Bismarck meets Beveridge on the Silk Road: coordinating funding sources to create a universal health financing system in Kyrgyzstan

Overview

Policy choices in health financing, particularly for low- and middle-income countries, are often reduced to a decision on whether progress towards universal coverage can best be achieved through a social health insurance (SHI) system (often labelled as the “Bismarck model” after the late 19th century German chancellor who enacted social legislation to insure workers against serious risks including health) or a general tax-funded system (often labelled as the “Beveridge model” after the designer of the British National Health Service). Advocates of SHI have suggested that in low-income countries, insurance coverage can expand from the formal sector to the entire population, as it has done in many countries that followed the Bismarck model such as in western Europe, Japan and the Republic of Korea. Critics of this view have argued that introducing SHI in economies in which most of the population is in the informal sector runs the great risk of widening existing disparities in access to care and financial protection. Kyrgyzstan’s experience with health financing reform since 1997 provides an example of how one low-income country introduced an SHI fund but did not suffer the potentially negative consequences for equity that had concerned critics. The Kyrgyz experience illustrates the importance of thinking about health financing policy in functional terms rather than in terms of historical models imported from western Europe.