Nothing is Free: The Emergent Role of Health Insurance as Donor Funding Declines

Nothing is free

This blog was originally posted on the Health Policy Plus website.

For many low- and middle-income countries, donor funding is needed to directly support access to “free” health services, such as family planning and HIV, in public facilities. At the recent Family Planning 2020 (FP2020) meeting in Ethiopia, while talking about insurance integration as a potential way to promote sustainable financing for family planning, a participant asked “Why does insurance need to pay for family planning? It’s already ‘free.’” This is not the first time these questions have been posed, nor is it unique to the family planning or HIV spheres. After decades of unwavering donor support for the financing of family planning, HIV, and other priority health services, many have come to see free service provision as a given. But this perception, that essential health services and commodities are “free,” is only partially true.

While services and commodities may be cost-free to the clients in public health facilities in many developing countries, someone is always paying for those services. These two essential health programs and others including maternal and child health, malaria, and tuberculosis, have been and remain significantly funded by donors who cover a large proportion of the cost—particularly drugs and commodities including, family planning contraceptives and HIV antiretroviral drugs. According to FP2020, about half (48 percent) of family planning funding for the 69 FP2020 countries comes from donors and 38 percent is funded domestically by governments. Similarly, according to UNAIDS estimates, domestic sources fund only 56 percent of the HIV response in low and middle income countries, a response which requires over US$20 billion each year.

The challenge is that the health financing landscape is shifting. Donor funding is stagnating or decreasing, forcing low- and middle-income country governments to consider how they can fully finance priority health programs. At the same time, many countries are developing ambitious plans and strategies towards achieving universal health coverage, which refers to the larger concept that everyone has access to the essential health services and medications they need without experiencing financial hardship. Although it is in the government’s interest to keep these essential health services at low or no-cost to the public to reduce financial barriers to accessing health services, without a sustainable financing source, doing so may not be a viable option.

There are many avenues to ensuring access to high-quality essential health services. Health insurance is one financing mechanism that many low- and middle-income countries have or are considering as they work to provide healthcare coverage to their citizens and create social value. Many of these countries view successful national and social health insurance schemes in developed countries as a model for their own but they don’t benefit from the same macroeconomic context. Given this, they face several challenges and in the short term, won’t be able to provide the same level of coverage and benefits, for example to subsidize the cost of providing essential health services and medications to everyone for free of cost to the patient. Many low- and middle-income countries are still in the early stages of developing their insurance schemes and it will take years for them to scale-up coverage and expand the benefits package to be able to offer expensive services such as HIV treatment or complex hospital-level care.

In the long term, moving to an insurance-based system is possible, as we have seen in countries such as Thailand and Vietnam and can be used successfully to fund essential programs through premium payments and government subsidies. A study conducted by the Health Policy Plus project, led by Palladium, found that many countries in Latin America have been able to offer family planning services and methods through their national or social health insurance schemes. However, despite these advances, reaching the most disadvantaged or vulnerable populations has remained a challenge and the simple inclusion of family planning in insurance benefit packages is not enough to ensure access or impact. Insurance schemes need to better target the poor and informal sector populations to ensure equitable access, ensure sufficient human resources and commodities are available to be able to offer high quality services, and reduce non-financial barriers, such as those related to geography or culture to have a positive impact in improving access to family planning.

In Thailand, the government has worked over the last decade to slowly integrate HIV prevention and treatment into their universal health coverage benefits package. They are now working to accredit civil society organizations under the government scheme, which will allow the government to contract these organizations to provide critical services to key populations. Political will, providing evidence to support a clear policy pathway, and leveraging existing resources and donor grants have been and will be key to their success.

Even though it is a long-term solution, health insurance is an important avenue to consider as low- and middle-income countries move toward attaining universal health coverage. It’s not and should not be considered the only avenue, however, the challenge remains: who is going to pay? And if it’s not donors, who is it?


Elise Lang has over 7 years of international and domestic health experience and is currently a senior health financing and policy associate at Palladium working on the USAID-funded Health Policy Plus project. She provides technical assistance to country governments and stakeholders by conducting health financing systems assessments, costing and drafting strategic plans and supporting policy reforms to sustainably finance the health sector on the path to universal health coverage. Before joining Palladium, Ms. Lang completed her MPH at Boston University and worked for the Centers for Disease Control and Prevention in HIV/STI case management and chronic disease policy. She speaks English and French.

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