176 OXFAM BRIEFING PAPER 9 OCTOBER 2013

Manana Mikaberidze, 52, is a doctor from the Gori region of Georgia. She is not eligible for government-sponsored health insurance and cannot afford to
join a private health insurance scheme. Manana was diagnosed with cervical cancer earlier this year and has had to rely on generous loans from her
relatives to get treatment. She often uses her own salary to buy medicines for patients who cannot afford to pay for these themselves. It is hoped that
major new reforms aimed at achieving UHC in Georgia will help ordinary people, like Manana, to get the health care they need.
UNIVERSAL HEALTH
COVERAGE
Why health insurance schemes are leaving the poor behind
Universal health coverage (UHC) has the potential to transform the lives of
millions of people by bringing life-saving health care to those who need it most.
UHC means that all people get the treatment they need without fear of falling into
poverty. Unfortunately, in the name of UHC, some donors and developing country
governments are promoting health insurance schemes that exclude the majority
of people and leave the poor behind. These schemes prioritize advantaged groups
in the formal sector and drive up inequality. Rather than collecting contributions
from people who are too poor to pay, the countries making most progress towards
UHC have prioritized spending on health from general taxation either on its own
or pooled with formal sector payroll taxes and international aid. Donors and
governments should abandon unworkable insurance schemes and focus on
financing that works to deliver universal and equitable health care for all.

www.oxfam.org


A ti mel y, cl ear and important publication from Oxfam. Universal
Health Coverage (UHC) i s being widely promoted as a panacea for
health inequities yet there are fundamental differences in its
interpretation and implementation especiall y on financing. This
publication makes it clear that health insurance schemes, often
promoted by the World Bank and other donors, invariabl y
disadvantage the poorest and unhealthiest. Without more equitabl e,
tax based approaches, inequalities in health will continue to grow and
threaten us all.
Professor David Sanders
Emeritus Professor, School of Public Health, University of the Western
Cape



There will be little or no progress in achieving UHC unless countries
implement reforms to rai se and use domestic prepayment funds in an
equitable, effi cient and sustainable way. This paper highlights some
of the key i ssues in relati on to financing for UHC and promises to
contribute positivel y to current debates.
Professor Di McIntyre
Health Economics Unit, University of Cape Town



International evidence cl earl y shows that universal health coverage
will not be achieved in low and middle income countries through
voluntary or contributory-based health insurance. This Oxfam report
clearl y highlights the importance of adopting context specifi c health
financing mechanisms that address the needs of the poor as well as
the rich. Governments, policy makers, funders and the international
community should rall y behind the recommendations put forward in
this report and support countries to implement reforms that ensure
all people rich and poor alike - can access good quality health care
when they need it.
Dr Jane Chuma
Research Fellow, KEMRI-Wellcome Trust Research Programme, Nairobi
2
SUMMARY
Described by the Director-General of the World Health Organization
(WHO), Margaret Chan, as the most powerful concept that public health
has to offer,
1
Universal health coverage (UHC) has risen to the top of the
global health agenda. At its core, UHC is about the right to health.
Everyone whether rich or poor should get the health care they need
without suffering financial hardship. For Oxfam, UHC means that
everyone has the same financial protection and access to the same
range of high quality health services, regardless of their employment
status or ability to pay.
UHC is not a one size fits all journey, and governments will need to
develop approaches that fit the social, economic, and political contexts of
their countries. However, the lack of a UHC blueprint does not mean
that anything goes.
2
WHO has been explicit that countries should
prioritize four key actions to finance UHC: reduce direct payments,
maximize mandatory pre-payment, establish large risk pools, and use
general government revenue to cover those who cannot afford to
contribute.
In too many cases these guiding principles are being ignored. User fees
for health care still exist in the majority of developing countries.
Worldwide every year 150 million people face catastrophic health-care
costs because of direct payments, while 100 million are pushed into
poverty the equivalent of three people every second.
3
In the name of
UHC, many governments and donors are promoting and implementing
voluntary private and community-based health insurance schemes that
they have been shown to have low coverage are costly to administer,
and exclude the poor. Indias RSBY insurance scheme for those below
the poverty line is widely praised as a success but offers limited financial
protection, suffers from corruption, abuse, and cost escalation, and has
skewed public resources to curative rather than preventative care.
4,5,6,7

No country in the world has achieved anything close to UHC using
voluntary insurance.
For those who recognize the pitfalls of voluntary schemes, social health
insurance (SHI) has become an increasingly popular alternative.
However, while SHI has worked to achieve UHC in a number of high-
income countries, attempts to replicate the same kind of employment-
based models in low- and middle-income countries have proved
unsuccessful. SHI schemes are typically characterized by large-scale
exclusion. Ten years after the introduction of SHI schemes in Tanzania,
population coverage had reached only 17 per cent.
8
Even rich countries
struggled to achieve rapid scale up via SHI it took Germany 127 years
to achieve UHC. People in poor countries cannot and should not have to
wait that long.
Every second, three
people are pushed into
poverty because they
have to pay out-of-
pocket for health care
3
Even when SHI is mandatory, it is near impossible to force people to join.
SHI then becomes de facto voluntary and suffers the same problems of
low coverage, adverse selection, and fragmented risk pools. Ghanas
mandatory insurance scheme, widely considered an SHI success story,
today covers only 36 per cent of the population.
9

Formal sector first approaches increase and entrench inequality and
should be avoided. Even with the best intentions, almost all low- and
middle-income countries that have initiated SHI by starting with the
formal sector have found it impossible to scale up coverage when this is
on a contributory basis. The common result is a two-tier health system
with one scheme for the formally employed and another Ministry of
Health scheme (usually with a more limited benefits package and poorer
quality) for everyone else.
Hopes that insurance contributions from those outside of formal
employment would raise significant revenue have not been realized. In
Ghana, premiums paid by the informal sector contribute just five per cent
towards the cost of the National Health Insurance Scheme (NHIS).
10

Governments also face huge bills to cover the SHI contributions of their
workers. The government of Tanzania spent $33m on employer
contributions in 2009/10; this equated to $83 per employee six times
more than it spent per person, per year on health for the general
population.
11,12
SHI may actually reduce the overall resources available
for the health sector when SHI was introduced in Kazakhstan, the
Ministry of Finance reduced the health budget by a larger amount than
that collected through insurance premiums.
13

TWO APPROACHES THAT WORK
Fortunately, a growing number of developing countries are building
home-grown financing systems that are working to advance UHC. While
their specific journeys differ, these countries agree that entitlement to
health care should be based on citizenship and/or residency and not on
employment status or financial contributions. Instead of importing ill-
suited health financing models from high-income countries, low- and
middle-income countries should look to build on the UHC success stories
in other, more comparable countries, including Thailand, Mexico, Sri
Lanka, and Kyrgyzstan.
The countries that have made most progress to date have embraced the
principles of equity and universality, rejecting approaches that collect
insurance premiums from those who are too poor to pay. They fall into
two broad camps.
First there are examples of countries at all income levels, including Sri
Lanka, Malaysia, and Brazil, which fund UHC from tax revenues. Sri
Lanka and Malaysias tax-financed health systems provide citizens with
some of the highest levels of financial risk protection in Asia.
14
In Brazil in
the late 1980s half of the population had no health coverage, yet only two
decades after the countrys tax-financed Unified Health System was
established, nearly 70 per cent of Brazils 200 million inhabitants now rely
on it for their health care.
15
Crucially, the only low-income countries to
achieve universal and equitable health coverage have done so using tax
financing.
16

4
A second option increasingly being adopted by another set of successful
UHC countries, including Thailand, Mexico and Kyrgyzstan, is to collect
insurance premiums from only those in formal salaried employment, and
to pool these where possible with tax revenues to finance health
coverage for the entire population.
Thailands health system relies on payroll contributions for only 12 per
cent of its population and finances its internationally celebrated Universal
Coverage Scheme using general government revenues.
17
In just ten
years the number of people without health-care coverage fell from 30 per
cent to less than four per cent of the population.
18
People living in poverty
have benefited most.
19
Steps being taken in Thailand to merge different
schemes will redress the current inequity of superior health-care benefits
for those in formal employment.
There is a welcome trend towards single national risk pools combining
payroll contributions, tax revenues, and development aid in other
countries too. Such reforms in Kyrgyzstan have radically reduced
fragmentation and inequity and have improved health outcomes.
20

Entitlement to health care in South Africas proposed National Health
Insurance will be based on citizenship and legal residency rather than
financial contributions.
Tax financing has played a dominant role in all UHC success stories.
Unfortunately, the preoccupation with SHI as the default UHC model
has left the crucial question of how to generate more tax revenues for
health largely unexplored in low- and middle-income countries. This blind
spot should be urgently addressed. Even the poorest countries can
increase domestic revenue for health by improving tax collection,
adjusting tax rates, and introducing new progressive taxes as well as
innovative financing mechanisms. Oxfam has estimated that
strengthening tax administration alone could raise an additional 31 per
cent of tax revenue across 52 developing countries amounting to $269bn
in increased domestic resources.
21

THE NEED FOR GLOBAL SOLIDARITY
Urgent action on global tax evasion and avoidance is also crucial to
ensure that countries can generate and retain more of their own
resources for health. Tax dodging by multinational enterprises costs
developing countries an estimated $160bn annually four times the
amount spent by all sub-Saharan African governments on health
combined in 2011.
22,23

Achieving UHC will require significant development assistance, at least in
the short to medium term. According to WHO, only eight low-income
countries will be in a position to fully finance UHC from domestic resources
in 2015.
24
More long-term and predictable aid is vital, not only to help build
effective public health systems, but also to improve public financial
management and taxation systems so that countries can be self-sufficient
in the future. Government to government aid via sector or general budget
support is the best way to support governments on their path to UHC.
5
Increasing revenues available to governments in low- and middle-income
countries alone will not advance progress towards UHC. Governments
must also demonstrate their political commitment by increasing and
protecting allocations to the health sector and moving quickly to address
inefficiencies, improve quality, and ensure effective, accountable, and
safe patient care. Ministries of health should prioritize comprehensive
primary health care, including cost effective preventative care, and play
an active role to improve performance and accountability. Political will to
achieve these changes has been the cornerstone of every UHC success
story.
RECOMMENDATIONS
Developing country governments
Develop financing systems based on the four key ingredients
outlined by WHO. Rather than looking to adapt European-style
employment-based SHI, build on the lessons from the growing
number of low- and middle-income countries that are making progress
towards UHC.
Make equity and universality explicit priorities from the outset and
avoid the temptation to start with the easiest to reach in the formal
sector. Those living in poverty must benefit at least as much as the
better off every step of the way.
Rather than focus efforts on collecting insurance premiums from
people in informal employment, look to more efficient and equitable
ways of raising revenue for health from tax reform.
Move towards pooling together all government revenues for health
with formal sector payroll taxes where these exist to maximize
redistribution.
Ensure that adequate proportions of national budgets are allocated to
health, in line with the Abuja target of 15 per cent of government
funds.
Actively engage civil society in all stages of policy-making,
implementation, and monitoring.
High-income country governments and multilateral organizations
Stop promoting inappropriate approaches in the name of UHC,
especially private and community-based voluntary health insurance
schemes.
Take action on tax avoidance and tax evasion, which denies poor
countries much-needed revenue for universal public services. Provide
support for progressive tax reform in poor countries, including
technical support to strengthen tax administration capacity.
Honour commitments to provide at least 0.7 per cent of GNI as Official
Development Assistance, and improve aid effectiveness for health.
Provide a greater proportion of aid as long-term sector or general
budget support.
Support developing country governments to effectively measure and
evaluate progress and outcomes on UHC, especially equity.
6
Civil society
Increase collaboration to exert collective pressure on governments
and other stakeholders to push for a UHC approach that enshrines the
values of universality, equity, and solidarity.
Hold governments to account by engaging in policy dialogue,
monitoring health spending and service delivery, and exposing
corruption.
Draw attention to cases where influential donors are promoting
inequitable health financing mechanisms and hold them to account.
Work together with civil society champions of tax justice to call for
urgent action on global tax evasion and avoidance.
Formal sector unions should act in solidarity with workers in the
informal economy and advocate for universal and equitable health
care.
Oxfam calls on the international health community to support UHC as the
umbrella health goal for the post-2015 development framework. A focus
on UHC provides the opportunity to accelerate progress on the health-
related Millennium Development Goals, address the growing burden of
non-communicable diseases, and most critically to move towards a more
comprehensive approach to deliver on the right to decent, affordable, and
equitable health care coverage for all.


7
1 INTRODUCTION
Universal health coverage (UHC) is a simple but inspiring concept, which
has risen fast up the global health agenda. At its core UHC means that
everyone - whether rich or poor - gets the health care they need without
suffering financial hardship. For Oxfam, it means everyone has the same
financial protection and access to the same range of high quality health
services regardless of employment status or ability to pay. Good quality
health care is both a human right and a building block to tackling poverty
and reducing inequality.
UHC is not a one size fits all journey and governments will need to
develop approaches that fit the social, economic, and cultural contexts of
their countries. However, the lack of a UHC blueprint does not mean
anything goes.
25
WHO has been explicit that countries should prioritize
four key actions to finance UHC: reduce out-of-pocket payments,
maximize mandatory pre-payment, establish large risk pools, and use
general government revenue to cover those who cannot afford to
contribute.
In too many cases these guiding principles are being ignored. Health user
fees have been internationally condemned, yet they continue to exist in
poor countries. Donor support for fee removal remains unacceptably low.
Although no country in the world has achieved anything close to UHC
using voluntary insurance, private and community-based voluntary
schemes are still being promoted as a pathway to achieving UHC. Social
health insurance (SHI) is often seen as the route to UHC, but the social
and economic conditions in developing countries where large informal
sectors and high levels of poverty are the norm do not provide a positive
enabling environment for SHI.
Fortunately, a growing number of countries including Thailand,
Malaysia, Sri Lanka, and Brazil are building home-grown universal and
equitable financing systems that are working to advance UHC. While
their specific journeys differ, these countries share a common
understanding that entitlement to health care should be based on
citizenship and/or residency and not on employment status or financial
contributions. Rather than focus efforts on collecting insurance premiums
from those who are too poor to pay, these countries have prioritized
general government spending for health on its own or pooled with
formal sector payroll taxes to successfully scale up UHC.
Despite the heavy reliance on general government revenue to cover the
majority of citizens in all UHC success stories, remarkably little attention
has been paid to alternative approaches to raise this revenue. This blind
spot should be urgently addressed. National and international tax reform,
as well as development aid, can help generate significant resources for
UHC and should be prioritized.
Although UHC is concerned with how health care is delivered as much as
how it is paid for, this paper focuses on financing UHC. We question the
emphasis on contributory-based health insurance as the way to achieve
UHC. Governments, donors, and civil society must work together to
develop comprehensive home-grown health financing strategies for UHC
8
that are universal and equitable, aligned with country health plans, and
which pool all sources of financing for health to maximize coverage and
redistribution. We call on governments and donors to learn from the low-
and middle-income countries that have advanced towards UHC and build
on their progress.
UHC is a unifying goal and, while countries have different starting points,
all nations rich and poor alike can take immediate steps to move to-
wards universal coverage. Politicians now have to show that they are
willing to take action, civil society must unite to demand change, and
development partners need to step up to support them.
Box 1: Health insurance models
Community-Based Health Insurance
Community-based health insurance (CBHI) schemes called mutuelles de
sant in Francophone countries are voluntary, not-for-profit health insurance
schemes organized at a community level that specifically target those outside
the formal sector. CBHI schemes vary a great deal in terms of who and what
they cover, how they are managed, and at what cost. Premiums are usually
charged at a flat rate, making this a highly regressive way of funding health
care as poor people contribute a higher proportion of their income than
wealthier people While CBHI can play a role in providing some financial risk
protection in situations where more widespread prepayment and pooling
arrangements do not exist, their potential to be scaled up to reach UHC is
limited.
Private Health Insurance
Private health insurance (PHI) is offered by private entities including
commercial companies. Although PHI can increase financial protection and
access to health services to those able to pay, high premiums mean that few
people can afford to join. More than 25 years after the introduction of PHI in
developing countries, there is still no evidence that it can benefit more than a
limited group of people. The contribution of PHI to UHC has been insignificant
or has even had an adverse impact by increasing inequalities.
Social Health Insurance (SHI)
SHI originated in Europe as work-related programmes and coverage was
gradually expanded to the non-working parts of the population. SHI models
vary but they share a number of defining characteristics. In most cases
membership is mandatory and members are entitled to a defined package of
health benefits. Most SHI schemes do not cover the entire population from the
outset and SHI is often initially restricted to formal sector employees and their
dependents. Workers in the formal sector pay their contribution through a
dedicated payroll tax and in most cases the employer also contributes. When
schemes are open to everyone, people outside of formal employment are
required to enrol and pay an annual premium to join. It is difficult to set
premiums according to a sliding-scale (in the absence of reliable income
records) so the contribution for the informal sector is generally a flat rate. Even
when SHI is mandatory for everyone, not everyone can afford to join. In low-
and middle-income countries SHI schemes therefore become de facto
voluntary.
9
2 UNIVERSAL HEALTH
COVERAGE
UHC is fast becoming a first order priority of the global health community.
In December 2012 the United Nations General Assembly adopted a
landmark resolution on UHC and there are now calls for UHC to be
included in the post-2015 development agenda. At the 2013 World
Health Assembly, the World Bank Groups commitment to UHC was laid
out by its President, J im Yong Kim. Governments around the world are
taking action; China, Thailand, South Africa, and Mexico are among the
emerging economies that are rapidly scaling up public investment in
health. Many low-income countries, especially in Africa, have introduced
free health care policies for some or all of their citizens as a first step
towards UHC.
As the momentum builds, a diverse range of actors including national
governments, multilateral agencies, bilateral donors, private foundations,
academics, and civil society organizations are uniting in support of
UHC. There is a danger however, that UHC will be reduced to a catchy
sound bite. Already many different things are being done in the name of
UHC and not all of these live up to the founding principles and objectives
set out in the landmark 2010 World Health Report on health financing.
It is therefore imperative to articulate exactly what we mean by UHC.
According to WHO, universal health coverage will be achieved when all
people have access to quality health services (prevention, promotion,
treatment, rehabilitation, and palliative care) without fear of falling into
poverty. Moving towards UHC requires progress on three fronts: the
range of services that are available, the proportion of the costs of those
services that are covered, and the proportion of the population that is
covered (Figure 1).
Figure 1: Three dimensions to consider when moving towards UHC

Source: WHO World Health Report 2010
All of us together must
prevent universal cov-
erage from ending up
as a toothless slogan
that doesnt challenge
us, force us to change,
force us to get better
every day.
J im Yong Kim, President
of the World Bank Group
10
For Oxfam, UHC should be framed by the values of universality, social
solidarity, and equity. UHC reforms must be explicit about reducing
inequality in access to health services, so that everyone has the same
financial protection and access to the same range of high quality health
services according to need and not their ability to pay. UHC requires
pooling arrangements that redistribute resources to individuals with the
greatest health needs. Governments have a role to play in both ensuring
that funds for health are raised equitably, and actively redistributing
resources.
Above all else, UHC is about the right to health. This means moving
away from the idea of an employment or contributory basis for
entitlement. People must be entitled to receive benefits by virtue of their
citizenship and/or residency because first and foremost they are people
not because they are formally employed or have paid to join a scheme.
To achieve UHC, in its truest form, governments, donors, and civil
society actors alike must adopt this as a starting point.
Critically, progressive realization of UHC should not be interpreted to
mean starting with the easiest to reach, namely those in formal
employment and/or with higher incomes, and then slowly expanding
access to the rest of the population. Instead, equity must be designed
into the system from the beginning with governments and donors
committing to progressive universalism, ensuring that the poor benefit at
least as much as the better off at every step of the way towards universal
coverage.
26

NO SINGLE UHC RECIPE BUT
FOUR KEY INGREDIENTS
The 2010 WHO World Health Report outlines four actions that
significantly increase a countrys likelihood of making sustained progress
towards UHC. Taken together, these key ingredients can create fair and
effective financing systems, which improve access to health services and
avert the poverty that results from catastrophic health care costs.
1. Promote equitable access by removing
financial barriers, especially direct payments
There is now broad consensus that health user fees punish the poor
27

and prevent people from accessing life-saving treatment. According to
WHO, user fees are the most inequitable method for financing health-
care services.
28
Worldwide every year 150 million people face
catastrophic health-care costs because of direct payments, while 100
million are pushed into poverty the equivalent of three people every
second.
29
Revenue previously raised through user fees should be
replaced with more efficient and equitable prepayment mechanisms.
A number of low-income countries have abolished health user fees for
some or all of their citizens as a first step towards UHC. In Mali, the
Even tiny out-of-
pocket charges can
drastically reduce
[poor peoples] use of
needed services. This
is both unjust and un-
necessary.
J im Yong Kim, President
of the World Bank Group
11
government has introduced policies to provide selected services free of
charge, including caesarean sections. Between 2005 and 2009
caesarean rates in Mali doubled and facility deliveries increased from 53
per cent to 64 per cent.
30
Burkina Faso, Sierra Leone, Niger, Benin, and
Senegal have introduced similar initiatives for priority groups. J ust 12
months after user fees were removed for pregnant women and children
in Sierra Leone, use of medical care by children increased by 214 per
cent and maternal mortality declined by 61 per cent.
31
The number of
children treated for malaria tripled over the same period.
32
Other
countries, like Zambia, Nepal, and Afghanistan have gone a step further
and made all basic health care free at the point of use. In Afghanistan,
utilization increased by 400 per cent in the first year.
33
A study published
in the British Medical J ournal in 2005 estimated that 233,000 deaths of
children under the age of five could be prevented every year by removing
user fees in 20 African countries.
34


Box 2: Indi rect impact of user fees on women: evidence from Mali
A 2012 ethnographic study on the indirect impact of health user fees on
women in Mali found that fees reinforced gender inequality.
35
Health user
fees reduced agency for women in health care decision-making. In
situations where women lacked personal income to pay fees for care for
themselves or their children, they explained how they must wait for their
husbands to decide whether to provide the resources necessary for
seeking care. The study describes how user fees trap women and their
families in cycles of poverty, disease, and powerlessness. Families living in
poverty and women with limited decision-making power in their
relationships were most severely affected.
2. Prepayment must be compulsory
No country in the world has achieved anything close to UHC using
voluntary insurance as its primary financing mechanism. The 2010 World
Health Report unequivocally states It is impossible to achieve universal
coverage through insurance schemes when enrolment is voluntary.
Prepayment for those who can afford to contribute must be compulsory; if
it is not, the rich and healthy will opt out and there will be insufficient
funding to cover the needs of poor people and those who are sick.
As can be seen in Figure 2, mandatory prepayment constitutes well over
60 per cent of health expenditure in countries with universal systems.
This figure presents data for the Organization for Economic Co-operation
and Development (OECD) countries and for a few middle-income
countries that are widely regarded as having universal coverage. The
USA, which relies predominantly on voluntary insurance, is the only
country in the original set of OECD countries that does not currently have
universal coverage.
36



Removing user fees
across 20 African
countries could pre-
vent the deaths of
233,000 children under
the age of five every
year.
12
Figure 2: Domestic revenue sources for funding universal health
coverage, 2011











Source: adapted from McIntyre (2012). Updated by author using 2011 data from
WHO National Health Accounts dataset.
3. Large risk pools are essential
The principle of social solidarity requires maximum redistribution in the
form of income cross-subsidies from rich to poor and risk cross-
subsidies from the healthy to the ill. This can only be achieved through
having large risk pools (with the gold standard being a single national risk
pool). Pooling arrangements that place funds raised from individuals in a
single national risk pool together with general revenue, supplemented
where necessary with donor funds, allow for cross-subsidization and are
most likely to support UHC.
37

Small risk pools that protect the health needs of a small number of
people (such as those found in voluntary schemes) cannot spread risk
sufficiently. Having multiple schemes for different social groups, each
with their own administration and information systems, is also inefficient
and not financially viable in the long run.
Countries with single-fund schemes, such as South Korea, Estonia,
Hungary, and Slovenia, have lower administrative costs than those with
multiple schemes, like Austria, France, Germany, and Luxembourg.
38

4. Governments need to cover the health costs
of people who cannot afford to contribute
To achieve UHC countries must raise sufficient public funds to cover the
health care costs of those who cannot afford to contribute. Even in
European countries with well-established health insurance systems,

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Mandatory pre-payment Voluntary pre-paymet Out-of-pocket
13
governments inject general revenues into the system to ensure coverage
for those who are too poor to pay (see Box 3).
In poorer countries where a large proportion of the population live on low
wages and work in the informal sector, general government revenues are
especially important. In a recent review published in the Lancet, a
common theme among nine African and Asian countries that have made
sustained progress towards UHC was the use of tax revenues to expand
coverage.
39


Box 3: Germany increases the proportion of general revenue
In Germany around 70 million people (out of a population of 82 million) are
members of one of the countrys 134 health insurance schemes. The
insurance schemes receive funding through the National Health Fund. The
National Health Fund pools all mandatory payroll contributions (15.5 per
cent split between employer and employee), and redistributes them risk-
adjusted to the different schemes. Almost a quarter of all members (e.g. the
unemployed, children and spouses of the insured, and parents on parental
leave) are not on any payroll and do not contribute directly to the fund, but
they receive the same level of benefits as those who do contribute.
Payroll contributions alone are increasingly insufficient to cover the health
care costs of members. High administrative costs, an aging population,
cost escalation, and an increasing number of people primarily the better
off opting out in favour of private insurance, mean that the government is
relying more and more on general tax revenue to fill the financing gap.
About a decade ago the German government started injecting resources
from general tax revenue to keep the system afloat. In 2006 Germany
allocated 4.2bn to the National Health Fund. This has quickly risen to
14bn in the years since 2009. Today it covers close to ten per cent of the
statutory health insurance schemes expenses.
UHC IS NOT BUSINESS AS USUAL
In too many cases the four UHC guiding principles are being ignored and
business as usual prevails.
Despite health user fees being publicly condemned by the Director-
General of WHO, and more recently, the President of the World Bank
Group, progress on removing fees has been disappointing and
international support remains unacceptably low.
Voluntary insurance schemes have been shown to have low coverage
rates, to be costly to administer, and exclude women and men living in
poverty.
40
Yet some governments and donor agencies, including the
World Bank Group, the International Labour Organization (ILO), the
Dutch government, and more recently UNICEF
41
, continue to provide
financial and technical support to initiate and attempt to scale up these
voluntary schemes. Such approaches do not follow WHO
recommendations, and may block progress towards UHC.
14
Box 4: India s RSBY the most innovative social security
scheme..?
Introduced in 2008, Rashtriya Swasthya Bima Yojna (RSBY) is Indias
flagship national health insurance scheme for people living Below the
Poverty line (BPL). Evidence suggests the high praise given to RSBY by
influential agencies including the World Bank Group and the ILO is both
premature and dangerously misleading.
As of J uly 2013, 35 million households had been enrolled in RSBY and it is
claimed that 50 per cent of BPL households are enrolled in the 460 districts
where RSBY operates. These impressive figures hide concerning
disparities - just eight per cent of families in the Shivpuri district in Madhya
Pradesh are enrolled compared to 90% in Kozhikode district in Kerala.
42
In
the first year of RSBY male enrollment was over 1.5 times higher than for
females only five people can enroll per household and male members
tend to be given priority.
43
There is also scope for gross overestimation of
coverage - data on renewals is not published so it is impossible to know
how big a gap exists between the active and cumulative count of
enrollees.
44
In Ghana when only active national health insurance enrollees
were counted, the official coverage was revized down in 2010 from 66 per
cent to just 34 per cent of the population.
RSBY provides inadequate financial protection to enrolees the insurance
scheme covers only limited hospitalization costs yet in India 74 per cent of
out of pocket health expenditure goes on outpatient care and medicines.
45

As costs are covered for inpatient care only, RSBY skews public spending
on health away from more cost effective primary and preventative health
care.
46

Cost escalation is a major problem. As the number of hospitalization claims
increase insurance companies have argued that the government
reimbursement of Rs. 750 ($12) per RSBY household is insufficient. In
Kerala companies are already charging the government ten per cent more
per household enrolled than the official maximum reimbursement amount.
47

Further cost escalation is inevitable in the long term due to population
aging, epidemiologic transition and rising medical costs.
48

Sadly there is significant evidence that health care providers and insurance
companies are maximizing profits by gaming the system. Hospitals have
engaged in misconduct by introducing illegitimate charges, making false
claims and providing unnecessary treatments, to the point of clear
fraudulence.
49
In the district of Dangs in the State of Gujarat, several
private hospitals submitted false claims for several months, driving the
claims ratio
50
for the district above 200 per cent.
51
Contracted insurance
companies have been known to delay issuing membership cards in order to
reduce the number of claims. A study in Karnataka revealed that about 38
per cent of households did not have their insurance cards six months after
registration.
52
More serious claims of fraud include the alleged enrollment
of thousands of ghost beneficiaries by ICICI Lombard Indias largest
private sector insurance company.
53
The losses to government, though not
yet fully calculated, are believed to run into tens of millions of rupees.
15
Private health insurance
The role of private health insurance (PHI) in developing countries
remains limited. Of all 154 low- and middle-income countries, only 11
fund more than 10 per cent of their health care through PHI.
54
A number
of donor agencies including the World Bank Group (and particularly the
International Finance Corporation) have been influential in driving the
growth of PHI markets. Backing for PHI has also come from Dutch
institutions such as PharmAccess and the Health Insurance Fund, which
have been actively promoting PHI as a strategy for extending coverage
to the informal sector.
55

South Africa and the USA are among the only countries globally that rely
heavily on PHI (accounting for 42 per cent and 32 per cent of total health
spending, respectively).
56
Neither of these countries has achieved UHC
and they are currently amongst the most inequitable health systems in
the world.
57

A number of defining characteristics make PHI an inappropriate financing
mechanism for UHC:
Although PHI can increase financial protection and access to health
services to those able to pay, high premiums mean that only those on
higher incomes can afford to join.
PHI does not support risk sharing. Private insurance companies tend
to design policies with the aim of attracting people with lower-than-
average health risks and exclude those with higher health risks a
practice commonly known as cream-skimming. This can lead to
discrimination and the exclusion of specific groups including women,
elderly people, and people living with HIV.
Without strong government regulation, PHI can lead to rising costs
and inequitable access. Even in high-income countries like the USA,
regulating PHI is a major challenge. Most developing countries lack
the capacity for effective regulation.
Box 5: Private health insurance in Georgi a
Georgias Medical Insurance Program for the Poor (MIP) was launched in
2006 to improve financial protection for the poorest 20 per cent of the
population. MIP is tax-funded and implemented by private health insurance
companies. In 2011 MIP accounted for 43 per cent of the health budget.
Members are entitled to a fairly comprehensive package of health services
with no co-payments. However, most drug costs are not covered. Problems
with the eligibility system mean that about half of the poorest quintile is still
not enrolled
58
and some patients are still paying for services that ought to
be covered by MIP.
59
Out-of-pocket payments have been reduced slightly
but remain exceptionally high at around 70 percent of total health spending,
at least half of which is spent on pharmaceuticals.
60
MIP has had no impact
on utilization or reported health status.
61
Meanwhile, insurance companies
have made huge profits in 2010 some companies were making profits of
up to 50 per cent.
62

16
For those not covered by MIP only a minority can afford private health
insurance or have employment-based cover. In 2012 half of all Georgians
had no coverage and were paying out-of-pocket for health services in a
privatized and largely unregulated health system.
63

Following the 2012 elections, the new government announced major
reforms aimed at achieving UHC, including the creation of a state fund to
purchase services directly from providers for those not covered by MIP.
The new fund will by-pass private insurers. The commitment is laudable but
significant challenges remain. Spending on health is low and the quality of
primary health care is poor, largely due to the dominance of unregulated
private providers. Questions remain over the design of the benefits
package (especially pharmaceuticals) and the issue of copayments.
Community-based health insurance
CBHI schemes called mutuelles de sant in Francophone countries
are increasingly popular with governments and donors as a pathway to
UHC. These voluntary, not-for-profit health insurance schemes are
organized at a community level and specifically target those outside the
formal sector. Some NGOs see CBHI as a way of increasing community
participation in health service decision-making, but schemes vary and
there is limited evidence on the extent of empowerment.
64
While CBHI
can play a role in providing some financial risk protection in situations
where more widespread prepayment and pooling arrangements do not
exist, their potential to be scaled up to reach UHC is limited. There are
several key reasons for this:
Enrolment rates are often very low. Coverage at country level rarely
exceed a few per cent
65
and so far CBHI schemes cover two million
people in Africa, out of an estimated population of 900 million.
66
There
is strong evidence to suggest that most CBHI schemes fail to cover
the poorest groups.
67

Premiums are usually charged at a flat rate, making this a highly
regressive way of funding health care as poor people contribute a
higher proportion of their income than wealthier people.
68

CBHI schemes generate little revenue and are not financially viable in
the long-run. Premiums tend to be low and the cost of collecting
premiums can be high; the average cost-recovery ratio (money raised
as a proportion of the amount spent) is only around 25 per cent.
69

Voluntary schemes do not generate the revenues required to cover
those unable to pay premiums, which is a major concern in countries
with high levels of poverty.
CBHI schemes have small risk pools. A review of 258 CBHI schemes
found that only two per cent had more than 100,000 members; more
than half had membership below 500 people.
70
With insufficient funds
to cover large health costs CBHI schemes tend to cover either a
limited number of primary health care services or expensive
specialist/inpatient care only, severely limiting the financial protection
offered.

17
3 SOCIAL HEALTH
INSURANCE
For those who recognize the pitfalls of voluntary schemes, SHI has
become an increasingly popular alternative. Numerous international
conferences and workshops have been dedicated to the issue, and the
question of SHI design and implementation in low- and middle-income
countries has been the subject of rigorous academic scrutiny.
71

In theory, SHI has great potential it relies on mandatory pre-payment
and pools health revenues so that they can be distributed equitably
across the population. However, while SHI has worked to achieve UHC
in a number of high-income countries, attempts to replicate the same
kind of employment-based models in low- and middle-income countries
have proved unsuccessful. A recent systematic review concluded that
there is no strong evidence to support widespread scaling up of social
health insurance schemes as a means of increasing financial protection
from health shocks or of improving access to health care.
72

In developing countries SHI schemes are typically characterized by
large-scale exclusion and the bigger the informal sector the bigger the
coverage gap. Ten years after the introduction of SHI schemes in
Tanzania, coverage had reached only 17 per cent (see Box 6).
73
Kenyas
National Hospital Insurance Fund established nearly 50 years ago
today insures only 18 per cent of Kenyans. Low levels of enrolment have
been reported as a major and recurring challenge in a number of other
countries, including Vietnam, Ghana, and Nigeria. Even high-income
countries struggled to achieve rapid scale up via SHI in Germany UHC
took 127 years to achieve. People in poor countries cannot and should
not have to wait that long.
Insurance premiums and co-payments act as a major financial barrier,
even when they are considered low. For example, in Ghana unaffordable
insurance premiums prevent many citizens from joining the National
Health Insurance Scheme (NHIS).
74,75
Twenty-nine per cent of Ghanas
population lives in poverty and yet just a quarter of this group are
members.
76,77
While most schemes exempt certain people from paying
premiums (e.g. elderly, people living in poverty, and disabled people),
subsidies are rarely sufficient to cover all those unable to pay. Insurance
premium exemptions also experience the same exclusion and inclusion
errors suffered by user fee exemption schemes.
78
In the absence of
reliable income records, premiums are generally charged at a flat rate,
for example $10 per person, per year. This is a very regressive way of
funding health care, with the poorest people paying more as a proportion
of their household income.


There is no strong
evidence to support
widespread scaling up
of social health insur-
ance schemes as a
means of increasing
financial protection
from health shocks or
of improving access to
health care
Systematic review on the
impact of insurance on the
poor and the informal
sector (2012)
18
Box 6: Multiple health insurance schemes in Tanzania
Health insurance in Tanzania remains highly fragmented, with a variety of
schemes in operation. The National Health Insurance Scheme (NHIS) is
mandatory for formal sector workers, especially government employees. A
six per cent payroll contribution is split equally between the employer and
the employee. Members and their dependants can access health services
at government facilities as well as accredited NGO-run services, private
facilities, and pharmacies.
The Community Health Fund (CHF) is a district-level voluntary prepayment
scheme that targets rural populations in the informal sector. Households
join by paying a flat-rate annual fee of between $3 and $6. Members are
entitled to a package of curative and preventive services but benefits are
much less than those afforded to NHIS members and expensive hospital
care is not covered.
79
Inability to pay contributions is a significant barrier
preventing poor families from joining the CHF.
80

It was anticipated that 60 per cent of households would be covered by
health insurance by the end of 2003.
81
However, official figures for the
NHIF and CHF combined placed coverage at just 17 per cent in 2010/11.
Meanwhile, the remaining population 38 million citizens continue to pay
out-of-pocket.
Even when SHI is mandatory, membership is difficult to enforce. There
are no formal mechanisms to deduct contributions from the majority
population in informal employment and not everyone can afford to join. In
low- and middle-income countries SHI schemes therefore become de
facto voluntary. As such they suffer the very same problems as voluntary
schemes, including low coverage, adverse selection, and risk pools that
do not support cross-subsidies from rich to poor or from the healthy to
the ill. Ghanas mandatory NHIS, widely promoted as an SHI success
story, covers only 36 per cent of the population (see Box 7).

Box 7: Ghana s National Health Insurance Scheme
Ghanas NHIS was introduced in 2004, promising to deliver UHC. Yet after
nearly ten years of implementation, the NHIS covers just 36 per cent of
Ghanaians.
82
The remaining 64 per cent of the population continue to make
out-of-pocket payments to access health care.
For its members the NHIS covers the direct costs of health services and
medicines for most common diseases in Ghana. The scheme is financed
from a 2.5 per cent levy on VAT (70 per cent), payroll deductions from
formal sector workers (22 per cent), and annual premium contributions from
informal sector workers (five per cent).
83

Although the insurance premiums paid by informal sector workers are
subsidized, large numbers of Ghanaians cannot afford the NHIS premiums,
which range from $3 to $22 per year. So while every citizen pays for the
NHIS through the 2.5 per cent levy on VAT, the majority of families on low
incomes are not enrolled in the NHIS and therefore do not benefit.

19
Many countries are tempted to initiate SHI by covering the formal sector
first; Zambia and Uganda are currently exploring this strategy. Even with
the best intentions, countries that have taken this approach have
struggled to expand coverage beyond the formal sector. Experience in
Latin America has shown that once SHI is established first for salaried
workers, there may be considerable opposition from employers and
employees who do not want to see their benefits diluted and/or are
unwilling to subsidize membership for poorer members. Recent attempts
to merge separate schemes in Tanzania have been met with similar
resistance.
84
Very often, the end result is a two-tier health system with
one scheme for the formal sector and another Ministry of Health scheme
(usually with a more limited benefits package) for everyone else.
Hopes that health insurance premiums from the informal sector would
raise additional revenue for health have not been realized. It is
complicated and expensive to collect premiums from people who are not
formally employed. In Ghana, premiums paid by the informal sector
contribute just five per cent towards the cost of the NHIS.
85
In Rwanda,
revenue from the CBHI scheme accounted for just five per cent of all
health spending in 2006, and is now probably closer to three per cent.
86

As major employers, governments also face huge bills to cover the SHI
contributions of their own workers. The government of Tanzania spent
$33m on employer contributions in 2009/10; this equated to $83 per
employee six times more than it spent per person, per year on health
for the general population.
87,88
Using government resources to subsidize
better health services for an already privileged group is fundamentally
unfair and undermines the core principles of UHC.
Introducing SHI may actually reduce the overall resources available for
health, as perceived additional income from premiums can take pressure
off ministries of finance to raise tax revenues for the health sector. In
Kazakhstan, SHI triggered a reduction in budget allocations to health by
a larger amount than that collected through insurance premiums.
89

SHI is ill-suited to the social and economic realities in poor countries and
the usual manner in which it is implemented (with coverage starting with
the formal sector first) is actually harmful for equity and the advancement
of UHC. In high-income countries, several structural features have
provided a positive enabling environment for SHI, including: large formal
sectors, low poverty rates, small family sizes, and strong government
capacity to administer and regulate insurance funds.
90
Crucially, these
enabling factors are absent in most low- and middle-income countries.
Instead of importing inappropriate health financing models from high-
income countries, developing country governments should look to learn
from the increasing number of home-grown UHC success stories in
other, more comparable countries.

In 2009/10 the Govern-
ment of Tanzania spent
$33 million on employ-
er insurance contribu-
tions. This equated to
$83 per government
employee six times
more than it spends
per person per year on
health for the general
population.
20
4 TWO APPROACHES
THAT WORK
A growing number of countries including Thailand, Malaysia, Sri Lanka
and Brazil are making significant progress using home-grown health
financing systems which are equitable and universal. While each journey
differs, successful countries have recognized that collecting premiums
from those outside formal employment is complicated and expensive.
Instead, they rely heavily on public financing to cover the majority of
citizens. These countries are working to pursue the WHO
recommendations to remove direct payments, maximize mandatory pre-
payment, establish large risk pools, and use general government
revenue to cover the majority of the population. Most importantly, these
countries are basing entitlement for health care on citizenship and/or
residence and not on employment status or financial contributions.
The countries that have had the most success with progressing towards
UHC to date fall into two broad camps. First, there are examples of
countries at all income levels, including Sri Lanka, Malaysia, and Brazil,
which fund UHC from tax revenues.
Sri Lankas tax-financed health system is unusually pro-poor and
provides modern medical treatment to all at low cost. Year-on-year
efficiency improvements ensure better health outcomes than most other
developing countries, despite only seven per cent of the government
budget being spent on health. Sri Lanka and Malaysias tax-financed
health systems provide citizens with some of the highest levels of
financial risk protection in Asia.
91
Only 0.3 per cent of households are
pushed into poverty each year in Sri Lanka as a result of health-care
costs.
92
While Sri Lanka continues to face a number of public health
challenges and there is an urgent need to address social and
environmental determinants of health, the significant progress made on
financing is a step in the right direction.
In Brazil in the late 1980s half of the population had no health coverage,
yet only two decades after the countrys tax-financed Unified Health
System was established, nearly 70 per cent of Brazils 200 million
inhabitants now rely on it for their health care.
93
Rather than covering the
easiest to reach first, Brazils Programa Sade da Famlia (Family Health
Programme) was designed to initially increase coverage amongst
disadvantaged groups, which it has largely achieved. The doubling of
public health-care spending in Brazil between 1995 and 2011 coincided
with the fastest fall in under-five mortality ever recorded.
94
However,
Brazil continues to face a number of challenges. The universal scheme
has been underfunded since its creation and standards of health care
have suffered as a result. It is significant that, among other things,
popular protests in 2013 focused on insufficient spending on health.
21

Advantages of tax financing include its inherent ability to create a
national-level risk pool and provide a broader potential revenue base
than SHI, especially in countries with high levels of informal employment.
Tax financing also removes the need for expensive insurance
administration systems, and has proved the most equitable system in
terms of raising and distributing health resources most fairly across the
whole population.
95

A second option increasingly being adopted by another set of successful
UHC countries is to collect insurance premiums only from those in formal
employment, and where possible, to pool these with general government
revenue to finance health coverage for the entire population.
Thailands health system relies on payroll contributions for only 12 per
cent of its population and finances its internationally celebrated Universal
Coverage Scheme using general government revenues (see Box 8).
96

Mexico introduced and scaled up its tax-funded popular health insurance
scheme, Seguro Popular, over a period of 10 years to cover the 52
million people outside of the formal social security system to achieve
UHC.
97
Challenges remain in Thailand and Mexico however, due to
separate risk pools and superior health care benefits for those in formal
employment, particularly government employees.
98,99


Box 8: Universal health coverage in Thailand
Before Thailand introduced its Universal Coverage Scheme in 2002, nearly
a third of the population had no health coverage.
100
The vast majority of
people who remained uncovered were in informal employment and many
were too poor to pay insurance premiums. Recognizing this, the Thai
government chose to use general revenues to fund the scheme, which
pools funds for nearly 50 million people.
In just ten years the scheme has reduced the proportion of the population
without health coverage to less than four per cent, increased access to
services, and improved financial risk protection.
101
People living in poverty
have benefited most; the proportion of families in the lowest income group
facing catastrophic health care costs dropped from four per cent in 2000 to
0.9 per cent in 2006 when UHC was achieved.
102

Thailands success can also be attributed to large-scale investment in
primary health care and action to ensure adequate supplies of essential
medicines and human resources. Strong political commitment and active
civil society engagement were crucial.

A more just and arguably more efficient solution is to create a single
national risk pool combining all resources for health, including tax
revenues, formal sector payroll contributions, and international aid, to
provide equal quality health coverage for all. There is a welcome trend in
this direction. Kyrgyzstan and the Republic of Moldova are among a
small but growing number of countries financing UHC by pooling payroll
22
taxes from the formal sector with tax revenue.
103
The reforms in
Kyrgyzstan have radically reduced fragmentation and inequity, revitalized
primary care, and improved health outcomes (the infant mortality rate
reduced by almost 50 per cent between 1997 and 2006).
104
In Moldova
the pooled health budget (one third from payroll contributions and two
thirds from general tax revenue) has enhanced equity and reduced the
burden of out-of-pocket payments for all income groups.
105

Thailand is taking steps to merge its separate insurance funds to
promote equity and improve efficiency. South Africas proposals to
redress significant health inequities by introducing National Health
Insurance (NHI) indicate that all citizens and legal long-term residents will
be provided with essential health care through a defined set of
comprehensive health service entitlements, regardless of employment
status or ability to make a direct monetary contribution to the NHI fund.
106


Box 9: The shift from passive to active purchasing of health care
Pooling of resources for health is critical to achieve UHC but so too is the
active role of governments in ensuring available funds translate into
effective health services for all.
107
It is a common misunderstanding that a
purchaser-provider split, often associated with insurance models, is the
only route to create incentives for improved provider performance and
ensure accountability. In reality, as the World Banks Adam Wagstaff has
stated, there is no compelling evidence that SHI purchasers are more
effective than tax-financed purchasers; in fact, there are some who argue
the opposite.
108

Rather than promote unproven blue print institutional arrangements, more
attention should be paid to how successful governments have made the
shift from passive to active purchasers across different health financing
systems. It is critical to understand how these governments identify the
health service needs of the population, align services to these needs, pay
providers in a way that creates incentives for the efficient provision of
quality services, monitor the performance of providers and take action
against poor performance.
109


23
5 SCALING UP TAX
FINANCING TO ACHIEVE UHC
Tax financing has played a dominant role in all UHC success stories.
Unfortunately, the preoccupation with SHI as the default UHC model
has left the crucial question of how to generate more tax revenues for
health largely unexplored in low- and middle-income countries. This blind
spot should be urgently addressed.
The common assumption by governments and donors that there is
insufficient fiscal space to increase government spending on health must
be challenged. Even the poorest countries can increase domestic
revenue by improving existing tax collection systems, removing
unnecessary tax exemptions, adjusting tax rates, and introducing new
progressive taxes and innovative financing mechanisms. The IMF has
studied the ratio between countries fiscal potential and actual
government revenues, finding that low-income countries are reaching
only 78 per cent of their potential, while lower-middle-income countries
reach only 63 per cent.
110
Analysis by the Kenya Institute for Public
Policy Research and Tax J ustice Network estimates Kenyas overall
untapped tax capacity to be KSH 244bn ($2.86bn) enough to more
than double government spending on health.
111,

112

IMPROVING TAX ADMINISTRATION
AS A FIRST STEP
Gaps in national tax revenue may be due to a lack of capacity in revenue
authorities, domestic tax evasion, and corruption in tax and customs
authorities. Strengthening tax administrations to address these problems
is therefore a critical first step to closing tax gaps. Oxfam has estimated
that improving tax collection in 52 developing countries could raise an
additional 31.3 per cent in tax revenues, or $269bn.
113
Indonesia has
improved the performance and efficiency of its tax system with
substantial benefits for government spending (see Box 10).
Box 10: Indonesia simplifies its tax administration system
In 2001 Indonesia created a single registry of taxpayers and simplified its
tax administration system to encourage compliance. The government
drafted tax laws that were clear, accessible, and consistently applied, and
adopted a policy of zero tolerance towards corruption. Donors have actively
supported tax authorities by building technical capacity, for example, by
developing electronic systems for reporting taxable income. In the first five
years, Indonesia increased its non-oil tax revenue by a massive 38 per cent
in real terms.
114

24
SCALING UP PROGRESSIVE TAX
FINANCING
Indirect taxes such as VAT have become increasingly popular in
developing countries, due in part to tax policy advice from the IMF and
other agencies. However, VAT is typically regressive, with the poorest
people paying more as a proportion of their household income. A range
of more progressive tax options exist.
In many countries there is scope to increase personal income and
company tax rates for those with greater means. Top marginal personal
income tax rates in OECD countries average 40 per cent, but in
developing countries it is rare to see tax rates greater than 25 per
cent.
115,116,117
Tax competition in attracting foreign direct investment has
led to a proliferation of unnecessary tax exemptions. Developing
countries forego an estimated $138.9bn each year through corporate tax
exemptions.
118
According to a recent World Bank Group survey, 93 per
cent of investors in East Africa said that they would have invested
regardless, had tax incentives not been on offer.
119

Property taxes and excise taxes on luxury goods such as cars and
electronics can raise additional revenue to finance UHC. In Indonesia,
luxury items are subject to a VAT surcharge of 10-200 per cent.
120
So-
called sin taxes on tobacco, alcohol, and high sugar content foods have
the advantage of raising funds and improving health at the same time.
WHO estimates that a 50 per cent increase in tobacco excise taxes in 22
low-income countries would generate $1.42bn in additional funds.
121


Box 11: Kenya rapidl y increases its tax potential
In the last 10 years Kenya has increased its tax to GDP ratio from 15 per
cent to nearly 20 per cent. Much of the increase is due to robust corporate
and personal income tax revenues, which account for 9.9 per cent of GDP.
The government has also introduced innovative sources of financing, such
as a financial transaction tax on electronic money transfers, expected to
raise 0.1 per cent of GDP in additional tax.
Kenya has increased transparency of public spending by creating local and
national development funds. The Local Authority Transfer Fund (LATF)
receives five per cent of national personal income tax revenues, has a
district level accountability, and is monitored by civil society organizations
such as the National Taxpayers Alliance (NTA) using citizen report cards.
A number of countries are exploring innovative financing mechanisms
such as small levies on financial transactions or levies on large and
profitable companies. Gabon raised $30m for health in 2009 using a 1.5
per cent levy on the post-tax profits of companies that handle remittances
and a 10 per cent tax on mobile phone operators.
122
Different forms of
financial transaction taxes have been introduced in approximately 40
developing countries.
123

25
Non-tax income from extractive industry royalties could also be used to
finance UHC, in Africa especially. According to the IMF, 20 of the 45
countries in sub-Saharan Africa are significant exporters of natural
resources.
124
Among them, 10 already collect more public revenues from
natural resources than from all other sources together. Providing
measures are put in place to ensure revenue is distributed fairly, new
discoveries of extractive resources constitute major revenue potential.
Lessons can be learned from countries like Botswana where good
governance and transparency have ensured that revenues from diamond
exports are being used to fund public services.
THE NEED FOR GLOBAL
SOLIDARITY
Urgent action on global tax evasion and avoidance is also vital to ensure
that poor countries can generate and retain more of their own resources.
Oxfam estimates that at least $18.5 trillion is hidden by wealthy
individuals in tax havens worldwide, representing a loss of more than
$156bn in tax revenue. The missing money is twice that required for
every person in the world to be living above the $1.25-a-day extreme
poverty threshold.
125
Tax dodging by multinational enterprises costs
developing countries an estimated $160bn annually.
126
This is more than
four times the amount spent on health by all sub-Saharan African
governments combined in 2011.
127

As a result of mounting pressure on rich country governments to act,
some progress was made at the recent G8 summit in the UK and the
G20 summit in Russia where world leaders agreed to new measures to
share tax information. Significant political commitment will be required to
see this important change through to full implementation.
Achieving UHC will also continue to require significant development
assistance, at least in the short to medium term. According to WHO, only
eight of 49 low-income countries will be in a position to fully finance UHC
from domestic resources in 2015.
128

But aid must be delivered in a way that supports democratic country
ownership, empowering developing country governments and their
citizens, in line with the principles of the Busan Partnership for Effective
Development Cooperation. Government to government aid via sector or
general budget support is the best way of supporting governments in
their advance towards UHC. Directing development aid through
government funding channels in Ethiopia has led to significant health
gains. Nine international partners finance Ethiopias MDG Performance
Fund which fills critical gaps in the national health sector plan, including
infrastructure and human resources.
129

More long-term and predictable aid is vital, not only to help strengthen
health systems, but also to improve public financial management and
taxation systems so that countries can be self-sufficient in the future. If
high-income countries were to immediately keep their international
pledges, external funding for health in low-income countries would more
than double overnight.
130

Oxfam estimates that
lost tax revenue from
tax havens is costing
governments more than
$150 billion twice the
amount required for
every person in the
world to be living above
the $1.25-a-day ex-
treme poverty thresh-
old.

If rich countries were to
immediately keep their
international pledges,
external funding for
health in low-income
countries would more
than double overnight.

26
Increasing revenues available to governments in low- and middle-income
countries alone will not be enough to achieve UHC. Governments must
also demonstrate their political commitment by dedicating sufficient funds
to the health sector and moving quickly to address inefficiencies, improve
quality, and ensure effective, accountable, and safe patient care.
Ministries of health need to consider how to allocate funds in the most
efficient and effective way in order to achieve maximum health gains, by
prioritizing primary health care including preventative care and by
playing an active role in improving performance and accountability.
Political will to achieve these changes has been the cornerstone of every
UHC success story.

27
6 CONCLUSION AND
RECOMMENDATIONS
The growing momentum for UHC is welcome, exciting, and challenging.
UHC has the potential to transform the lives of millions of people by
bringing life-saving health care to those who need it most. Developing
country governments, aid donors, and civil society all have a part to play
in making it happen.
UHC should be framed by the values of universality, social solidarity, and
equity. Equity must be built into the system from the beginning,
131

ensuring that people living in poverty benefit at least as much as those
who are better off at every step of the way.
132
If not, health financing
reforms carried out in the name of UHC may actually reinforce inequality
by prioritizing already advantaged groups and leaving the most poor and
marginalized especially women last in line to benefit.
While UHC is not a one size fits all journey, policy makers should
prioritise WHOs four key principles on health financing. Approaches that
reduce direct payments, maximize mandatory pre-payment, establish
large risk pools, and use government revenue to cover the majority
population, are most likely to succeed.
In too many cases these guiding principles are being ignored. Health
user fees have been internationally condemned, yet they continue to
exist in poor countries. Three people are pushed into poverty every
second because they are forced to pay out-of-pocket for health care. No
country in the world has achieved anything close to UHC using voluntary
insurance, but private and community-based schemes are still being
promoted by influential donors. And there is no strong evidence to
support widespread scaling up of social health insurance schemes as a
means of increasing financial protection from health shocks or of
improving access to health care.
133

Fortunately a growing number of low- and middle-income countries are
building universal and equitable financing systems that are working to
advance UHC. While their specific journeys differ, these countries share
a common understanding that entitlement to health coverage should be
based on citizenship and/or residency and not on employment status or
financial contributions. Instead of collecting insurance premiums from
those who are too poor to pay, these countries have prioritized general
government spending for health either on its own or pooled with formal
sector payroll taxes to successfully scale up UHC. Governments and
donors should use the recent lessons from these countries and build on
them.

28
There is indisputable evidence that public financing is the key to ensuring
access to quality health care for all, yet the crucial question of how to
generate more tax revenues for health has been largely overlooked. This
blind spot should be urgently addressed. Even the poorest countries can
increase domestic revenue for health by improving tax collection,
adjusting tax rates, and introducing new progressive taxes. Such efforts
must be supported and complemented at the global level with
international tax reforms to address tax evasion and avoidance. More
long-term and predictable development aid is also critical. Government to
government aid via sector or general budget support is the best way to
support countries to achieve UHC.
All countries can take immediate steps to move towards UHC and those
that do will reap the rewards. Governments, donors, and civil society
must work together to develop national health financing strategies for
UHC that are universal and equitable, aligned with country health plans,
and include all sources of financing for health. At the same time they
must halt unproven and risky policies that threaten to derail progress.
RECOMMENDATIONS
Developing country governments
Develop financing systems based on the four key ingredients
outlined by WHO. Rather than looking to adapt European-style
employment-based SHI, build on the lessons from the growing
number of low- and middle-income countries that are making progress
towards UHC.
Make equity and universality explicit priorities from the outset and
avoid the temptation to start with the easiest to reach in the formal
sector. Those living in poverty must benefit at least as much as the
better off every step of the way.
Rather than focus efforts on collecting insurance premiums from
people in informal employment, look to more efficient and equitable
ways of raising revenue for health from tax reform.
Move towards pooling together all government revenues for health
with formal sector payroll taxes where these exist to maximize
redistribution.
Ensure that adequate proportions of national budgets are allocated to
health, in line with the Abuja target of 15 per cent of government
funds.
Actively engage civil society in all stages of policy-making,
implementation, and monitoring.

29
High-income country governments and
multilateral organizations
Stop promoting inappropriate approaches in the name of UHC,
especially private and community-based voluntary health insurance
schemes.
Take action on tax avoidance and tax evasion, which denies poor
countries much-needed revenue for universal public services. Provide
support for progressive tax reform in poor countries, including
technical support to strengthen tax administration capacity.
Honour commitments to provide at least 0.7 per cent of GNI as Official
Development Assistance, and improve aid effectiveness for health.
Provide a greater proportion of aid as long-term sector or general
budget support.
Support developing country governments to effectively measure and
evaluate progress and outcomes on UHC, especially equity.
Civil society
Increase collaboration to exert collective pressure on governments
and other stakeholders to push for a UHC approach that enshrines the
values of universality, equity, and solidarity.
Hold governments to account by engaging in policy dialogue,
monitoring health spending and service delivery, and exposing
corruption.
Draw attention to cases where influential donors are promoting
inequitable health financing mechanisms and hold them to account.
Work together with civil society champions of tax justice to call for
urgent action on global tax evasion and avoidance.
Formal sector unions should act in solidarity with workers in the
informal economy and advocate for universal and equitable health
care.
Oxfam calls on the international health community to support UHC as the
umbrella health goal for the post-2015 development framework. A focus
on UHC provides the opportunity to accelerate progress on the health-
related Millennium Development Goals, address the growing burden of
non-communicable diseases, and most critically to move towards a more
comprehensive approach to deliver on the right to decent, affordable, and
equitable health care coverage for all.



30
NOTES
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Geneva.
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Sinha K (2012) Unnecessary procedures on the rise in govt hospitals too: Report The Times of India [online] 15
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La Forgia, G and Nagpal, S (2012) Government-sponsored health insurance in India: Are you covered? The World
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9
In its 2010 Annual Report the Ghana National Health Insurance Authority reported population coverage to be 34%. In
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ghanaians-use-health-insurance.html). This represents 36% of Ghanas total population of 25 million people.
10
Amporfu, E. (2013) Equity of the premium of the Ghanaian national health insurance scheme and the implications
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National Health Insurance Fund Tanzania (2010) NHIF Actuarial and Statistical Bulletin. Available from:
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According to the WHO per capita government expenditure on health was US$14.4 in 2010 (data available from
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13
Elovainio, R. and Evans, D. (2013) Raising and spending domestic money for health Centre for global health
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In Myanmar UNICEF has been piloting a Township-based Health Insurance (TBHI). UNICEF Myanmar recently
established the Inter-Agency Working Group for Social Protection of Children as a platform for discussion on
social protection issues including health insurance.
42
Calculated using state-level 2013 enrolment data on RSBY website. Available from:
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Sinha (2012) op.cit.
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The claims ratio is the ratio between the value of claims paid by the insurer to the provider to the amount of policy
premium the insurer receives (from the government in the case of RSBY). A high or adverseclaim ratio is where
insurers are paying more than they earn (i.e. they are losing money) and this can result in a re-pricingof the
districts premium in the next (annual) round of bids.
32


51
Palacios, R. (2010) A new approach to providing health insurance to the poor in India: The early experience of
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Shivakumar (2013) op.cit.
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McIntyre (2012) op.cit.
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Smith, O. (2013) UNICO studies series 16: Georgias Medical Insurance Program for the Poor The World Bank:
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Transparency International Georgia (2012) The Georgian Health Insurance Industry Transparency International
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Pharmaceutical spending in Georgia among highest in the world at 3 to 4 per cent of GDP (Smith 2013 op.cit.). The
pharmaceutical market is characterized by high prices; high markups; and significant cartel control of importing,
wholesale, and retailing (Transparency International 2012 op.cit.).
61
Smith (2013) op.cit.
62
Based on the Audit Report by the State Audit Office on Public insurance Programmes of the Ministry of Labour,
Health Care and Social Affairs, which looks at a number of financial performance indicators of the insurers
participating in the public insurance scheme, Transparency International Georgia (Ibid.) estimate the insurers
average profit margin over 2008-2010 to be at 51% - an unprecedented profit margin for comparable schemes.
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Smith (2013) op.cit.
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Ekman, B. (2004) Community-based health insurance in low-income countries: a systematic review of the evidence
Health Policy and Planning, 19(5):249-270.
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Soors W, Devadasan N, Durairaj V and Criel B (2010) Community health insurance and universal coverage:
multiple paths, many rivers to cross World Health Report 2010 Background Paper 48.
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Ekman (2004) op.cit.
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Examples include: the first Pan African Health Congress on UHC held in 2011 which had as its theme Creating a
movement for equitable health insurance in Africa; The World Bank's "Health Financing Series" which includes six
titles focusing on insurance solutions, including "Global Marketplace for Private Health Insurance: Strength in
Numbers" and "Scaling Up Affordable Health Insurance: Staying the Course."
72
Acharya, A., Vellakkal, S., Taylor, F., Masset, E., Satija, A., Burke, M., and Ebrahim, S. (2012) Impact of National
Health Insurance for the Poor and the Informal Sector in Low- and Middle-Income Countries: A systematic review
London: EPPI-Centre, Social Science Research Unit, Institute of Education, University of London.
73
National Health Insurance Fund (2011) op.cit.
74
Apoya, P and Marriott, A (2011) Achieving a Shared Goal: Free Universal Health Care in Ghana Oxfam
International: Oxford. Available from: http://www.oxfam.org/en/policy/achieving-shared-goal-ghana-healthcare ,
last accessed 6 J uly 2013
75
Alfers, L (2012) The Ghana National Health Insurance Scheme: assessing access by informal workers WIEGO
Policy Brief (Social Protection) No.9. Available from: http://wiego.org/sites/wiego.org/files/publications/files/Alfers-
Ghana-Natl-Health-Informal-Workers-WIEGO-PB9.pdf, last accessed 4 September 2013.
76
World Bank (2011) Republic of Ghana: joint review of public expenditure and financial management The World
Bank: Washington D.C.
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33


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poor under cost recovery: the role of means testing, Health Policy and Planning 10:24156
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Kamuzora, P and Gilson, L (2007) 'Factors influencing implementation of the Community Health Fund in Tanzania'
Health Policy and Planning, 22:95102.
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Ibid.
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Laterveer, L. et al. (2004) Equity implications of health sector user fees in Tanzania. Do we retain the user fee or do
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See note 8.
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Amporfu (2013) op.cit.
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Amporfu (2013) op.cit.
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National Health Insurance Fund Tanzania (2010) op.cit.
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According to the WHO per capita government expenditure on health was US$14.4 in 2010 (data available from
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the total amount spent on employer contributions and the number of NHIF members in 2009/10.
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Kutzin, J . et al. (eds) (2010) Implementing Health Financing Reform: Lessons from Countries in Transition,
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World Health Organization (2010) op.cit.
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Ibid.
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transition European Observatory on Health Systems and Policies: Copenhagen.
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35

Oxfam International October 2013
This paper was written by Ceri Averill with support from Anna Marriott. Oxfam
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