Private health insurance in developing countries.

A joint Wharton School-World Bank conference called attention to the high proportions of medical care spending paid out of pocket in most developing countries. One of the reasons for this, attendees said, is the problem in such economies of generating high tax revenues in a nondistortive way. Since people are paying out of pocket, they should be able to afford some private insurance that can spread the risk of above-average out-of-pocket payments. The potential efficiency gains from greater use of voluntary private insurance seem large, but there are a number of possible impediments to the emergence of such insurance.