CHAPTER ONE

INTRODUCTION

1.1       Background of the study

Health care insurance plan has been a growing concern to many developing countries in recent times. Given that health insurance is designed to cover formal and informal sectors, rural and urban locations, low and high income earners, it becomes critical as well as a challenge for developing countries as they seek to design, operate and manage effective health insurance system that benefit all citizens. According to Mossialos et al. (2002) there are basically five forms of health financing available to any country. These include taxation; social health insurance; voluntary and private insurance; out-of-pocket or cash-and-carry; and donations. It is said that identifying a sustainable source of financing health care in the world has indeed become a major issue for discussion across the world’s powerful institutions and stakeholders. The United Nation and other groupings and organs representing the continents of the world are developing strategies for sustainable health care insurance plan. According to the World Health Organization (WHO), supporting adequate, sustainable, equitable and effective health financing to improve health outcomes is one of the most important goals of the World Health Organization. The Executive Board of WHO and the fifty-eight World Health Assembly have discussed and provided strategic directions on sustainable health financing, universal coverage and social health insurance.

Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care and health system expenses, among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity. According to the Health Insurance Association of America, health insurance is defined as "coverage that provides for the payments of benefits as a result of sickness or injury. Includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment"