The Case Against Labor-Tax-Financed Social Health Insurance For Low- And Low-Middle-Income Countries

An increasing interest in initiating and expanding social health insurance through labor taxes in low- and low-middle-income countries goes against available empirical evidence. This article builds on existing recommendations by leading health financing experts and summarizes recent research that makes the case against labor-tax financing of health care in low- and low-middle-income countries. We found very little evidence to justify the pursuit of labor-tax financing for health care in these countries and persistent evidence that such policies could lead to increased inequality and fragmentation of the health system. We recommend that countries considering such policies heed the evidence on labor-tax financing and seek alternative approaches to health financing: primarily using general taxes or, depending on the context, general taxes combined with adequately regulated insurance premiums.