Financing of health systems is an enduring concern world wide. Yazbeck and colleagues in their paper make an important point that when there is a choice between financing in which contributions from citizens take place in the form of generalised taxes versus those in which they are in the form of insurance premiums, the overwhelming evidence suggests that tax-based financing is unambiguously superior even in low- and middle-income countries. Despite the strength of their case against contributory insurance, we suggest that the path forward may be more complex than they envisage for a number of reasons. The problem of a high proportion of informal sector workers that they argue impacts contributory approaches is also an issue with taxes because of the very low numbers of people who file returns. Taxes in most developing countries are in fact largely derived from highly regressive indirect taxes which the poor are forced to pay. Additionally, in most developing countries, including large ones like India and Nigeria, the only choice on offer is continued dependence on out-of-pocket expenditures. In such a situation exploring alternatives which are superior to out-of-pocket expenditures becomes imperative. Asking citizens to wait interminably for additional tax resources to be made available would be a grave disservice to them.
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Great insights! The way you’ve presented the information makes it easy to understand and very impactful. Keep up the great work.
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