As in Chile, these reforms are likely to cause inequality in access to healthcare and may lead to rising costs.
• Columbian health sector reform offers a better chance of efficient, equitable healthcare.

Policy relevant implications of these findings include:

• Health insurance reforms are unlikely to provide a satisfactory solution to the problem of financing healthcare in these three countries.
• Reforms rarely provide effective mechanisms for containing costs, nor will they reduce inequality in access to healthcare.
• Health insurance markets will require effective and careful regulation to be sustainable in the longer term. Considerable resources will also be required to protect the poor and the uninsured.

Source(s):
‘Health insurance reforms in Latin America: cream skimming, equity and cost containment’ by A. Barrientos and P. Lloyd-Sherlock, in 'Social policy reform and market governance in Latin America' MacMillan, London (2000)

id21 Research Highlight: 15 May 2001

Further Information:
Armando Barrientos
Institute for Development Policy and Management
University of Manchester
Crawford House
Precinct Centre
Oxford Road
Manchester M13 9GH
UK

Tel: +44 (0)161 275 2800
Fax: +44 (0)161 273 8829

University of Manchester

Peter Lloyd Sherlock
School of Development Studies
University of East Anglia
Norwich
NR4 7TJ
UK

Tel: +44 (0)1603 592807
Fax: +44 (0)1603 451999
Contact the contributor: p.lloyd-sherlock@uea.ac.uk

University of East Anglia

Other related links:
Refer to the Centre for Health Economics website for health economics research and links.

Health Reform Online is hosted by the World Bank and has links to many related resources.

Check the Health Economics site for links to health economics resources on the internet.

Refer to the Health Services Delivery site for information on this WHO programme.

The International Clearinghouse of Health System Reform Initiatives has information on research, events and other resources.