Enrolling the self-employed in mandatory health insurance schemes The case of Colombia

The introduction of mandatory health insurance in developing countries is often questioned because of the difficulties in enrolling self-employed workers, who represent an increasingly large segment of the labor force. Partial population coverage coupled with adverse selection effects raise serious concerns about the financial viability of social health insurance schemes. Despite these difficulties, an increasing number of developing countries have implemented social health insurance schemes with the aim of attaining universal health coverage and improving access to health services. In Colombia, a major health sector reform was launched in 1993 with the extension of mandatory social insurance as its cornerstone. The aims of the reform were to remove financial barriers to health care access and to reduce health care financing through out of pocket payments. In this paper, we assess the impact that Colombia’s health sector reform had on the enrolment of self-employed workers in the social health insurance scheme. For this purpose, we use two national-level Living Standards Measurement Surveys (LSMS) conducted in Colombia in 1997 and 2003, respectively. These household surveys include a set of questions on self-reported health status, the presence of chronic conditions, and the socio-demographic characteristics of respondents. We find that health insurance enrollment rates among the self-employed have increased considerably between the two time periods, while evidence of adverse selection present in 1997, is absent in 2003. In addition, we identify several factors that may explain the change in these enrollment patterns, including the adoption of government legislation obliging employers to require evidence of health insurance enrollment when contracting self-employed individuals.