Valuing Protection against Health-Related Financial Risks

Abstract

There is strong interest in both developing and developed countries toward expanding health insurance coverage. How should the benefits, and costs, of expanded coverage be measured? While the value of reducing the financial risks that result from insurance coverage have long been recognized, there has been less attention in how best to measure such benefits. In this paper, we first provide a framework for assessing the financial value from health insurance. We focus on three distinct potential benefits: Pooling the risk of unexpected medical expenditures between healthy and sick households, redistributing resources from high- to low-income recipients and smoothing consumption over time. We then use this theoretical framework and an illustrative example to provide practical guidelines for benefit-cost analysis in capturing the full benefits (and costs) of expanding health insurance coverage. We conclude by considering other potential financial effects of broad insurance coverage, such as the ability to consolidate purchases and thus lower input prices.

Conducting Benefit-Cost Analysis in Low- and Middle-Income Countries: Introduction to the Special Issue

“…In addition, Skinner et al. (2019) discuss the value of increased financial risk protection associated with health insurance.…”

Financial risk, vulnerability and equity of access to healthcare services in Kenya

“…Chapter 3 of this dissertation shows that health insurance is associated with a reduction in socioeconomic inequalities related to CHE and is therefore a crucial aspect of risk protection. Universal health insurance is reported to yield better outcomes in providing financial risk protection to larger populations (Skinner et al, 2019), coupled with other socioeconomic measures. Furthermore, even when premiums are relatively low, there are socioeconomic factors that influence the uptake of health insurance (Alesane & Anang, 2018).…”