Two-tier health system in Brazil: implications for equity

Presenter: Edson Araujo, Universidade Federal da Bahia & Queen Margaret University

Abstract

Introduction: The coexistence of public and private health insurance has become a central point of analysis in the majority of Latin American health systems. Some argue that a greater role for private health insurance (PHI) and private providers will ‘crowd out’ the public health services and alleviate financial pressures on the public system; also it is claimed that the PHI would be more responsive to consumers’ preferences than the public health services and can result in cross-subsidy between privately insured and public users. Others point out the negative consequences of a ‘two-tier’ style of health care, such as the limited fiscal relief for public system and equity issues arising from the reduction of political pressure to improve the quality of public services when removing the higher demand individuals to PHI. Since the mid-1980s the public health system in Brazil has undergone expansion, decentralization and economic reorganization. As a result, the private sector has emerged as a major payer of health care in Brazil in the last decade, creating a two-tier health system. There is evidence that such features result in a regressive system of financing (where the burden of payment for health care is proportionally greater on the poorest) and a higher level of catastrophic health care expenditures.

Objectives: This proposal aims to explore the determinants of demand for PHI in health systems with two-tier features. This paper provides new evidences of the effects of perceived quality differentials between public and private health services on households’ choice for health coverage and how these effects vary across different households (in terms of income, education, risks of illness and other socioeconomic characteristics).

Methodology: Initial analysis was undertaken using a national household survey (Pesquisa Nacional por Amostra de Domicilios – PNAD ) and a series of regression models were estimated to observe how the levels of satisfaction among public and private services users influence the decision to purchase PHI. Subsequently, a discrete choice analysis will be conducted to explore the importance of different elements of quality in households’ insurance purchase decisions.

Results/Conclusions: The regression results show a negative association between the decision to purchase PHI and being satisfied with public health services. This analysis helps to understand the level of demand for PHI in the context of a mixed public and private health system (two-tier health system). The discrete choice analysis will reveal further detail about the elements of quality that are most important in motivating purchase of PHI. Where there is policy influence over these elements, there is an entry point for influence over how many and which households purchase PHI, the extent of cross subsidy between the tiers of the system and the implications for clinical qualities of the distribution of uptake that results. The paper will consider the extent of leverage achievable and the definition of optimal distributions of demand, quality and subsidy.