corresponds to increases between 5 and 8 percentage points in the likelihood of correctly treating cases. To put the potential gains in context, they are similar to the difference in correct treatment rates for providers with and without formal training in India (3-7 percentage points) and statistically indistinguishable from a range of successful and well-powered behavioral interventions reported in Rowe et al.’s (2018) systematic review of quality improvement interventions in LMICs.<sup>12</sup> In conclusion, despite the considerable evidence that quality of care is poor, the evidence that supply constraints are the fundamental barrier to improved health outcomes is less conclusive. Quality deficits reflect providers practicing below the knowledge frontier and allocations that result in high-quality providers being underused, to the extent that they may be seeing only two to three patients a day.<sup>13</sup>

# Why Has Health Insurance Not Improved Health Outcomes? Provider Responses

Instead of limited capacity, we believe that the keys to understanding the uneven performance of health insurance in LMICs is the provider side of health care.<sup>14</sup> Two sorts of problems arise. The first, like fraud and dispute, arise in all insurance schemes (not just health) because there are multiple transactions, each of which comes with its own potential problem. Patients must be diagnosed and treated correctly, hospitals need to submit claims and be reimbursed. Hospitals may charge false bills or overcharge for what was provided, and insurance companies may then refuse to honor the claim. In a cascading effect, insurance payment delays may lead to hospitals denying care to patients, lowering the value of insurance in the first place.

> 12 For high-income countries, Chandra et al. (2016), show that reallocation towards higher quality hospitals was responsible for one-third of the decline in heart attack mortality in the U.S. and Dahlstrand (2022) shows that telemedicine allows doctors who are skilled at triaging to see more patients at high risk of avoidable hospitalizations in Sweden, leading to a 20 percent reduction in avoidable hospitalizations.

> 13 Sparse data on hospital quality has restricted our focus to primary care, but the data that do exist suggest similar patterns. In terms of quality deficits, post-operative infections are 2-3 times higher in LMICs compared to OECD countries (GlobalSurg collaborative) and, a short while after a cataract operation, patients were legally blind in 36 percent of cases (Singh, Garner, and Floyd 2000). In terms of quality variation, a study of hospital maternity wards within the single geographic area of Nairobi, Kenya, found wide variations (Siam et al. 2019). And, in terms of low capacity utilization, Colombia’s National Hospitals Study in 1986 showed that the occupancy rate was 74.8 percent among Level 3 hospitals, but only 40.4 percent among Level 1 hospitals (Glasman et al. 2009).

> 14 A stated objective of health insurance schemes in some countries was to allow patients to choose higher quality providers, often in the private sector. We have documented above the existing evidence on substitution towards the private sector. However, in the light of substantial variation in quality within public and private providers, any claim on reallocation towards higher quality providers requires facility-based measures of quality which are so far absent in the literature.

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