Although universal coverage, in principle, means providing financial protection to the whole population, it requires the introduction of some form of prepayment for health service charges, especially in low- and middle-income income countries, where resources are constrained and per capita health expenditures are low. Prepayment mechanisms have been defined as a means of distributing the financial risk associated with different individuals’ health-care expenditures over time and across populations.
The implementation of prepayment mechanisms for non-poor informal workers in LMICs is a relatively new policy area and faces many challenges. There are concerns on whether compulsory schemes such as social health insurance are effective in covering non-poor informal workers, whether voluntary schemes such as community based health insurance can be used to scale-up coverage of non-poor informal workers, and whether complete subsidization of non-poor informal workers can create perverse incentives for remaining in or moving into informal employment. Approaches to coverage of non-poor informal workers vary depending on the political, economic or cultural context within each LMIC. In conceptual terms, there are three broad, practical approaches to providing coverage of non-poor informal workers: extend coverage downward from the formal sector; extend coverage upward from schemes subsidizing the poor; or use a combination of prepayment and tax-based subsidies.