equity and financial viability o, health systems which rely so heavily on user fees, especially with regard to expensive inpatient care (17-20).

Bad debt is a documented problem in inpatient care facilities, and is the primary reason why hospitals have the lowest rate of cost recovery of all health iacilities in Zaire (4). For tnese reasons, a recent study concluded that user fees may not be the optimal financing mechanism for inpatient care (5).

In theory, insurance programs may avoid these problems, since the premiums are based on the statistical probability of illness, and are therefore set at a fraction of the avcrage cost of a hospitalization. The population may be more willing and is certainly more ab!e to pay the price of an insurance premium than to pay the full cost of inpatient care. Thus, compared with the current user fee system, a hospital insurance program has the potential to mobilize grcater and more steady financial resourt'. while providing protection to individuals against the enormous burden of catastrophic illness.

As early as 1986, rcscarchers in Zaire identified insurance systems and pre-paid plans as an additional health financing mechanism which could help protect individuals against the cots of catastrophic illness, and at the same time provide a steady source of increased revenue for the health sector (4). Most recently, a paper commissioned by the World Bank in the course of social sector adjustment work reiterated the potential advantages of health insurance systems in Zaire, especially in comparison with the current, almost universal systems of user fees for inpatient services (5).

The study noted that Zairians can expect to have high inpatient expenditures if they fall ill and require hospitalization, given the user fees now in place. Perceiving that they will be faced with such high expenditures when hospitalized, sick individuals can take three actions: 1) avoid sceking care at all; 2) obtain care and spend a large portion of annual disposable income or sell household assets to pay for it; or 3) obtain care and not pay for it, thus increasing the hospital's burden of bad debt. Whatever option is selected, the outcome is negative. In the first two cases, the individual's welfare is harmed by not seeking necessary care, or by being forced to spend a large portion of very limited household resources on one episode or treatment. In the last case, the financial sustainability of the health care provider is undermined by the extra burden of frec care provided to inpatients.

Given the success of Zaire's user fee system in mobilizing resources to finance ambulatory care, the case for insurance programs for ambulatory care is less strong. Insurance may be desirable, however, as a way to stimulate demand for services, if under-utilization is a perceived problem.

# 2. GOZ Commission on the Organization of Insurance Systems

At the same time, the Government of Zaire has sh, ' i great concern for insurance programs. In 1989, the Conseil Executif commissioned an insurance systems study (Mission d'Organisation des Mutualites) which included four parts:

- I) An inventory of existing *mutual associations" (a term that includes many different types of formal and informal clubs and cooperatives);

- 2) A public opinion survey;

- 3) Plans for proposed changes in laws regarding the organization of insurance in Zaire;

- 4) Options for pilot testing and alternatives for organization, financing, training and promotion of insurance programs (13).

_5_