Disadvantages Of Social Health Insurance

There is no clear definition of social insurance financing but it can be referred as a system in which some group of people, usually workers, is directed to make contributions to a health care financing (or retirement) program. Social health insurance can be an effective way to raise additional resources for health and to reach universal coverage. In particular, by making the financing of health care more transparent and stable, social health insurance may encourage the population to contribute more to the health coverage system. But these objectives can be reached at different speeds, depending on the political and socioeconomic characteristics of each country. For many low-income countries, particularly those with stagnant economies

Practice also shows that, in its initial stage of development, social health insurance has a tendency to divert resources from the poorer segment of the population to the richer segment. Consequently, countries considering establishment of a social health insurance system should be aware of this side effect and include mechanisms to protect the poor within their system

However, because most community-based systems are small and often barely financially viable, they are not particularly effective in reaching the poorest segments of the population. Community-based health insurance can be established in settings with informal labor markets and limited institutional capacity, but a strong sense of local community solidarity is a prerequisite. The intervention of governments through subsidies, technical assistance, and initiatives to link community based health insurance schemes with more formal health financing is important to improve the efficiency and sustainability of such schemes. What emerges from the literature on community-based health insurance is that it is “better than nothing” in low-income settings where the implementation of any kind of collective financing scheme is problematic. Nonetheless community-based health insurance is not likely to be the solution to all health care financing problems in low-income countries and should be regarded more “as a complement to but not a substitute for a strong government involvement in health care financing” (Preker and others 2004, p. 41). The most challenging and promising issues include how to design community-based health insurance schemes to ensure the best possible compatibility with larger systems