Private financing of health care in times of economic crisis: a review of the evidence

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Many high-income countries have cut public health care spending since the global economic downturn in 2008. In some cases these cuts have been accompanied by calls to expand private financing to improve the efficiency of health systems. In low and middle-income countries seeking to increase access to health care, it is sometimes suggested that private financing is more effective than public financing because of weak state institutions and bureaucratic shortcomings.

In this paper, we review the theoretical and empirical evidence on private financing in terms of cost, efficiency, equity and financial protection. We consider private health insurance, medical savings accounts and user charges in high, middle and low-income countries.

The theoretical and empirical evidence reveals major market failures in the health sector. It is unlikely that private financing generates better results than public financing. Still, as private financing options are heterogeneous, it is possible that a particular form might play a beneficial role in a specific setting. Given the current state of knowledge, however, any calls to increase private financing must be accompanied by robust evidence, such as real world pilot studies.