**1. Introduction**

This chapter examines health insurance systems from the perspective of how health insurance access can be expanded in environments characterised by high levels of informality in employment, relative unaffordability of premiums, low benefit or service levels, revealed preference for private health care, and high inefficiencies in the management of social health insurance funds. This type of environment is prototypical not only for the Philippines but for other low to middle-income countries. Informal

labour markets present a challenge to health insurance systems as there is no employer to co-share premium payments, nor are they adequately covered in government subsidies extended for those considered poor through the means test. It is this gap that is often cited as 'the missing middle' in social health insurance systems' [1].

Assessments of health coverage for the informal sector examine demand and supply-side issues peculiar to the sector, such as willingness to pay and ability to pay, premium levels, and collection structures, including cost-sharing modalities and fund sustainability. This chapter takes on the perspective of understanding the institutional context, the nature of coordination arrangements required to 'fit' the informal sectors' conditions into social health insurance schemes or in reverse, structure systems to cater to social insurance schemes for the more unorganised groups.

Health insurance systems have two inherent features—information asymmetries and adverse selection. Yet social health insurance schemes often bypass these concerns in the development of schemes to cover the informal sector. Information asymmetry fosters moral hazard, whereby insurance status signals the choices on diagnostics or treatment and quality of services recommended by providers, described in standard textbooks [2]. Moral hazard happens when the insured takes more risks, such as unhealthy or incautious consumption behaviour (smoking, driving under the drugs, or alcohol influence) as a result of the risks being insured. Adverse selection is created when risk pools may be more attractive to sicklier individuals. Private health insurance is known to select lower-risk individuals. These features create the knowledge gaps to coordinate transactions and behaviour in the informal sector, thus limiting health insurance coverage. The promise of social health insurance or universal health coverage (UHC) is premised on greater financial protection in the face of health risks, a larger population coverage to spread risks, and wider sets of services or benefits covered. These pillars of UHC form its mandate, affecting interactions among stakeholders and thus creating operating pressures for programme implementation.

The Philippines launched its universal health care Act in 2020, following the approval of a fresh-minted law, Republic Act 11223 in February 2019. Implementation was set for January 2020, when the COVID-19 pandemic struck. This twin setback provides an opportunity for reflection on an institutional design that is more inclusive, efficient, equitable for greater health security.
