The iron chancellor and the fabian.

Adam Wagstaff (2009) reports on a statistical comparison of social health insurance (SHI) versus tax financed (TF) health systems within the OECD. On average, SHI financing is more expensive than TF and yields no better health outcomes. It lowers overall labour force participation and reduces the share of the formal sector. Why, then, is interest in SHI increasing in developing countries?Consider the historical origins for SHI and TF. Bismarck (SHI) was a Prussian aristocrat; Beveridge (TF) was a socialist. TF is inherently egalitarian; SHI adapts readily to the preservation of inequality and privilege in both financing and access to care. This may be the real attraction of SHI in countries with highly unequal income distributions.