T. Barnighausen, R. Sauerborn Social Science Medicine 54(2002)1559-1587 1563 coverage, the supraregional principle solved the problem insurance system-from informal to more formal, from of providing insurance coverage for an increasingly voluntary to compulsory, and from small to larger mobile population, for whom -as social ties were schemes--can and should be emulated in LMIC may be severed and regional insurance was lost-social security highly contingent on the context: the power stru had become a more and more elusive concept trust and legitimacy between the different actors. Will In introducing the workers' insurance Bismarck did informal schemes be opposed to government regulation? not primarily intend to further social justice, but to Will the participants and the current non-participants in fortify the state against the threat from a proletariat, the scheme resist being compelled to join? will solidarity which had become both well organised in the trade (or generalised reciprocity) suffer as the average distance unions and politically powerful, as its interests wer physical and social) between members increase? Will represented by the Social Democratic Party. By incor- trust in the scheme and its management remain intact as porating formerly self-administered insurance into the community participation and social control becom state Bismarck hoped to counter the increasing politi- increasingly difficult? cisation of the working class. Indirect evidence supports As in the german case. it has been suggested his view. First, compulsory insurance at the inception of elsewhere for the context of LMICs that incremental the system was limited to workers. Although blue-collar changes may be easier to implement than transforma workers were employed in the formal sector economy, tional changes in developing efficient and equitable they were harder to insure than many other groups, as health insurance( Carrin, De graeve, deville, 1999a) they had low incomes and high risks of work-related In many of the formerly socialist Eastern European illness, accidents, and disability. Better risks in terms of countries a development towards sHI similar to that in income and health care needs such as civil servants were Germany had been taking place, starting in the 18th not included under compulsory health insurance cover century until restructuring of the health care sector by until 30 years later. The likely explanation is that the communist governments(see, for instance, Observa- Bismarck expected civil servants to be naturally loyal to tory, 1999a, b). In Hungary, voluntary self-help funds the state and interested in preserving the status quo. for industrial workers were legally legitimised in 1840: a Second, a number of provisions in Bismarck's "Socialist voluntary General Fund for sick and disabled workers Law, passed in 1878, were intended to obstruct the was established in 1870: a national compulsory insu functioning of those sickness and relief funds that had ance for industrial workers, similar to Bismarcks been founded by workers-the stick preceded the workers' insurance, was established; and, finally, at the carrot. Third, both trade unions and the Social turn of the century a national insurance fund for Democratic Party were openly opposed to Bismarcks agricultural workers was set up(Observatory, 1999b). social insurance, as they-correctly-viewed the pro. It is safe to say that a number of Eastern European gramme as a means to tie the workers to the existing countries picked up threads of development that had state structures(Herder-Dorneich, 1994) been abandoned during the communist era when the (re-)established SHI. The mode of reforms, however, did If informal risk-sharing schemes exist, the creation of not follow the earlier incremental pattern. A crisis in legal frameworks formalising these and health care financing accompanied by a fall in life Itually making them compulsory expectancy in an environment characterised by rapid important step towards establishing un litical and economic changes had opened a window health insurance of opportunity, in which fast and drastic, rather than slow and steady, action was felt to be required. Introducing compulsory health insurance has been Of the three transitions described above the move to part of health care reform in many countries of South compulsion may be the most difficult to achieve even if East Asia, Central and Eastern Europe and has come it is only for one segment of the population and in one under consideration in a number of African countries region of the country. In many contexts, the establish Zwi Mills, 1995; Bennet Ngalande-Banda, 1994). ment of any form of compulsory insurance may be Countries where successful informal voluntary risk- deemed not to be politically feasible. In such situations, sharing schemes for health exist should consider making voluntary schemes may remain a second-best option. them more formal, as without such government action The recommendations regarding rural community-based risk-sharing social protection will remain limited (or cooperative) health insurance schemes in the Peoples contingent on local circumstances( Criel Van Dor- Republic of China in 1998 to promote voluntary mael, 1999). A legal framework may define a minimum community-based health insurance in the countryside benefit package and regulate contributions, provider exemplify this. Although policy makers were aware that payment mechanisms and scheme administration problems with adverse selection could arise and that Whether the three transitions that took place at this willingness-to-join could be generally low because of phase in the development of the German healthcoverage, the supraregional principle solved the problem of providing insurance coverage for an increasingly mobile population, for whomFas social ties were severed and regional insurance was lostFsocial security had become a more and more elusive concept. In introducing the workers’ insurance Bismarck did not primarily intend to further social justice, but to fortify the state against the threat from a proletariat, which had become both well organised in the trade unions and politically powerful, as its interests were represented by the Social Democratic Party. By incor￾porating formerly self-administered insurance into the state Bismarck hoped to counter the increasing politi￾cisation of the working class. Indirect evidence supports this view. First, compulsory insurance at the inception of the system was limited to workers. Although blue-collar workers were employed in the formal sector economy, they were harder to insure than many other groups, as they had low incomes and high risks of work-related illness, accidents, and disability. Better risks in terms of income and health care needs such as civil servants were not included under compulsory health insurance cover until 30 years later. The likely explanation is that Bismarck expected civil servants to be naturally loyal to the state and interested in preserving the status quo. Second, a number of provisions in Bismarck’s ‘Socialist Law’, passed in 1878, were intended to obstruct the functioning of those sickness and relief funds that had been founded by workersFthe stick preceded the carrot. Third, both trade unions and the Social Democratic Party were openly opposed to Bismarck’s social insurance, as theyFcorrectlyFviewed the pro￾gramme as a means to tie the workers to the existing state structures (Herder-Dorneich, 1994). If informal risk-sharing schemes exist, the creation of legal frameworks formalising these schemes and eventually making them compulsory, can be an important step towards establishing universal social health insurance. Introducing compulsory health insurance has been part of health care reform in many countries of South East Asia, Central and Eastern Europe, and has come under consideration in a number of African countries (Zwi & Mills, 1995; Bennet & Ngalande-Banda, 1994). Countries where successful informal voluntary risk￾sharing schemes for health exist should consider making them more formal, as without such government action risk-sharing social protection will remain limited and contingent on local circumstances (Criel & Van Dor￾mael, 1999). A legal framework may define a minimum benefit package and regulate contributions, provider payment mechanisms and scheme administration. Whether the three transitions that took place at this phase in the development of the German health insurance systemFfrom informal to more formal, from voluntary to compulsory, and from small to larger schemesFcan and should be emulated in LMIC may be highly contingent on the context: the power structure, trust and legitimacy between the different actors. Will informal schemes be opposed to government regulation? Will the participants and the current non-participants in the scheme resist being compelled to join? Will solidarity (or generalised reciprocity) suffer as the average distance (physical and social) between members increase? Will trust in the scheme and its management remain intact as community participation and social control become increasingly difficult? As in the German case, it has been suggested elsewhere for the context of LMICs that incremental changes may be easier to implement than transforma￾tional changes in developing efficient and equitable health insurance (Carrin, De Graeve, & Deville, 1999a). ! In many of the formerly socialist Eastern European countries a development towards SHI similar to that in Germany had been taking place, starting in the 18th century until restructuring of the health care sector by the communist governments (see, for instance, Observa￾tory, 1999a, b). In Hungary, voluntary self-help funds for industrial workers were legally legitimised in 1840; a voluntary General Fund for sick and disabled workers was established in 1870; a national compulsory insur￾ance for industrial workers, similar to Bismarck’s workers’ insurance, was established; and, finally, at the turn of the century a national insurance fund for agricultural workers was set up (Observatory, 1999b). It is safe to say that a number of Eastern European countries picked up threads of development that had been abandoned during the communist era when they (re-)established SHI. The mode of reforms, however, did not follow the earlier incremental pattern. A crisis in health care financing accompanied by a fall in life expectancy in an environment characterised by rapid political and economic changes had opened a ‘window of opportunity’, in which fast and drastic, rather than slow and steady, action was felt to be required. Of the three transitions described above the move to compulsion may be the most difficult to achieve, even if it is only for one segment of the population and in one region of the country. In many contexts, the establish￾ment of any form of compulsory insurance may be deemed not to be politically feasible. In such situations, voluntary schemes may remain a second-best option. The recommendations regarding rural community-based (or cooperative) health insurance schemes in the Peoples’ Republic of China in 1998 to promote voluntary community-based health insurance in the countryside exemplify this. Although policy makers were aware that problems with adverse selection could arise and that willingness-to-join could be generally low because of negative past experiences with community-based T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587 1563