UHC: Is Kenya making any progress? /FILEIn the great theatre of health systems, two protagonists
dominate the stage, Otto von Bismarck, the Iron Chancellor, with his
payroll-funded precision, and William Beveridge, the British architect, with his
egalitarian tax ledger.
Both offered visions of protection from the cruelty of
illness, promising solidarity, security, and the comfort of knowing that health
care would not bankrupt households. Yet only one of these models seems at home
in the bustling, informally employed economies of today’s low- and
middle-income countries (LMICs), where labour markets operate more like jazz
improvisation than the regimented orchestras of 19th-century Europe.
The Bismarck model, built on the sturdy legs of
industrialisation, assumes a world of payroll slips, compliant employers, and
tidy contributions to sickness funds. It thrives where the labour force clocks
in daily, taxes are collected at the source, and administrative machinery hums
with near-military efficiency. Its logic, anchored in formal employment and
contributory social insurance, made sense in the factories and offices of
Prussia and later Western Europe.
But in LMICs, where the informal economy
accounts for 70–90% of employment, this architecture wobbles like a steel
bridge resting on wet clay. When workers are self-employed, unregistered,
itinerant, or paid in cash, the very foundation of “mandatory social insurance
contributions from a formally employed base” disintegrates. The results are
predictable: a narrow, underfunded risk pool that insures the healthiest
formal-sector workers while leaving out those who most need protection.
Health economists can recite what happens next as though
reading from a textbook: moral hazard, adverse selection, and negative
externalities crowd the stage. Once insured, the small cohort of formal workers
tends to overuse services, ‘classic moral hazard because the marginal cost to
them is low. At the same time, informal workers who do enrol tend to be the
already sick or high-risk individuals, creating ‘adverse selection’ that drives
up costs and destabilises the insurance pool.
Underfunded facilities, dependent on insufficient
reimbursements from thin insurance funds, are forced to ration care, cut
corners, or introduce informal fees. This deterioration spills over to the
entire health system as ‘externalities’, hurting both insured and uninsured
patients. What was meant to be a machine of solidarity begins to resemble a
monument to inequity, with the poor effectively subsidising the inefficiencies
created by structural mismatch.
Contrast this with Beveridge’s quietly elegant simplicity,
healthcare financed from general taxation, available to all irrespective of
employment status or income. It is less dependent on administrative exactitude
and payroll compliance and more on political will, fiscal discipline, and an
ethos that treats health as a public good rather than an employment benefit.
Within Beveridge systems, the entire population becomes the risk pool, allowing
broader redistribution, mitigating adverse selection, and reducing
fragmentation across schemes. It is no coincidence that many LMICs with
successful Universal Health Coverage (UHC) stories have turned to
Beveridge-style financing as their foundation.
Thailand’s universal coverage scheme provides one of the
clearest examples. Financed primarily through taxation and delivered largely
through an extensive public network, Thailand achieved near-universal coverage
within a decade, not through high national income but through strategic
purchasing, capitation-based provider payment reforms, and political
commitment. The country’s experience demonstrates that even with high informal
employment, a well-designed tax-funded system can deliver equity, financial
protection, and improved health outcomes.
Sri Lanka offers another compelling narrative. Despite its
modest GDP, the country has maintained a longstanding tradition of tax-funded,
free public healthcare. Its public delivery system is efficient, geographically
accessible, and widely trusted; it ensures that even rural and low-income
communities receive care without financial hardship. These achievements are not
economic miracles; they are reflections of governance, social contracts, and sustained
prioritisation of health within national policy agendas.
But the Beveridge model is not immune to challenges.
Dependence on public financing exposes systems to the mood swings of political
cycles, fiscal austerity, and competing budgetary demands. Chronic
underinvestment can strain facilities, demotivate health workers, and
compromise quality. Bureaucratic inertia can slow innovation. Yet these are
management problems, not structural flaws. In contrast to the Bismarck model, whose difficulties in LMICs stem from fundamental incompatibility, Beveridge’s
weaknesses can be addressed through governance reforms, improved public
financial management, and strengthened health system stewardship.
This brings us to the pragmatic synthesis that many health
financing frameworks advocate. For LMICs, a hybrid architecture may offer the
most realistic and politically feasible pathway toward UHC. Under such a model,
core services, particularly preventive, primary, and essential care, are
financed through taxation in Beveridge fashion, ensuring broad coverage and
equity.
Meanwhile, Bismarckian insurance can be layered on top for
higher-income or formal-sector workers who can contribute without destabilising
the system. This dual architecture aligns with global best practice, harmonises
with health economics principles, and respects the social and economic
realities of LMICs.
Bismarck may have unified Germany with “blood and iron,” but
in today’s developing economies, health systems need something softer, ‘taxes,
trust, and tenacity. Beveridge’s teapot, though less dramatic than Prussian
armour, keeps more cups full and warms more households. The Iron Chancellor
built a system for an industrial economy, and Beveridge built one for a nation.
LMICs must build for their people, not for European ghosts of centuries past.
In the end, the moral of the story is clear: universal
health coverage is not achieved by imitating Europe’s 19th-century
institutional order but by crafting financing models that reflect today’s
demographic, economic, and political realities. For LMICs, it’s not about
choosing between Iron and Tea, it’s about brewing a blend strong enough to
serve everyone.
The Author is a Health Leadership Scholar at the University
of Oxford’s Saïd Business School & the Nuffield Department of Primary Care
Health Sciences.