T. Barnighausen, R Sauerborn/ Social Science Medicine 54(2002 )1559-1587 insurance, the Chinese State Council shied away fro health contributions in the time of economic crisis. In mpulsion. Another compulsory payment to a state addition, the state lacked the capacity to collect organisation, it was feared, would further increase anti- contributions from those companies and workers that government sentiments among farmers( Gwatkin, 1999. were able to pay(Observatory, 1999a-c) Hsiao, 1984). Similarily, in Nigeria a social health n sum, the German case suggests that the central insurance scheme was established on a voluntary basi government plays a crucial role in establishing a SHI, as as a compulsory scheme was judged not to be politically it is the institution best placed to create a legal feasible(Bennet Ngalande-Banda, 1994) framework for SHI. Legislation in Germany incremen In addition, compulsion may prove not to be enforce- tally formalised and expanded insurance as well as made able for administrative or economic reasons. In China, it compulsory. While many LMICs already have under national law all urban workers in state-owned successfully introduced compulsory health insurance companies and their family members fall under the for some segments of the population, other cases from mpulsory cover of the Labour Insurance Scheme LMICs suggest that introducing compulsion -even if company-based Bismarckian health insurance. As more only in the formal sector-may be difficult to enact or to d more state-owned enterprises near bankruptcy. the enforce, if the government is politically or administra ompany-based funds become increasingly insolvent In tively weak or the economy is flagging theory, workers still receive full reimbursement for a omprehensive benefit package, their family members After 1883: incremental expansion of coverage to achieve are covered with 50% of their eligible health care universal coverage xpenditures. Increasingly, however, deficit-running en terprises have been unable to pay contributions to the The incremental approach taken to develop the funds. As a result, in 1998, about one-third of workers in system after the introduction of the workers'insurance state enterprises had no health insurance coverage at all, manifested itself mainly in the expansion of population many others received only marginal health care benefits coverage, the size of the risk pools and the benefits from their insurance(Grogan, 1995, Yip Hsiao, 1997; covered. By some estimates, Bismarck's law doubled u, Ong, Lin, Li, 1999: Center for statistical sickness insurance coverage among workers from information of the Chinese ministry of health, 1999). round 5%o to 10% of the total population. Thereafter In many Eastern European countries, the implemen- coverage in the statutory health insurance grew steadily tation of a compulsory SHI after 1989 has faced serious from 11% in 1885 to 37% in 1910. By 1930 about 50% problems(such as in Bulgaria and Hungary) or even of the total population were covered and by 1950 about failed (such as in Kazakhstan). In these cases, both 70%. Since 1975 more than 90% of the population are employees and employers were unable to pay social enrolled in the statutory health insurance; the remaining 1885189519101914192519341950195519601965196819761980198519901995 9oIO Private health insurance a Statutory health insurance 50 Fig 1. Population coverage, 1885-1
insurance, the Chinese State Council shied away from compulsion. Another compulsory payment to a state organisation, it was feared, would further increase antigovernment sentiments among farmers (Gwatkin, 1999, Hsiao, 1984). Similarily, in Nigeria a social health insurance scheme was established on a voluntary basis, as a compulsory scheme was judged not to be politically feasible (Bennet & Ngalande-Banda, 1994). In addition, compulsion may prove not to be enforceable for administrative or economic reasons. In China, under national law all urban workers in state-owned companies and their family members fall under the compulsory cover of the Labour Insurance Scheme, a company-based Bismarckian health insurance. As more and more state-owned enterprises near bankruptcy, the company-based funds become increasingly insolvent. In theory, workers still receive full reimbursement for a comprehensive benefit package, their family members are covered with 50% of their eligible health care expenditures. Increasingly, however, deficit-running enterprises have been unable to pay contributions to the funds. As a result, in 1998, about one-third of workers in state enterprises had no health insurance coverage at all, many others received only marginal health care benefits from their insurance (Grogan, 1995, Yip & Hsiao, 1997; Hu, Ong, Lin, & Li, 1999; Center for statistical information of the Chinese ministry of health, 1999). In many Eastern European countries, the implementation of a compulsory SHI after 1989 has faced serious problems (such as in Bulgaria and Hungary) or even failed (such as in Kazakhstan). In these cases, both employees and employers were unable to pay social health contributions in the time of economic crisis. In addition, the state lacked the capacity to collect contributions from those companies and workers that were able to pay (Observatory, 1999a–c). In sum, the German case suggests that the central government plays a crucial role in establishing a SHI, as it is the institution best placed to create a legal framework for SHI. Legislation in Germany incrementally formalised and expanded insurance as well as made it compulsory. While many LMICs already have successfully introduced compulsory health insurance for some segments of the population, other cases from LMICs suggest that introducing compulsionFeven if only in the formal sectorFmay be difficult to enact or to enforce, if the government is politically or administratively weak or the economy is flagging. After 1883: incremental expansion of coverage to achieve universal coverage The incremental approach taken to develop the system after the introduction of the workers’ insurance manifested itself mainly in the expansion of population coverage, the size of the risk pools and the benefits covered. By some estimates, Bismarck’s law doubled sickness insurance coverage among workers from around 5% to 10% of the total population. Thereafter, coverage in the statutory health insurance grew steadily from 11% in 1885 to 37% in 1910. By 1930 about 50% of the total population were covered and by 1950 about 70%. Since 1975 more than 90% of the population are enrolled in the statutory health insurance; the remaining Fig. 1. Population coverage, 1885–1995. 1564 T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587
T. Barnighausen, R. Sauerborn Social Science Medicine 54(2002)1559-1587 1565 10% are nearly completely covered under private or the population remain uncovered(Ensor, 1997). South other health insurance. Today, less than 0.5% of all America has enjoyed a long tradition of social insurance. 1999a,b)Fig.. than 80% in Costa Rica, although the proportion of the The extension of population coverage in an insurance population covered in most countries is rising. The ystem can be classified based on three principles: the population group least likely to be covered is the regional, the personal, and the place of work principle growing number of urban informal sector workers (Zollner, 1963). According to the regional principle, an Donaldson gerard, 1993). In Africa, a number of insurance scheme is first established in some regions of a countries have established social health insurance country (usually the most industrialised ones),an schemes, such as Cameroon, Ghana and Kenya. Again, gradually extended to cover other (usually less devel- coverage is mostly confined to the formal workforce oped) regions. An extension of coverage according to (Bennet Ngalande-Banda, 1994) the personal principle can be either oriented at horizontal In Chinese cities, up to the market reforms in the criteria such cupation or vertical criteria such as 980s. SHI schemes covered more than 90% of the income. Similarly, extension according to the place of urban population, although only 50% of health care work principle ca along horizontal lines (e.g. costs incurred by spouses and children of the insured economic sector) or vertical lines(e.g. size of company) were covered. Today, the number of urban residents Before the introduction of the workers' health covered has dwindled to less than 50%, as more and insurance, access to insurance had depended either on more state enterprises declare insolvency and people the region of residence or on the place of work increasingly find work in private enterprises or in the Correspondingly, coverage was extended according to informal urban sector(Center for statistical information the regional or the place of work principle. By contrast, of the Chinese ministry of health, 1999: World Bank, once the principle of supraregional compulsory insur- 1997; Hsiao,1995).The or stumbling block to nce was introduced for different occupational groups in universal coverage in these cities is the growing number 1883, coverage was extended according to the personal of informal sector employees and migrants from the principle Along horizontal lines coverage was expanded countryside(both legal and illegal). The central Chinese incrementally to cover more and more occupational government currently attempts to promote a stepwise groups and-in three major shifts of expansion -to expansion of coverage in all cities from state to non-state cover the unemployed, all primary dependents and enterprises to the self-employed and-eventually and retirees(see Table 1)(Wasserrab, 1889: Lang, 1925: perhaps with the help of subsidies-to the urban poor Peters, 1978: Alber, 1989; Manow, 1999). Vertically, (Hu, 1999; Zhu, Zhou, Zhang, Ma, Gao, 1999: Bloom, coverage was expanded by increasing the income ceiling 1998). In accordance with a national policy recommen above which health insurance is no longer compulsory dation, some city governments consider offering volun- as was done, for example, in 1918 when the monthly tary enrolment in the city-wide funds to anybody not yet income limit was doubled from RM 2500 to RM 5000. under mandatory cover, if they are able to contribute as or people who fell under the law of compulsory much to the fund as do workers earning 60% of the citys urance. but who did not have access to a sickness average annual salary (see, for instance, Social health fund through their work and could not insure in a town- insurance administration office of Shenzhen city, 1999: based fund, every municipality had to provide insurance Labour office of Yichang city, 1998) through a municipal sickness fund. The German case suggests that compulsory coverage This second phase in the development of the German an be extended incrementally to achieve universality. health insurance system suggests the following lesson This 'lesson. however, cannot be drawn without some neral qualifications and without If compulsory insurance already exists for some the specific methods used in Germany can and should be people, extending it incrementally to other regions transferred to other countries and times. From an and social groups will--if a number of conditions are ethical point of view, it has to be kept in mind that the met-be a feasible way to achieve universal cover German government in adopting an incremental ap- proach towards universality was motivated by argu- ments of power rather than social justice(Rimlinger, Expanding compulsory insurance Nam. a c is a task 1971: Observatory, 2000b). If one accepts a utilitarian many LMICs face today. In Viet Na ethic that preservation of power may be a legitimate goal SHI scheme was introduced in 1993 covers civ of social policy as long as the ultimate outcome serves servants and workers in larger enterprises, but-in spite social justice, it has to be kept in mind that an of attempts to expand cover to family members, farmers, incremental approach to establishing SHI may, in fact and urban informal sector workers-more than 90% of lead to more inequity
10% are nearly completely covered under private or other health insurance. Today, less than 0.5% of all people living in Germany do not have health insurance (Tennstedt, 1977; Peters, 1978; Neubauer, 1988; BMG, 1999a, b) Fig. 1. The extension of population coverage in an insurance system can be classified based on three principles: the regional, the personal, and the place of work principle (Zollner, 1963). According to the . regional principle, an insurance scheme is first established in some regions of a country (usually the most industrialised ones), and then gradually extended to cover other (usually less developed) regions. An extension of coverage according to the personal principle can be either oriented at horizontal criteria such as occupation or vertical criteria such as income. Similarly, extension according to the place of work principle can be along horizontal lines (e.g. economic sector) or vertical lines (e.g. size of company). Before the introduction of the workers’ health insurance, access to insurance had depended either on the region of residence or on the place of work. Correspondingly, coverage was extended according to the regional or the place of work principle. By contrast, once the principle of supraregional compulsory insurance was introduced for different occupational groups in 1883, coverage was extended according to the personal principle. Along horizontal lines coverage was expanded incrementally to cover more and more occupational groups andFin three major shifts of expansionFto cover the unemployed, all primary dependents and retirees (see Table 1) (Wasserrab, 1889; Lang, 1925; Peters, 1978; Alber, 1989; Manow, 1999). Vertically, coverage was expanded by increasing the income ceiling above which health insurance is no longer compulsory, as was done, for example, in 1918 when the monthly income limit was doubled from RM 2500 to RM 5000. For people who fell under the law of compulsory insurance, but who did not have access to a sickness fund through their work and could not insure in a townbased fund, every municipality had to provide insurance through a municipal sickness fund. This second phase in the development of the German health insurance system suggests the following lesson: If compulsory insurance already exists for some people, extending it incrementally to other regions and social groups willFif a number of conditions are metFbe a feasible way to achieve universal coverage. Expanding compulsory insurance coverage is a task many LMICs face today. In Viet Nam, a compulsory SHI scheme was introduced in 1993, which covers civil servants and workers in larger enterprises, butFin spite of attempts to expand cover to family members, farmers, and urban informal sector workersFmore than 90% of the population remain uncovered (Ensor, 1997). South America has enjoyed a long tradition of social insurance. But population coverage is highly variable. It ranges from less than 10% in the Dominican Republic to more than 80% in Costa Rica, although the proportion of the population covered in most countries is rising. The population group least likely to be covered is the growing number of urban informal sector workers (Donaldson & Gerard, 1993). In Africa, a number of countries have established social health insurance schemes, such as Cameroon, Ghana and Kenya. Again, coverage is mostly confined to the formal workforce (Bennet & Ngalande-Banda, 1994). In Chinese cities, up to the market reforms in the 1980s, SHI schemes covered more than 90% of the urban population, although only 50% of health care costs incurred by spouses and children of the insured were covered. Today, the number of urban residents covered has dwindled to less than 50%, as more and more state enterprises declare insolvency and people increasingly find work in private enterprises or in the informal urban sector (Center for statistical information of the Chinese ministry of health, 1999; World Bank, 1997; Hsiao, 1995). The major stumbling block to universal coverage in these cities is the growing number of informal sector employees and migrants from the countryside (both legal and illegal). The central Chinese government currently attempts to promote a stepwise expansion of coverage in all cities from state to non-state enterprises to the self-employed andFeventually and perhaps with the help of subsidiesFto the urban poor (Hu, 1999; Zhu, Zhou, Zhang, Ma, & Gao, 1999; Bloom, 1998). In accordance with a national policy recommendation, some city governments consider offering voluntary enrolment in the city-wide funds to anybody not yet under mandatory cover, if they are able to contribute as much to the fund as do workers earning 60% of the city’s average annual salary (see, for instance, Social health insurance administration office of Shenzhen city, 1999; Labour office of Yichang city, 1998). The German case suggests that compulsory coverage can be extended incrementally to achieve universality. This ‘lesson’, however, cannot be drawn without some general qualifications and without considering, whether the specific methods used in Germany can and should be transferred to other countries and times. From an ethical point of view, it has to be kept in mind that the German government in adopting an incremental approach towards universality was motivated by arguments of power rather than social justice (Rimlinger, 1971; Observatory, 2000b). If one accepts a utilitarian ethic that preservation of power may be a legitimate goal of social policy as long as the ultimate outcome serves social justice, it has to be kept in mind that an incremental approach to establishing SHI may, in fact, lead to more inequity. T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587 1565
T. Barnighausen, R. Sauerborn Social Science Medicine 54(2002)1559-1587 Table I Introduction of new types of social insurance, expansion of compulsory health insurance coverage, and extension of the mandated minimum benefit package Year Creation of components Population coverage Scale and scope of the mandated of social security of social health insurance benefit package of social health insurance 1854 Miners 1883 Statu Blue collar workers (in saltworks Minimum benefit package Insur processing plants, factories, metallurgical Sickpay (63% of all benefits) plants, railway companies, shipping Restricted in- and outpatient care trade co es, shipyards, building companies, free pharmaceuticals medical aid devices Craftsmen de Persons employed by lawyers, notaries, maternity support nsurance funds l884 Statutory accident Transport workers Statutory pension 1892 Commercial office workers Increase in the duration of sickpay from 13 to 26 weeks Sickpay extended to cases of sexually transmitted diseases Increase in allowances to family members in case of a hospitalisation of a relative 1911 Agricultural and forestry workers Increase in maternity support Domestic servants Increase in sickpay of high-wage workers Itinerant workers 1914 Civil servants Earlier start of sickpay Family support for spouses and children 1917/18 The unemployed Obstetric services 1919 Persons Persons employed in Wives and daughters without own income 927 Statutory unemployme Persons employed in the educational and ocial welfare sectors All primary dependents 938 Self-employed workers in nursing and child care Full cover of the treatment of all fugees and expellees sically disabled Increase in sickpay for workers 1972 Self-employed agricultural workers workers for sick farmers
Table 1 Introduction of new types of social insurance, expansion of compulsory health insurance coverage, and extension of the mandated minimum benefit package Year Creation of components of social security Population coverage of social health insurance Scale and scope of the mandated benefit package of social health insurance 1854 Miners 1883 Statutory health insurance Blue collar workers (in saltworks, processing plants, factories, metallurgical plants, railway companies, shipping companies, shipyards, building companies, trade companies, power plants) Minimum benefit package: Sickpay (63% of all benefits) Restricted in- and outpatient care free pharmaceuticals medical aid devices Craftsmen deathpay Persons employed by lawyers, notaries, bailiffs, industrial cooperatives, insurance funds maternity support 1884 Statutory accident insurance 1885 Transport workers 1889 Statutory pension insurance 1892 Commercial office workers 1901 Increase in the duration of sickpay from 13 to 26 weeks Sickpay extended to cases of sexuallytransmitted diseases Increase in allowances to family members in case of a hospitalisation of a relative 1911 Agricultural and forestry workers Increase in maternity support Domestic servants Increase in sickpay of high-wage workers Itinerant workers 1914 Civil servants Earlier start of sickpay Family support for spouses and children 1917/18 The unemployed Midwife services Obstetric services Pregnancy allowance Nursing mother’s allowance 1919 Persons employed in public cooperatives Persons employed in private cooperatives Persons who are only partially capable of gainful employment Wives and daughters without own income 1927 Statutory unemployment insurance Seamen Persons employed in the educational and social welfare sectors 1930 All primary dependents 1935 Increase in the duration of maternity support 1938 Midwives Self-employed workers in nursing and child care 1941 Retirees Full cover of the treatment of all notifiable diseases 1953 Refugees and expellees The seriously disabled 1957 The physically disabled Increase in sickpay for workers 1970 Prevention Pediatric screening 1972 Self-employed agricultural workers Salary of a temporary replacement workers for sick farmers 1566 T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587
T. Barnighausen, R Sauerborn/ Social Science Medicine 54(2002 )1559-1587 1567 Table I(continued) Creation of components Population coverage of social health insurance benefit package of social health insurance 1974 Removal of the time limit to in-patient care to compensate for wages lost while for a child ease in the cover of rehabilitation services ease in the cover of dental and orthodontic Students 1978 Contraception consultation Counselling and medical support in cases of legal sterilisation and legal abortion 1981 1995 Statutory nursing Insurance For one, revenues in a SHI system traditionally flow concerns have been raised, as the scheme is subsidised from formal wages and salaries. As a result, the from general government revenues. In addition, bene- population groups likely to be covered last are the most ficiaries were found to use public hospitals at a rate that vulnerable segments of the society: those without was five times the national average( Prescott, 1991). For incomes(the unemployed, retirees, and family depen- these reasons, a fast-track approach to universal health dents)or those with incomes that are variable and hard insurance, may be preferable in some circumstances, to assess(urban informal workers and farmers ). This has although it may require a much larger effort. an important implication. Current members of social In the formerly socialist countries of Eastern Europe health insurance schemes may be opposed to including establishing social insurance step by step, starting other groups in the insurance cover. On the one hand, with partial coverage, would have meant red since those who are as yet without insurance are likely to equity in comparison to the universal access be low income and high risk people, those who are uaranteed before under the command-and-control currently insured would likely pay part of the price of Soviet model of health care(Observatory, 1999a, b, including these groups in the form of higher insurance 2000a, c: Twigg, 1999) contributions. On the other hand. the incremental Whether or not the specific means by which groups approach to include people along employment without formal wages or salaries were integrated under solidarity between current memb, roximity and thus the SHI cover in Germany can be replicated in LMICs regional lines implies that the socia depends on a series of factors. First, the unemployed between members and non-members. Unemployment and the retired are covered through the wider system of and informal sector employment are increasing in many social insurance. The statutory pension insurance and LMICS(ILO, 1999). Thus countrywide solidarity across the statutory unemployment insurance provide the two ployment lines may be increasingly hard to establish groups with regular, taxable incomes from which in LMICs. But continuing commitment to solidarity mandatory health insurance contributions are automa among all people living in a country-as it still exists in tically deducted. Obviously, this is only possible Germany (Hinrichs, 1995)is a basic condition for countries where comprehensive social insurance exists establishing universal ShI is esta blished at the same time as the health insurance oreover, a stepwise pass Second, children and spouses are included under result in decreased access to health care for the cover of the breadwinner. Since contributions are uninsured in the interim periods of partial coverag independent of family size, a re-distribution from singles (which may be quite long, if political will is lacking to families and from families with fewer to families with socio-economic conditions are unfavourable) Resources nore children results. how far a re-distribution may be drained away from the uninsured to provide feasible within a SHI system depends on the dominant health care for the insured(Normand Weber, 1994; hierarchy of values within a society Abel-Smith, 1992). A case in point is a compulsory Third, self-employed farmers were not covered until insurance scheme for Indonesian civil servants. Equity 90 years after the introduction of Bismarck's workers
For one, revenues in a SHI system traditionally flow from formal wages and salaries. As a result, the population groups likely to be covered last are the most vulnerable segments of the society: those without incomes (the unemployed, retirees, and family dependents) or those with incomes that are variable and hard to assess (urban informal workers and farmers). This has an important implication. Current members of social health insurance schemes may be opposed to including other groups in the insurance cover. On the one hand, since those who are as yet without insurance are likely to be low income and high risk people, those who are currently insured would likely pay part of the price of including these groups in the form of higher insurance contributions. On the other hand, the incremental approach to include people along employment or regional lines implies that the social proximity and thus solidarity between current members is higher than between members and non-members. Unemployment and informal sector employment are increasing in many LMICs (ILO, 1999). Thus countrywide solidarity across employment lines may be increasingly hard to establish in LMICs. But continuing commitment to solidarity among all people living in a countryFas it still exists in Germany (Hinrichs, 1995)Fis a basic condition for establishing universal SHI. Moreover, a stepwise passage to universality may result in decreased access to health care for the uninsured in the interim periods of partial coverage (which may be quite long, if political will is lacking or socio-economic conditions are unfavourable). Resources may be drained away from the uninsured to provide health care for the insured (Normand & Weber, 1994; Abel-Smith, 1992). A case in point is a compulsory insurance scheme for Indonesian civil servants. Equity concerns have been raised, as the scheme is subsidised from general government revenues. In addition, bene- ficiaries were found to use public hospitals at a rate that was five times the national average (Prescott, 1991). For these reasons, a fast-track approach to universal health insurance, may be preferable in some circumstances, although it may require a much larger effort. In the formerly socialist countries of Eastern Europe establishing social insurance step by step, starting with partial coverage, would have meant reducing equity in comparison to the universal access guaranteed before under the command-and-control Soviet model of health care (Observatory, 1999a, b, 2000a, c; Twigg, 1999). Whether or not the specific means by which groups without formal wages or salaries were integrated under the SHI cover in Germany can be replicated in LMICs depends on a series of factors. First, the unemployed and the retired are covered through the wider system of social insurance. The statutory pension insurance and the statutory unemployment insurance provide the two groups with regular, taxable incomes from which mandatory health insurance contributions are automatically deducted. Obviously, this is only possible in countries where comprehensive social insurance exists or is established at the same time as the health insurance. Second, children and spouses are included under the cover of the breadwinner. Since contributions are independent of family size, a re-distribution from singles to families and from families with fewer to families with more children results. How far a re-distribution is feasible within a SHI system depends on the dominant hierarchy of values within a society. Third, self-employed farmers were not covered until 90 years after the introduction of Bismarck’s workers’ Table 1 (continued) Year Creation of components of social security Population coverage of social health insurance Scale and scope of the mandated benefit package of social health insurance 1974 Removal of the time limit to in-patient care Sickpay to compensate for wages lost while caring for a child Domestic aid during in-patient or in-patient cures Increase in the cover of rehabilitation services Increase in the cover of dental and orthodontic services 1975 Students All disabled 1978 Contraception consultation Counselling and medical support in cases of legal sterilisation and legal abortion 1981 Artist Publicists 1995 Statutory nursing insurance T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587 1567
1568 T. Barnighausen, R. Sauerborn Social Science Medicine 54(2002)1559-1587 insurance(Holler, 1977). This reflects the difficulty in health insurance can be established in a country with a assessing and taxing farmers' incomes. For many social, political and cultural history which is very countries, especially those where farmers constitute different from that in Germany. It also shows that the large proportion of the total population, such as China, pace of incremental development can be much acceler- Vietnam and Thailand, such a delay may not be ated. It has to be kept in mind, however, that this practicable. The difference in context between 19th ened against a backdrop of fast and sustaine century Germany and todays LMICs is even more economic growth and a shrinking informal sector-two prominent in the case of the informal sector. In conditions that, while neither necessary nor sufficient, Germany, the proportion of informal sector workers are conducive to establishing a SHI declined during the years of the systems existence. In n sum, Germany succeeded in achieving universal many LMIC, on the other hand, the informal sector is coverage following an incremental pattern of expanding expected to continue to grow in the next years (ILo, compulsory insurance. This success has been contingent 1992,1996,1999) n a number of social. economic and institutional Self-employed farmers and informal sector workers circumstances. Yet, as the above cases suggests,a are hard to cover in a SHI system since their incomes similar approach holds promise for countries that have fluctuate and are hard to assess objectively. Still, many already established partial coverage such as many stems have been devised for assessing the incomes of countries in transitional Asia and South america the self-employed and charging contributions(Normand Weber, 1994). These systems, however, may be Incremental extension of the benefit package to attain administratively cumbersome and costly or may be comprehensive coverage extremely crude, such as flat-rate contributions. Conse quently, countries that have large or growing informal The approach to extend the mandated benefit package sectors should consider alternatives to shi unless some was incremental as well. It occurred along three means of including the informal sector in the social dimensions insurance cover has been shown to work well First, the largest changes in the scope of the benefit Yet, even in a context of high formal sector employ- package were brought about by the introduction of ment payroll deductions may prove problematic as the types of statutory social insurance system, such as (sole) revenue base for insurance. In Germany, as in accident, pension and unemployment insurance. Each other developed countries, wages and salaries constitute new type extended the benefit package to an area of a decreasing proportion of total GDP as the contribu- social need, which the social net had not covered before tion of business profits and capital investment to GDP The principle of compulsion applied to the same group growing(Statistisches Bundesamt, 1997: OECD, 1998). of the population as before. Today, all types of statutory As a result, payroll deduction rates to SHI in Germany insurance cover health-related benefits, The latest increased, even in times when sickness fund expenditures addition to the statutory insurance system was long proportion of GDP remained fairly constant term nursing care insurance. Introduced in 1995, it pays Barnighausen, 2000: Barnighausen et al., 1999; Braun, for ambulatory as well as in-patient nursing care(Bloch, Kuhn, Reiners, 1998) Hillebrandt, Wolf, 1997) A Bismarckian health insurance system can, in fact Second, the benefit packages of already existing types be implemented in a MIC following an incremental of the statutory insurance were gradually extended to process very similar to that in Germany. In 1965, the additional disease groups and services. Examples en first voluntary health insurance fund was organised in compass occupational diseases(which were added to the Korea. By 1977, when compulsory insurance was first coverage under the statutory accident insurance in 1925 ntroduced, there were ll voluntary funds, which and 1929), the treatment of sexually transmitted diseases covered about 0.2% of the population. Compulsory and a broad spectrum of preventive measures(which insurance was expanded vertically step by step to were added to the benefit package of the statutory health companies with 500, 300, 100 and finally 16 employees 1952 and 1955, respectively). over the following six years. Similarly, coverage was Third, already existing benefits were more or less expal ally to government gradually increased in amount or durati private school teachers(1979)and families of military stance, amount and duration of sick pay were increased servicemen and employees of private school foundations in 1957; the time limit on coverage of in-patient care was (1980). Universal compulsory coverage was achieved 26 eliminated in 1974(Lang, 1925; Peters, 1978; Winte years after the establishment of the first stein, 1980a, b). through schemes covering the rural and the urban sel The expansion of both coverage and benefits has lead employed (in 1988 and 1989)(Moon, 1998: Peabody to a gradual transformation of the statutory health Lee,& Bickel, 1995: Anderson, 1989). The achievement insurance system. On the one hand, as more and more f universality in South Korea shows that a Bismarckian groups of society fell under the laws of compulsory
insurance (Holler, 1977). This reflects the difficulty in assessing and taxing farmers’ incomes. For many countries, especially those where farmers constitute a large proportion of the total population, such as China, Vietnam and Thailand, such a delay may not be practicable. The difference in context between 19th century Germany and today’s LMICs is even more prominent in the case of the informal sector. In Germany, the proportion of informal sector workers declined during the years of the system’s existence. In many LMIC, on the other hand, the informal sector is expected to continue to grow in the next years (ILO, 1992, 1996, 1999). Self-employed farmers and informal sector workers are hard to cover in a SHI system since their incomes fluctuate and are hard to assess objectively. Still, many systems have been devised for assessing the incomes of the self-employed and charging contributions (Normand & Weber, 1994). These systems, however, may be administratively cumbersome and costly or may be extremely crude, such as flat-rate contributions. Consequently, countries that have large or growing informal sectors should consider alternatives to SHI, unless some means of including the informal sector in the social insurance cover has been shown to work well. Yet, even in a context of high formal sector employment payroll deductions may prove problematic as the (sole) revenue base for insurance. In Germany, as in other developed countries, wages and salaries constitute a decreasing proportion of total GDP as the contribution of business profits and capital investment to GDP is growing (Statistisches Bundesamt, 1997; OECD, 1998). As a result, payroll deduction rates to SHI in Germany increased, even in times when sickness fund expenditures as a proportion of GDP remained fairly constant (Barnighausen, 2000; B . arnighausen et al., 1999; Braun, . Kuhn, & Reiners, 1998). . A Bismarckian health insurance system can, in fact, be implemented in a MIC following an incremental process very similar to that in Germany. In 1965, the first voluntary health insurance fund was organised in Korea. By 1977, when compulsory insurance was first introduced, there were 11 voluntary funds, which covered about 0.2% of the population. Compulsory insurance was expanded vertically step by step to companies with 500, 300, 100 and finally 16 employees over the following six years. Similarly, coverage was expanded horizontally to government officials and private school teachers (1979) and families of military servicemen and employees of private school foundations (1980). Universal compulsory coverage was achieved 26 years after the establishment of the first voluntary fund through schemes covering the rural and the urban selfemployed (in 1988 and 1989) (Moon, 1998; Peabody, Lee, & Bickel, 1995; Anderson, 1989). The achievement of universality in South Korea shows that a Bismarckian health insurance can be established in a country with a social, political and cultural history which is very different from that in Germany. It also shows that the pace of incremental development can be much accelerated. It has to be kept in mind, however, that this happened against a backdrop of fast and sustained economic growth and a shrinking informal sectorFtwo conditions that, while neither necessary nor sufficient, are conducive to establishing a SHI. In sum, Germany succeeded in achieving universal coverage following an incremental pattern of expanding compulsory insurance. This success has been contingent on a number of social, economic and institutional circumstances. Yet, as the above cases suggests, a similar approach holds promise for countries that have already established partial coverage, such as many countries in transitional Asia and South America. Incremental extension of the benefit package to attain comprehensive coverage The approach to extend the mandated benefit package was incremental as well. It occurred along three dimensions. First, the largest changes in the scope of the benefit package were brought about by the introduction of new types of statutory social insurance system, such as accident, pension and unemployment insurance. Each new type extended the benefit package to an area of social need, which the social net had not covered before. The principle of compulsion applied to the same groups of the population as before. Today, all types of statutory insurance cover health-related benefits. The latest addition to the statutory insurance system was longterm nursing care insurance. Introduced in 1995, it pays for ambulatory as well as in-patient nursing care (Bloch, Hillebrandt, & Wolf, 1997). Second, the benefit packages of already existing types of the statutory insurance were gradually extended to additional disease groups and services. Examples encompass occupational diseases (which were added to the coverage under the statutory accident insurance in 1925 and 1929), the treatment of sexually transmitted diseases and a broad spectrum of preventive measures (which were added to the benefit package of the statutory health insurance in 1952 and 1955, respectively). Third, already existing benefits were more or less gradually increased in amount or duration. For instance, amount and duration of sick pay were increased in 1957; the time limit on coverage of in-patient care was eliminated in 1974 (Lang, 1925; Peters, 1978; Winterstein, 1980a, b). The expansion of both coverage and benefits has lead to a gradual transformation of the statutory health insurance system. On the one hand, as more and more groups of society fell under the laws of compulsory 1568 T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587