Ethical Issues in Financing Health Services and Designing Insurance Systems
Financing refers to the methods of raising money for health services (Roberts and others, 2008, pp. 26, 153). A variety of mechanisms exist to finance health services, such as general taxation, employee health insurance or other private coverage, social insurance, community-based health insurance, and payment out of pocket at the point of service (Roberts and others, p. 153). As an ethical matter, which system of financing health services is the most fair? The answer to that question requires consideration of the meaning of fairness in the context of health financing.
The World Health Organization considers fairness in financing to be one of the three objectives of every health system (2000, p. 25). In its World Health Report 2000, WHO described this concept as follows:
Fair financing in health systems means that the risks each household faces due to the costs of the health system are distributed according to ability to pay rather than to the risk of illness…A health system in which individuals or households are sometimes forced into poverty through their purchase of needed care, or forced to do without it because of the cost, is unfair….
Paying for health care can be unfair in two different ways. It can expose families to large unexpected expenses…Or it can impose regressive payments, in which those least able to contribute pay proportionately more than the better-off….
…[F]inancial fairness is best served by more, as well as by more progressive, prepayment in place of out-of-pocket expenditure…. [T]he ideal is largely to disconnect a household’s financial contribution to the health system from its health risks, and separate it almost entirely from the use of needed services [World Health Organization, 2000, pp. 35–36, emphasis in original].
WHO’s framework for determining the fairness of financial contribution to a health system can be broken down into several principles, each of which can be used to evaluate the fairness of financing in particular countries. These principles are as follows:
1. Protection from the financial risks of illness should be universal, so that no individual or family is prevented from access to care or driven into poverty as a result of illness (World Health Organization, 2000, p. 35).
2. People should be protected from high, unexpected, and out-of-pocket costs at the point of service. Therefore, prepayment of costs by means of taxes or insurance is fairer than out-of-pocket payment (World Health Organization, 2000, pp. xviii, 35).
3. Payment for health services should be progressive rather than regressive. Therefore prepayment should be based on the ability to pay, instead of on the risk of illness or utilization of necessary services (World Health Organization 2000, pp. 35–36). As explained by Christopher Murray and Julio Frenk (2000), who developed the conceptual framework for the WHO report, poor people have less disposable income, in part because they must spend a larger percentage of their income on necessities like shelter and food (p. 720). If prepayment were to be based on the risk of illness, each individual would be charged a rate that reflects his or her individual risk, and no individual would be required to subsidize anyone else (Light, 1992, pp. 2506–2507). As Donald Light (1992) has pointed out, payment on the basis of risk may satisfy the libertarian principle that no person should be required to pay for any other person, but such “actuarial fairness is morally unfair, because it reduces access to life opportunities and increases suffering for those disadvantaged by risk, pain, and illness” (p. 2507). Thus WHO, and others, take the position that prepayment should be based on the ability to pay, rather than on the risk of illness.
4. Fairness requires the pooling of risks, whereby healthy people subsidize sick people and rich people subsidize poor people (World Health Organization, 2000, p. xviii). Risk pooling refers to combining risks for individuals, which are uncertain and potentially unaffordable, into one risk for a large group, which is calculable and manageable (Gottret and Schieber, 2006, pp. 4–5).
5. Risk pools should be as large as possible, in order to minimize the risk to individuals and their families (World Health Organization, 2000, p. xviii). Prepayment on an individual basis, such as occurs in a medical savings account, does not ensure fairness of financing, because it does not spread the risk or subsidize the elderly or the sick (World Health Organization, 2000, p. 99).
In terms of the principles used by WHO, the health financing system of the United States is less fair than the systems of other industrialized countries, such as Canada and the United Kingdom, for several reasons. First, the U.S. system of health financing is not universal, although the U.S. government is undertaking some reforms toward a long-term goal of universality. The U.S. system fails to provide universal protection and access to care, with more than 46 million people in the United States uninsured in 2009. Millions of people in the United States have been prevented from having access to care or have been driven into bankruptcy as a result of medical bills. Even those U.S. residents who have health insurance may need to pay high, unexpected costs out of pocket at the point of service because of high deductibles, copayments, and charges for noncovered services.
The U.S. system is based to a large extent on employment-based insurance coverage, which, under the principles used by WHO, is arguably less fair than tax-supported, national health insurance. In fact Victor Fuchs (2008) has argued that a tax-financed system, which is unrelated to employment status, is not only the most equitable method of providing universal coverage but is also the most efficient (p. 1751). Employment-based coverage is unfair to those people who are unemployed or who work for employers that do not provide health insurance for their employees. As the World Health Organization (2000) put it, employment-based systems limit coverage to “their privileged membership” (p. xviii). Nancy Jecker (1993) argued that the employment-based insurance system found in the United States is inherently unethical because of unjust discrimination in the distribution of jobs that provide insurance and because, even if jobs were distributed fairly, the reasons for distributing jobs are not valid reasons for distributing health care. Therefore, Jecker argued that rather than mandating all employers to offer health insurance for their employees, health reform efforts in the United States should be directed toward “uncoupling health insurance and jobs” (p. 671.)
In addition to being less inclusive than other health insurance systems, employment-based health insurance is also less portable, and it can be difficult for individuals to retain coverage after termination of employment. Employment-based coverage is also less uniform than the coverage of national health systems, because the benefits, coverage levels, and degree of cost sharing can vary considerably among employers. The financing of employment-based coverage is not transparent, as a direct tax for health care would be. Many workers mistakenly believe that most of the cost for their health insurance is borne by their employers, but actually that cost is borne, one way or another, by the workers (Fuchs, 2008, p. 1750). Moreover, employment-based coverage can encourage employers to discriminate against people who are less healthy when those employers are making decisions on hiring and promotion, and this kind of coverage raises serious risks of disclosing medical information to supervisors and coworkers.
The U.S system of employment-based insurance coverage is also regressive. First, an individual employee’s share of contributions for health insurance is not based on his or her level of income. Therefore, low-wage workers are required to pay the same amount as workers or managers who earn much more money, even though that amount represents a larger percentage of the low-wage worker’s earnings and a larger percentage of disposable income. This system violates the principle of vertical equity, which requires fair treatment for groups of people with different levels of income (Roberts and others, 2008, p. 103).
In addition, U.S. federal tax laws make the system of health financing even more regressive. The U.S. government provides a significant tax break to those employees who receive health benefits from their employers (Carey and others, 2009, pp. 25–26). As a general rule, employees must pay income tax on the compensation that they receive from their employers. Wages and salaries are considered to be part of an employee’s taxable income. However, an employer’s contribution for an employee’s health insurance is not considered part of the employee’s taxable income. This tax break is unfair in many ways because it does not benefit all taxpayers or all employees equally (Emanuel and Fuchs, 2005, pp. 1255, 1257). It gives the most tax advantages to those employees who have the most expensive insurance benefits or the highest incomes, or both. This violates the principle of vertical equity by treating high-income workers more favorably than low-income workers (Carey and others, 2009, p. 27). This tax break provides no advantages whatsoever to those employees who receive no health insurance from their employers. Therefore, this system also violates the principle of horizontal equity by providing differential treatment for people with the same level of income (Roberts and others, 2008, p. 104; Carey and others, 2009, p. 27). Meanwhile other taxpayers are forced to pay more taxes than they would otherwise, in order to make up for the revenue not collected by the government.
The employment-based insurance system in the United States also violates WHO’s principle that risk pooling should be as broad as possible. As discussed previously, fairness requires the pooling of risks so that healthy people subsidize sick people and rich people subsidize poor people. Risk pools should be as large as possible, in order to minimize the risk to specific individuals. To the contrary, employer-based coverage is an attempt to limit each company’s risk pool to people associated with that company, such as current employees, retirees, and their dependents.
Many employers in the United States complain about the high and rapidly increasing costs for their employee health plans. Some employers would like to be relieved of the obligation to pay the cost for their employees’ health insurance, and some say that they would like someone else, such as the government, to pay for those costs. However, many U.S. employers prefer the current system, under which they are primarily responsible for their own employees, retirees, and dependents, to a system of national health insurance, under which they could be required to pay higher taxes in support of a broader risk pool. To some extent this attitude reflects the uncertainty about the relative costs to employers of shifting from an employment-based system to a tax-supported system, as well as employers’ concern about relinquishing control of the health insurance system while continuing to be largely responsible for its costs (Galvin, 2008). Under the current U.S. system, employers in the private sector have substantial flexibility to design their own employee benefit plans, determine the levels of benefits and cost sharing, and change their plans prospectively, quite possibly to the detriment of their employees.
Moreover, the reluctance of many employers to support a national health system may also reflect a desire to limit their risk pool to people who are likely to be healthier on average than other groups of people. That is, a company’s employees, retirees, and dependents may be healthier than the population at large. That parochial attitude may be understandable from a purely financial perspective. However, it is questionable from an ethical perspective because it bases the entire system of health financing on selfish efforts to keep other people out of one’s risk pool. It would be fairer to include everyone in the society in the same risk pool, including people who are poor, elderly, disabled, chronically ill, unemployed, or working for other companies.
Some supporters of the U.S. system argue that private health insurance is more likely to encourage the development and use of new medical technology and drugs, whereas systems of national health insurance might try to control health care costs by limiting the use of expensive new treatments and not providing incentives for their development. However, access to new technologies and drugs in a system of private health insurance can be extremely inequitable and unfair.
For all of these reasons, from the standpoint of the WHO principles, the U.S. system of employment-based health insurance, which is both regressive and inequitable, is less fair than methods of health financing used by other industrialized countries. Of course, fairness is not the only ethical value to consider. Under the ethical theory of principlism, one might argue that the U.S. system of employer-based coverage promotes the ethical duty of autonomy, by maximizing the choices for employers and employees. However, other ways of preserving choice are available, even in systems that provide universal coverage. For example, the social insurance system of Germany provides universal coverage but permits individuals to choose among competing, nonprofit sickness funds (European Observatory on Health Systems and Policies, 2004, p. 4). Moreover, under the theory of principlism, any gain in autonomy under the U.S. system of insurance is outweighed by the system’s unfairness as well as its failure to promote beneficence. The U.S. system also fails to treat each individual as an end in himself or herself, as required by Kantian ethics, and it is not a system that we could wish to be universally applied to the distribution of other things on which we are similarly dependent. Perhaps most telling, the U.S. system of employer-based health insurance fails even the test of utilitarianism. The United States outspends other industrialized countries but ranks poorly on some important measures of health (Davis, 2008), and thereby fails to provide the greatest good for the greatest number of people.
According to Julio Frenk and Octavio Gómez-Dantés (2009), discussions in Mexico about the ethical deficiencies of that country’s previous health system had helped to build consensus for reform (p. 1406). It is to be hoped that people in the United States and other countries can learn from their example.
Designing a fair health insurance system requires trade-offs, not only in high-income countries but also in developing and transitional countries. The activity at the end of this chapter provides an opportunity to consider the most ethical way to employ a finite sum of money in establishing a new system of health insurance for a developing country.
Fundamental Values of Health Systems
As economists frequently remind us, there is no such thing as a free lunch. Every country that has accomplished the goals of universal access to care and financial security for its people had to give up something. Most people in those countries firmly believe that the trade-off was worth it.
How can people decide what they and their society are willing to forgo? The way to make those decisions in a politically acceptable and morally defensible manner is to begin by identifying the fundamental values of a country’s health care system (Priester, 1992, pp. 85–86, 105–106). As Frenk and Gómez-Dantés (2009) have explained, “every health system reflects value assumptions, which are expressed in the distribution of benefits and the organisation of its institutions” (p. 1406). After identifying those basic values, people will be able to judge whether particular proposals for reform are consistent with their values. Moreover, those values will guide people in making the difficult decisions about what they are willing to forgo.
In Mexico the health reform of 2003, which created a public insurance system, was based on specific values and on the principle that health care is a social right, rather than a privilege or a commodity (Frenk and Gómez-Dantés, 2009). Other countries that have succeeded in developing universal health systems, such as Canada and the United Kingdom, have also explicitly identified the values that form the basis for their respective systems. What did the people in those countries really care about as a society, and what were they willing to give up as the price of health reform?
The heath care system of Canada is based on five fundamental values, which are set forth in the Canada Health Act. These five principles are universality, public administration, comprehensiveness, portability, and accessibility (Jecker and Meslin, 1994, p. 189). In order to obtain federal government funding for its health program, each province in Canada must meet specific criteria, including compliance with those five principles (European Observatory on Health Systems and Policies, 2005, pp. 2–3, 8). Canada has a single-payer system, in which universal health coverage is financed primarily by taxation. Under these circumstances the role of private insurance companies is strictly limited. Private health insurance that duplicates public coverage is prohibited, although Canadians may have private insurance for services that are not covered by the public plan. In effect Canadians have given up the option to choose basic insurance coverage from any organization other than the government, in exchange for universal insurance coverage and comprehensive financial security. Although Canadians gave up the individual freedom to choose their health insurance plan and they accepted waiting lists for nonemergency services, they retained the freedom to choose their health care providers. The Canadian health insurance system operates on a single-payer model, but the health care delivery system is pluralistic. Most hospitals are not-for-profit organizations, and most doctors are in private medical practice. Generally, Canadians have the option to choose their health care providers, although some Canadians have complained about long waiting lists.
In the United Kingdom the government and the people support the values of a national health system that is funded by taxation and free at the point of service. About 12 percent of the population also has private health insurance, for avoiding queues, better amenities, and choice of specialist, but purchasing private insurance does not relieve those people of the obligation to pay taxes in support of the public health insurance system. On January 21, 2009, Prime Minister Gordon Brown signed a new constitution for the National Health Service (NHS). This new constitution sets forth the basic principles that guide the NHS, including provision of comprehensive service to all patients without discrimination, access on the basis of need rather than ability to pay, quality of services, respect for patient preferences, and accountability to the public (U.K. Department of Health, 2009). All patients in the United Kingdom have the right to services free of charge, unless specific exceptions have been authorized by Parliament. Patients have the right to choose their general practitioner (GP) practice, unless there is a reasonable basis for refusal. Patients do not have the right to see a particular doctor within their GP practice, but patients may express their preference and the GP practice must try to comply. Ordinarily, if patients want their care to be covered by the NHS, they are limited to choosing a GP practice within the NHS and must obtain their inpatient services at an NHS hospital, although the NHS may arrange for care to be provided by private hospitals or surgery centers in some situations.
Thus, people in the United Kingdom have given up some freedom to choose their health care providers in exchange for universal access to care and comprehensive services without regard to the ability to pay. Moreover, the NHS constitution explicitly recognizes that resources are limited, and that hard decisions need to be made in operating the system. “The NHS is committed to providing best value for taxpayers’ money and the most effective, fair and sustainable use of finite resources” (U.K. Department of Health, 2009, p. 4). Under these circumstances, patients have the right to new drugs if those drugs have been prescribed by their doctor and if those drugs have been recommended by the National Institute for Health and Clinical Excellence (NICE), on the basis of its evaluation of cost effectiveness (p. 6). However, as discussed in Chapter EIGHT of this book, patients of the NHS might not receive a new treatment if NICE does not consider that treatment to be a cost-effective use of limited NHS resources.
In contrast to the systems in the United Kingdom and Canada, the health care system of the United States is based on very different fundamental values. However, this does not mean that the U.S. health care system lacks values. In a 1992 article, project director Reinhard Priester summarized the analysis of the “New Ethic” research project, cochaired by Sheila Leatherman and Arthur Caplan at the Center for Biomedical Ethics at the University of Minnesota, Minneapolis. As Priester explained, the U.S. health care system is based on the values of individualism and physician autonomy, with much less concern than other systems have for the values of universal access to care, social solidarity, and the good of the community as a whole (pp. 86–87, 91). The values of U.S. health care are based instead on the underlying values of U.S. society, including “strong faith in individualism, distrust of government and preference for private solutions to social problems, belief in American exceptionalism, a standard of abundance as the normal state of affairs, the power of technology, and the uniquely American frontier orientation” (p. 87). Thus, the United States allows individual physicians the freedom to choose their patients, and allows individual patients the freedom to choose expensive treatments of little marginal benefit, even though both these types of individual choice can result in denial of care to other patients and undermine efforts to achieve universal access to care (pp. 89–90, 103–104).
In addition to having a unique view about the paramount importance of individual choice, the United States has a unique attitude about the poor. First, U.S. culture distinguishes between the so-called worthy poor, who deserve to be helped, and other poor people who are supposedly less deserving of aid. As Priester (1992) explained, “The concept of the worthy poor derives from the peculiarly American notion that for many poor people, poverty is somehow deserved” (p. 89, footnote omitted). Generally, persons who have major disabilities or are over sixty-five years of age are considered to be more worthy of assistance than able-bodied adults who are unemployed. Thus, federal and state governments in the United States operate medical assistance programs for the poor, called Medicaid, but keep those programs separate from the public health insurance program for people who are elderly or disabled, called Medicare. The U.S. approach to the problem of poverty has been described as a “poor law system” that attempts to alleviate the effects of poverty, as opposed to a “welfare system” that provides a guarantee of necessary services to every member of the community (Jecker and Meslin, 1994, pp. 190–191). Another unique aspect of the U.S. attitude toward the poor relates to the ethical duty of charity. Doctors and hospitals in the United States acknowledge their ethical obligation to provide charity care, and many do indeed provide substantial volumes of free or discounted services. However, health care providers generally have the autonomy to determine for themselves the amount of free or discounted services they will supply, as well as the specific recipients of their charity (Priester, 1992, p. 89), although most U.S. hospitals are required to provide services in a medical emergency regardless of the patient’s ability to pay. Some health care professionals who treat elderly patients under the Medicare program refuse to treat poor patients under Medicaid, in part because Medicaid pays extremely low rates for treatment of poor people.
To address these problems and promote reform, Priester and the other members of the “New Ethic” research project proposed a new framework of health care values for the United States (Priester, 1992, p. 92). Their framework contains five essential values: access, quality, efficiency, respect, and patient advocacy. It also contains several instrumental values that can promote those essential values. Most important, the project group developed a set of ordering rules for resolving potential conflicts between and among the different values. All five of the essential values should be pursued as much as possible, but any conflicts should be resolved in favor of promoting the value of fair access to care. Instrumental values may be superseded by any one of the essential values. Significantly, provider autonomy is considered an instrumental value and therefore can be superseded by the need to increase fair access to care, such as by requiring health care professionals to treat a sufficient number of underserved patients (pp. 92, 103–104). This proposed framework of values, with its ordering rules, is an important step toward health reform in the United States. In particular it could help to promote discussion and clarification of what people in the United States care about the most, and what they may be willing to give up as the unavoidable price of reform.
As Priester (1992) noted, the U.S. health system does not place a high priority on the value of social solidarity (p. 91). Solidarity refers to the feeling of unity that is generated by having a fair health system, one that includes everyone in the community regardless of wealth or social status and that gives people a feeling of ownership and an opportunity to participate (Priester, pp. 99–100). In contrast to the situation in the United States, solidarity is a fundamental value in the national health system of the United Kingdom (Priester, p. 99), as well as in the social health insurance systems of several industrialized countries in Western Europe (Saltman and DuBois, 2004, p. 27).
The value of solidarity is not limited to nationwide health systems or to health systems in industrialized countries. Solidarity is also an important value in systems of community-based health insurance, such as local systems of risk pooling in resource-poor developing countries. Community-based financing systems are local prepayment mechanisms through which villages or other small communities pool their risks of health care costs. Depending on the local circumstances, community-based insurance can be an attractive alternative for financing health care services, especially where national governments are unable to raise sufficient funds by means of taxation (Roberts and others, 2008, pp. 176–178).
Scholars from Burkina Faso and Germany have explained that community-based health insurance systems must be based on the values of solidarity and reciprocity. Moreover, in Burkina Faso and other African countries the fundamental values of solidarity and reciprocity are not imported or imposed from other countries but rather are part of the traditional culture and society (Sommerfeld and others, 2002, pp. 149, 160). The following excerpt from an article by these scholars explains the relationship between community-based health insurance and traditional, local values of reciprocity and solidarity.
Excerpt from “Informal Risk-Sharing Arrangements (IRSAs) in Rural Burkina Faso: Lessons for the Development of Community-Based Insurance (CBI)”
By Johannes Sommerfeld and Others
Introduction
In recent years, community-based health insurance (CBI) has been propagated as an option to extend access to health care of poor rural populations in countries lacking formal insurance markets. In contemporary Burkina Faso, a landlocked country in the West African Sahel, low access to health care is a serious impediment to the effectiveness of modern health care intervention. In Kossi Province, the site of the present study, there are only 0.3 visits per capita and per year to modern health services. The financial costs involved in seeking such care and their timing at the time of need have been identified as major factors contributing to low access.
The formal sector of the Burkinan economy comprises only 5% of the population. Social insurance for the formal sector has been limited until now to government employees, company employees and a few families living in relative economic prosperity. Some mutual health organizations, with varying success, have recently emerged without, however, providing coverage to a significant proportion of the rural population
Fee-for-service payment is still the predominant mode of health care financing of a large majority of the population in the non-formal sectors of the economy. The Burkinian Ministry of Health has opted to follow the Bamako Initiative, with the introduction of user fees. In the study area, user fees lead to a decrease in the utilization of formal health services: the percentage of those who reported an illness episode in the preceding month and sought care at the formal health facilities dropped from 25.6% in 1993 (before the introduction of fees) to 18.7% in 1994 and 11.7% in 1995.
Burkina Faso’s Ministry of Health has recently called for promoting solidarity-based modes of health care financing to increase the financial accessibility of health services in order to overcome the limitations of the existing system. The objective was to increase access to services and not to generate resources for the government, since funds would be retained and managed at the community or district levels. In June 1999, a national seminar was held to foster the creation of mutual health organizations in Burkina Faso.
Social insurance schemes, regardless of their design, reflect the history and cultural notions of solidarity and reciprocity norms of societies in which they develop. A crucial question, therefore, is whether an insurance scheme developed in one society can be applied in another. In other words the question remains whether CBI schemes are socially and culturally feasible, tapping into established notions of solidarity and reciprocity, and adapted to informal sector economies in rural Africa.
There is now an increasing awareness that CBI schemes need to be grounded in national values of solidarity and reciprocity. One of the underlying questions is whether CBI schemes can be built upon existing risk sharing arrangements and notions of solidarity. Solidarity is a common feature of ‘traditional’ rural communities, who have always shared the economic risks of unpredictable and cost-intensive life-events, such as deaths, accidents and weddings
The present study was carried out in 1998–2000 in Kossi Province, in the North-Western part of Burkina Faso, as an integral part of a larger research project entitled ‘The Scientific Basis of Community-Based Insurance,’ conducted conjointly by the Nouna Center for Health Research (CRSN) and the Department of Tropical Hygiene and Public Health (ATHOEG) of Heidelberg University. The research intended to assess the scope and prevalence of existing IRSAs in rural Burkina Faso and to evaluate their potential role in CBI. The research was explicitly multi-disciplinary, bringing together the qualitative ethnographic interest of anthropology and the more quantifying research paradigm of economics.
Research Context
IRSAs in West Africa and Burkina Faso
Informal or ‘traditional’ risk sharing institutions and solidarity mechanisms in West Africa have, for a long time, attracted the curiosity of anthropologists and economists. Rural economies in West Africa have established a number of social and economic mechanisms in order to cope with the fnancial consequences of economic random shocks. A great number of traditional solidarity networks can be identified from the literature, e.g. clan relationships, burial societies, cooperative labour exchange pools, cooperative work groups, fire associations, sea rescue associations, special fund societies, Rotating Credit and Savings Associations (ROSCAs), beer societies, group borrowing schemes, credit cooperatives and regional associations
Mutual Health Institutions and Insurance in Burkina Faso
Burkina Faso’s mutual health movement is still in an embryonic stage. Recently, a number of mutual health institutions have emerged A new formal law governing mutual health institutions is currently being conceived. This development has been strongly supported by the international donor community
Up until now, in Burkina Faso formal insurance institutions were limited to urban centres. In recent years, however, a number of commercial and state-owned insurance companies…have emerged, offering life, health and vehicle insurance and reinsurance. In addition, social security insurance is provided to salaried and state employees…
Results
A preliminary study of existing community-based risk sharing schemes in the project region identified a variety of community-based institutions involved in risk sharing. Forms of risk-sharing included credit saving funds, solidarity funds and rotating work assignments. Although none of these existing institutions constitutes by definition a health insurance scheme, assistance is provided to members through collective as well as individual donations, assisting hospitalized group members with loans for little or no interest
Solidarity Networks Based on Kinship, Neighbourhood, Ethnicity or Profession
Individuals and groups of people linked by kinship or place of origin, by neighbourhood, ethnic group or profession belong to widespread social networks which generate and share resources in times of need, e.g. in the case of illness. Examples include financial solidarity within an extended family network, intra-community solidarity among families, neighbours and friends, and social funds among colleagues. For example, the catechists of the provincial parish have organized a solidarity fund which is deducted from their annual allowance and serves, among other purposes, to cover unforeseen medical expenditures
Notions of Solidarity and Reciprocity
Solidarity in non-monetarized IRSAs is characterized by friendly social relationships among families, clans, friends, peers or neighbours that are mobilized for the purpose of assistance to an individual in times of need or distress. Solidarity is based on the assumption, a loan is a given…thus implying a certain expectation of reciprocity. Interestingly, the Djoula term for loan is djuru or string. Credit is considered a string or link based on an obligation between two individuals. The obligation is exclusively moral and rarely legally enforced. Sometimes, it is even relegated to the divine by saying to the debtor nyi to ni allah ye (I leave you with God).
Solidarity
Solidarity in Times of Ill-Health…
In the case of sickness, asset sale is an important health financing strategy. Even the least privileged will own a chicken to sell. Relatives are the first resort in terms of financial arrangements. This resort is, in many cases, limited to providing immediate food support, i.e. delivering soup or fruit to the diseased patient. Giving money to buy medicines would be seen as meaning that a person does not have enough money to pay for his or her own needs.
Discussion and Conclusions
Solidarity is a crucial feature of the Burkinian social fabric in spite of a growing trend for individualism and monetarization. Without contributing to, and tapping into a varied set of solidarity mechanisms, the individual would face social and economic deprivation in the harsh economic and ecological conditions of the Sahel. Solidarity fulfills important functions. It allows people to situate themselves in extended social networks providing them with a sense of belonging and support. Deprived of social security as offered by the nation state, solidarity allows rural Burkinian farmers to participate in extended risk sharing networks that often transcend ethnic boundaries
In any society, the “mutualization” of risk is the result of associative experiences of collectivities. In Burkina Faso, the associative movement (village production groups)…[has] experienced serious organizational and financial deficits. Whereas national agrarian politics in the 1980s favoured village-wide production groups, just recently the advantages of small structures have been rediscovered.
A great variety of risk sharing institutions exist in the study area. Our ethnographic data suggest that informal, non-monetarized, so-called ‘traditional’ risk sharing arrangements, contrary to assumptions in the literature, are very prevalent and evidently not prone to immediate disappearance. They transport important solidarity notions inherent in the Burkinian society. Our data suggest that not all of the solidarity expressed in traditional arrangements is based on the idea of mutual reciprocity. Some arrangements are even altruistic.
Increasing monetarization of the Burkinian non-formal economy brings with it a tendency for collective group work to rise in size and in importance. Monetarization brings about egoism, even at the level of the extended family. This tendency will most likely affect future institutionalized risk sharing schemes. Proximity is a crucial and essential structural element of African institutions. As there is widespread mistrust of anonymous and bureaucratic institutions, one can, however, posit that the more institutionalized groups there are, the less effective they risk becoming. The specificity of African societies…[needs] to be taken into account when promoting institutional development in rural African areas. Before new mutual health institutions can be successful, they need to be grounded in local values of solidarity and reciprocity.
To be functional, CBI schemes need to be tailored around a number of presuppositions. There needs to be, in the community, a collective interest in financial precautions to ward off income shocks due to illness. More than that, communities need to have a positive attitude towards precautionary approaches for future ill-health. In addition, there needs to be awareness that certain health problems warrant insurance which relates to common attitudes towards, and perceptions of, health risks. Shared norms of solidarity and reciprocity can largely increase the trust in a pooling scheme. Finally, the ability to pay (ATP) and willingness-to-pay (WTP) are necessary in order to create trust in service providers
New mutual health organizations in the rural Sahel face a number of challenges. The administrative set-up needs to fulfill popular expectations regarding leadership and transparency. New innovative ways to promote an administration based on proximity need to be conceived. Administrative skills, particularly, financial management skills, need to be strengthened. A benefit package based on issues of financial sustainability and popular expectation needs to be defined. Enrollment, modalities and the level of fee payment, membership administration and reimbursement procedures need to be developed and systematized. Potential sources for moral hazard need to be identified. The greatest challenge will be to bridge the need for proximity with the health care financing need to pool resources. One possibility to preserve the benefits of small size and proximity, yet avoiding the risks of bankruptcy inherent in small groups, would be to create a public re-insurance scheme covering high cost/low volume risks.
Finally, nation states are called upon to provide clear-cut legal frameworks for mutual health organizations. Burkina Faso needs to provide a legal framework for the rapidly emerging mutual health organizations. To be successful as stimulators of local development, CBI schemes need to enroll marginalized and disadvantaged populations into national development processes. In Burkina Faso, the law on community associations…provides sufficient legal framework to implement a community-based insurance scheme except that it does not provide any structure for social (i.e. public) re-insurance. The Burkinian government should assume two roles; providing a legal framework both for CBIs and reinsurance for small scale…[IRSAs] so that they can take on health care expenditures as additional item to share risks.
Source: Excerpted from “Informal Risk-Sharing Arrangements (IRSAs) in Rural Burkina Faso: Lessons for the Development of Community-Based Insurance (CBI),” by J. Sommerfeld and others, 2002. International Journal of Health Planning and Management, 17(2), 147–163 (citations, references, tables, and some text omitted). Copyright 2002 John Wiley & Sons, Ltd. Reprinted by permission
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