Absence of Health Insurance Markets will impede Universal Health Coverage

Irrespective of the scale of operation or model adopted, unless a market for health insurance is well established – it would be very difficult for health insurance to take proper root in Sub-Saharan Africa (SSA) as a viable financing mechanism for healthcare. A health insurance market occurs when individuals and insurance companies communicate with each other to buy and sell health insurance. On the demand side – individuals who wish to buy health insurance do so in order to maximize their ‘utility’; while on the supply side – insurance companies who wish to sell health insurance do so to maximize their ‘profits’ (or ‘surplus’). And both sides communicate with each other through the medium of health insurance premiums.

The failure to allow this basic arrangement to happen in SSA has given rise to all sorts of programmes and projects that have never left their pilot stages. Meanwhile, as countries continue to explore the promise of health insurance as a significant alternative source of funds for health care, many have been led to undertake schemes that do not take this very perception into account.

Contrary to common knowledge, health insurance is ‘not a health intervention’, rather it is a ‘financial instrument’ that allows easy access to health care. Part of this misunderstanding stems from the influence of donor agencies that are largely averse to using ‘market-based solutions’ in resolving critical development problems; but the main reason for not encouraging countries in SSA to develop health insurance markets is because of the notion of wide spread poverty in the sub region. Nevertheless, we know that even for poor people, market-based solutions have proved to be delivering much better value to them than traditional approaches. Manufacturers of fast moving consumer goods and Mobile Telephone companies in SSA who are already profiting from this knowledge have managed to turn this group into effective consumers for their products and services ◊◊◊