Private health insurance and its contributions: WTO

Private health insurance is not a panacea, but it contributes in a number of ways, highlighted a report released by the World Trade Organization (WTO) and the World Bank.

To begin with, the report concludes that two main benefits explain the potentially positive role of private health insurance.

First, private health insurance can help households avoid large out-of-pocket spending on health services (the most common form of health financing in low- and middle-income countries).

Second, when affordable to those who can afford it, private coverage allows the publicly funded health system to focus on the most vulnerable groups.

While private health insurance is not a panacea for universal health coverage (UHC), it can help expand access to health care in a number of ways.

According to the report, available research on UHC shows that, although the overall effect of private health insurance on UHC is ambiguous, mandatory private health insurance schemes are positively and significantly associated with specific indicators of health service coverage.

However, no two markets are alike and, depending on how national health care systems are organized, private health insurance can play a positive role.

Private health insurance

Private health insurance can be compulsory or voluntary. In the latter case, private insurance can play a supplementary role (allowing users to overcome shortcomings of publicly funded systems, such as long waiting times); a complementary role (allowing users to fill gaps in publicly funded protection schemes that are not comprehensive); or a substitute role (for users excluded from public schemes for reasons of age or income or who can choose between private and public coverage).

Thus, private health insurance plays an important role in financing health care in both high-income and low- and middle-income economies, and its role is not limited to any particular region or level of development.

Even in countries where universal health coverage has been achieved, private health insurance (voluntary or compulsory) remains important.

Foreign investment

India is a case in point. During 2020-21, general and health insurance companies have covered 514.7 million people with 23.7 million health insurance policies (66.6% of people with government-sponsored health insurance schemes, 23.1% with group policies and the remaining 10.3% with individual policies issued by general and health insurers).

Of the 21 private sector insurers and 7 independent health insurers established in India, foreign investors are involved in 16, with foreign equity participation ranging from 23 to 49 percent.


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