B1.1.1 Private health insurance schemes as a share of total health expenditure in selected countries, 2019

Box 1.1 Access to health care: The role of (trade in) health insurance services (Continued)

may contribute to the uptake of private health insurance by bringing capital, technology, and know-how.

In that regard, India is a case in point. During 2020–21, general and health insurance companies have covered 514.7 million individuals under 23.7 million health insurance policies (66.6 percent of the individuals under government-sponsored health insurance schemes, 23.1 percent under group policies, and the remaining 10.3 percent under individual policies issued by general and health insurers). Out of the 21 private sector insurers and 7 stand-alone health insurers established in India, foreign investors participate in 16, with foreign equity participation ranging between 23 percent and 49 percent.a

Figure B1.1.1 Private health insurance schemes (sum of compulsory and voluntary) as a share of total health expenditure in selected countries, 2019

Share of health expenditure (%) 60

50

40

30

20

10

0 NetherlandsSouth AfricaSwitzerlandNamibia Venezuela, RBUnited StatesBahamas, TheBrazil Zimbabwe United Arab EmiratesAndorra Antigua and Barbuda LebanonJamaica JordanSloveniaQatar ThailandCanada Saudi ArabiaParaguayAustraliaIrelandCyprusFiji Dominican RepublicUruguayIsraelBahrainGabon Iran, Islamic Rep.EswatiniMoroccoMalaysiaKenyaChile Source: World Health Organization (WHO) Global Health Expenditure Database. Note: As quantified in the WHO Global Health Expenditure Database (GHED), health care spending is primarily financed through the following schemes: (a) government schemes and compulsory contributory health care financing schemes (including compulsory private insurance schemes [CPIS]); (b) voluntary health care payment schemes (including voluntary health insurance schemes [VHIS]); and (c) household out-of-pocket payments. The chart shows the sum of CPIS and VHIS as a percentage of total health care spending. (For more about the GHED methodology, see WHO 2021b.)

a. Forty-nine percent was the maximum allowable level of foreign equity until May 19, 2021, when the foreign investment limit in the insurance sector, to also benefit health insurers, was raised to 74 percent by the Insurance Amendment Act, 2021 (IRDAI 2021).

Mode-specific drivers of trade in medical services

As defined by GATS, international trade in medical services can take place through four modes of supply (summarized earlier in table 1.2):cross-border supply, consumption abroad, commercial presence, and the movement of individuals across borders.

Mode 1: Cross-border supply. Advancements in ICT have created greater possibilities for cross-border telehealth (particularly practitioner-to-practitioner services), health management, and the transfer and use of health data across countries. Telehealth is rapidly gaining acceptance—from regulators, health practitioners, and patients—and governments are increasingly focusing on national telehealth programs to expand health care capacity and fill shortages in certain specialized services. Social distancing measures during the COVID-19 pandemic have accelerated these trends.

However, the supply of telehealth services depends on sometimes uncertain internet connectivity and telecommunications quality. The lack of sound legal frameworks for telehealth, digital trade, and data protection may also constrain prospects for cross-border telehealth. For example, regulators must ensure that foreign service suppliers have the necessary qualifications and are insured against malpractice.

Mode 2: Consumption abroad. Consumption of medical services abroad is driven by greater demand, which is induced by potential increased insurance portability as well as the lower costs of treatment and the availability of specialized, high-quality health care services in destination countries. Patients may be driven abroad by shortcomings in their home markets, such as long waiting periods, lack of certain services, or the stigma attached to treatments such as assisted reproductive technologies and surrogacy. The greater affordability of international travel before COVID-19 was yet another factor. International accreditation of hospitals has also spurred growth of medical travel, and many countries (for example, Costa Rica, Jordan, Spain, and Thailand) are actively promoting themselves as medical travel hubs in specific segments. Geographic, linguistic, and cultural proximity and diaspora networks influence the pattern of this trade between certain countries (Helble 2011).

There are also constraints on the consumption abroad of medical services. These include the lack of compliance with conditions imposed by health insurers (such as supplier accreditation requirements or recognition of qualifications), cross-border liability insurance, particularly burdensome visa requirements, and limitations on cross-border payments.

Mode 3: Commercial presence. Trade in medical services based on commercial presence is driven by the willingness of health authorities to attract private foreign investment to complement or supplement public health services, combined with private investors’ interest in investing in a country’s health sector. There is also growing interest in investing in enterprises that develop applications and technology-based health solutions and delivery, including telehealth.

Establishing a commercial presence can be constrained by a lack of supporting physical and other infrastructure and the absence of an enabling environment. High costs of procuring medical equipment and technologies can also act as impediments. Finally, there may be concerns about creating a “brain drain” to locally established foreign facilities.