16 Data on the real level of the annual premium show that it has increased at an annual rate of 9.5 percent since 1986. This is not indicative of any problem; rather, the insurance program was established in 1986 with the goal of increasing resources for the reference hospital of the zone. Evidence from the first few years under the plan show that this goal has been reached. 100 percent of hospital charges for plan beneficiaries were covered by premium income in 1987 and 1988, with additional resources left over to cover administrative costs. Cost re(c3very in the hospital increased from about 48 percent of operating costs in 1985 to 79 percent in 1988.

Resource allocation and referral. Even though the insurance plan does not cover charges in health centers (except for care of chronic conditions), it includes strong incentives to discourage self-referral to the hospital. Specifically, the plan will pay for hospital care only if a beneficiary has a referral slip from a health center. Insured patients who self-refer to the hospital must pay the full (non-covered) fee for a private physician visit. The incentive for first using less complex facilities is thus built directly into its reimbursement rules. Another aspect of the plan which encourages appropriate use of primary care facilities is what insured women are entitled to a free hospital delivery only if they have received prenatal care. The health plan takes a very active role in managing the use of facilities in the zone, a task simplified because the provider and insurer are the same entity, thus making referral rules relatively easy to enforce.

Access and equity. The incentives in place for the three groups of the population are borne out by hospital utilization data. The results of a sample of hospital patients by payment category during 1988-1989 are presented in Table 3. The table clearly shows that salaried employees were heavily overrepresented (relative to their population share) in the hospital, and the insured plan members were also overrepresented. The non-insured were very much underrepresented. Based on the hospital register of admissions by payment source, 1989 hospital admission rates were also Table 3. Distribution of Payment Categories in the Bwamanda Health Zone Population and Hospital Patients, Dec. 1988 - Oct. 1989 (matemity patients excluded)

|_<br>____<br>Payment<br>**Category**<br>l|Population<br>t%)|H i<br>Hospital<br>Patients<br>(%)|Ratio of<br>**Patients**to<br>Population|
|---|---|---|---|
|Employed<br>|4.6|<br>17.3|3.76|
|I<br>Insured|60.2|76.7|1.27|
|Not insured|35.2|6.1|0.17|

Source: _Shepardetal.,_ 1990 found to be lower among the uninsured than those insured through the plan (by nearly 700 percent), and much lower (nearly twenty-fold) than those whose fees were paid by their employers. This suggests a combination of limited access for the very poor (as there are apparently no exemptions from payment), moral hazard arising from the financial protection provided by insurance and employer payment, and the hospital's incentive to admit salaried employees to receive the highest payment rate. The enrollment in the plan of individuals who believed they were likely to use the hospital (adverse selection) was also probably a factor in the overrepresentation of plan members in the hospital.

Lessons learned. The purpose of establishing a health insurance program in Bwamanda was to increase the level of resources available for health services. Increases have been achieved, yet the allocation of resources has been tightly managed and utilization of non-hospital services strongly