Encourage the for-profit sector to move away from fee-for-service to pre-paid coverage through, for example, encouraging health maintenance organizations.
In developing countries, the private sector already serves a large and diverse clientele and delivers services of higher quality without the long lines and inadequate supplies frequently found in government facilities. Governments could subsidize private health care providers who deliver essential clinical services to the poor. In many African countries, including Malawi, Uganda and Zambia, governments subsidize the operating expenditures of church hospitals and clinics in rural areas and the training of their health personnel.
In the late 1970s, the Chilean Ministry of Health began the transfer of its primary care budget and about half of its personnel to the municipalities, which could also draw for financing on local tax revenues. More important, the government encouraged the establishment of privately owned and operated health insurance funds. The roughly 70% of the population covered by social security schemes had the option of using their payroll deduction to buy a pre-paid private health plan. By 1990 about 2.5 million people, or 18% of the population, were covered by the 35 private funds. However, this was the richest segment of Chilean society; and because the private funds could choose to cover, they in practice skimmed the population for good risks, leaving the public sector to care for the sick and the elderly. It is estimated that each salaried beneficiary who chose to shift to a private fund cost the public system 2.5 times the contribution of an average salaried worker. The government is now requiring private plans to use community risk-rating and to accept all applicant able to pay the community-rated premiums (similar to the USA managed care systems), and eliminating the deduction for employer contributions.
Profit-making providers tend to to over-prescribe drugs, procedures and diagnostics.