ABSTRACT
This chapter examines the characteristics of out-of-pocket payments and of voluntary health insurance, assessing strengths and weaknesses against the same set of international criteria. The model that most closely resembles a simple ‘free’ market is where out-of-pocket fees are charged for services provided by for-profit operators, especially in the informal sector in poor countries, where supply factors are not subject to restriction by regulation. Insurance companies will sell insurance only if the premiums are sufficient to pay for claims and the costs of administration, and they normally aim also to make a profit. Voluntary health insurance offers cover for a specific package of health care benefits that can include covering a proportion or all of the costs of a range of services and products. The equity implications of voluntary health insurance are difficult to disentangle a priori and are influenced by the structure of the health insurance market, and the role played by this financing mechanism in the health system.
