Private health insurance in developing countries

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A new paper from the National Bureau of Economic Research suggests that there may be a viable market for voluntary private health insurance in developing countries. The authors draw primarily on data from the 2002 World Health Survey, limiting their analysis to 14 countries with "per capita incomes that are low compared to developed countries but above subsistence levels, and generally high values for real economic growth." The question they want to answer is whether risk aversion would be high enough and administrative expenses low enough to permit the introduction of voluntary unsubsidized private health insurance.

In a word, yes; the available data suggest market conditions would make private health insurance profitable. And it wouldn't be limited to those in the highest income brackets. In the authors' own words:

...[I]t does seem possible to conclude that there are bright prospects for voluntary insurance in many developing countries. If the insurer can segment markets by income, even low income households might be attracted.

If the prospects are bright, then why haven't any companies stepped into the market? The authors don't bring up this question. It seems to me it's worth further inspection. Perhaps this is an area in which the IFC can expand its current portfolio.


Ryan Hahn

Operations Officer

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