A global overview of health insurance administrative costs: what are the reasons for variations found?

Mathauer, Inke; Nicolle, Emmanuelle

doi:10.1016/j.healthpol.2011.07.009

Cited by 23 publications

(24 citation statements)

References 20 publications

(27 reference statements)

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“…Administrative costs of private insurance are higher than government financed insurance schemes [27, 28]; our study confirms this finding. Higher administrative costs lead to lower expenditure on patient benefits in view of limited government resources.…”

Section: Resultssupporting

confidence: 86%

Should Governments engage health insurance intermediaries? A comparison of benefits with and without insurance intermediary in a large tax funded community health insurance scheme in the Indian state of Andhra Pradesh

Nagulapalli

Rokkam

2015

BMC Health Serv Res

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BackgroundA peculiar phenomenon of engaging insurance intermediaries for government funded health insurance schemes for the poor, not usually found globally, is gaining ground in India. Rajiv Aarogyasri Scheme launched in the Indian state of Andhra Pradesh, is first largest tax funded community health insurance scheme in the country covering more than 20 million poor families. Aarogyasri Health Care Trust (trust), the scheme administrator, transfers funds to hospitals through two routes one, directly and the other through an insurance intermediary. The objective of this paper is to find out if engaging an insurance intermediary has any effect on cost efficiency of the insurance scheme.MethodsWe used payment data of RAS for the period 2007–12, to find out the influence of insurance intermediary on the two variables, benefit cost ratio defined as benefit payment divided by premium payment, and claim denial ratio defined as benefit payment divided by treatment cost. Relationship between scheme expenditure and number of beds empanelled under the scheme is examined. OLS regression is used to perform all analyses.ResultsWe found that adding an additional layer of insurance intermediary between the trust and hospitals reduced the benefit cost ratio under the scheme by 12.2 % (p-value = 0.06). Every addition of 100 beds under the scheme increases the scheme payments by US$ 0.75 million (p-value < 0.001). The gap in claim denial ratio between insurance and trust modes narrowed down from 2.84 % in government hospitals to 0.41 % in private hospitals (p-value < 0.001).ConclusionsThe scheme is a classic case of Roemer's principle in operation. Introduction of insurance intermediary has the twin effects of reduction in benefit payments to beneficiaries, and chocking fund flow to government hospitals. The idea of engaging insurance intermediary should be abandoned.

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Section: Resultssupporting

confidence: 86%

Should Governments engage health insurance intermediaries? A comparison of benefits with and without insurance intermediary in a large tax funded community health insurance scheme in the Indian state of Andhra Pradesh

Nagulapalli

Rokkam

2015

BMC Health Serv Res

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“…Functionality reflects the firm's ability to carry out the health insurance function and is assessed by member growth rates, premium collection rates and renewal rates. Administrative cost computed as a percentage of total expenditure and as a share of total revenue (Mathauer and Nicolle, 2011), and claims ratio (which indicates the ability to provide insurance with the funds generated) (ILO, 2007) serve as proxies for efficiency.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

Growth of health maintenance organisations in Nigeria and the potential for a role in promoting universal coverage efforts

Onoka

Hanson

Mills

2016

Social Science & Medicine

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There has been growing interest in the potential for private health insurance (PHI) and private organisations to contribute to universal health coverage (UHC). Yet evidence from low and middle income countries remains very thin. This paper examines the evolution of health maintenance organisations (HMOs) in Nigeria, the nature of the PHI plans and social health insurance (SHI) programmes and their performance, and the implications of their business practices for providing PHI and UHC-related SHI programmes. An embedded case study design was used with multiple subunits of analysis (individual HMOs and the HMO industry) and mixed (qualitative and quantitative) methods, and the study was guided by the structure-conduct-performance paradigm that has its roots in the neo-classical theory of the firm. Quantitative data collection and 35 in-depth interviews were carried out between October 2012 to July 2013. Although HMOs first emerged in Nigeria to supply PHI, their expansion was driven by their role as purchasers in the government's national health insurance scheme that finances SHI programmes, and facilitated by a weak accreditation system. HMOs' characteristics distinguish the market they operate in as monopolistically competitive, and HMOs as multiproduct firms operating multiple risk pools through parallel administrative systems. The considerable product differentiation and consequent risk selection by private insurers promote inefficiencies. Where HMOs and similar private organisations play roles in health financing systems, effective regulatory institutions and mandates must be established to guide their behaviours towards attainment of public health goals and to identify and control undesirable business practices. Lessons are drawn for policy makers and programme implementers especially in those low and middle-income countries considering the use of private organisations in their health financing systems.

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“…However, there has been relatively little research into the administrative costs of CBHI schemes in low-income settings and the relative cost of different administrative activities. Yet, it is acknowledged that voluntary insurance schemes typically result in high administrative costs, relative to compulsory schemes ( Mathauer and Nicolle 2011 ). This is due to the bureaucracy required to set premiums and manage funds and costs associated with advertising, card distribution and revenue collection ( Mossialos and Thompson 2004 ).…”

Section: Introductionmentioning

confidence: 99%

The administrative costs of community-based health insurance: a case study of the community health fund in Tanzania

Borghi

Makawia

Kuwawenaruwa

2013

Health Policy and Planning

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Community-based health insurance expansion has been proposed as a financing solution for the sizable informal sector in low-income settings. However, there is limited evidence of the administrative costs of such schemes. We assessed annual facility and district-level costs of running the Community Health Fund (CHF), a voluntary health insurance scheme for the informal sector in a rural and an urban district from the same region in Tanzania. Information on resource use, CHF membership and revenue was obtained from district managers and health workers from two facilities in each district. The administrative cost per CHF member household and the cost to revenue ratio were estimated. Revenue collection was the most costly activity at facility level (78% of total costs), followed by stewardship and management (13%) and pooling of funds (10%). Stewardship and management was the main activity at district level. The administration cost per CHF member household ranged from USD 3.33 to USD 12.12 per year. The cost to revenue ratio ranged from 50% to 364%. The cost of administering the CHF was high relative to revenue generated. Similar studies from other settings should be encouraged.

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A global overview of health insurance administrative costs: what are the reasons for variations found?

Cited by 23 publications

References 20 publications

Should Governments engage health insurance intermediaries? A comparison of benefits with and without insurance intermediary in a large tax funded community health insurance scheme in the Indian state of Andhra Pradesh

Should Governments engage health insurance intermediaries? A comparison of benefits with and without insurance intermediary in a large tax funded community health insurance scheme in the Indian state of Andhra Pradesh

Growth of health maintenance organisations in Nigeria and the potential for a role in promoting universal coverage efforts

The administrative costs of community-based health insurance: a case study of the community health fund in Tanzania

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