Justifying health insurance expenditure

Justifying health insurance expenditure

It can be difficult for public health insurers to decide which medical interventions to cover. After all, it is the tax payers’ money that must be spent wisely and equitably across all patient groups.

As outlined below, my previous article on the inclusion of transgender transition discusses only one example in this debate.

A 2018 paper by Johann Go argues that if assessments for any condition follow the same strict criteria, there is no reason to exclude any patients that meet the eligibility criteria. He suggests the consistent application of a two-level assessment process to justify healthcare expenditure.

First level – Medical indication

The first hurdle poses the question whether the intervention is medically indicated. Is there a clinical reason for treatment based on defined health criteria? This is less straightforward than it sounds. Not only must diagnostic criteria be defined for each condition, but at an even more fundamental level, we must agree what ‘health’ means. The WHO states,

Health is a state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity.

This ambitious definition of health has mainly been criticised because ‘complete’ wellbeing is nearly unachievable across all its dimensions of:

  • physical health – physiological wellbeing
  • mental health – psychological wellbeing
  • social health – performance in society

The pursuit of absolute health may encourage the development and application of unnecessary or even ludicrous diagnoses and treatments. The WHO’s definition ignores the capacity of the human body and mind to cope with sub-optimal conditions. This is not a moot point. How we define health influences, for example, outcome measures of healthcare initiatives. Should we always strive to cure someone completely or rather stimulate coping and self-recovery mechanisms? Is it realistic and productive to always look for the ultimate remedy? After all, good quality of life does not necessitate an absolute cure as long as the individual is able to cope sufficiently.

Go (2018) therefore proposes a definition of health as follows,

To be healthy is to be in an adequate but not necessarily complete nor perfect state of physical and mental health.

Thus, any intervention for any diagnosable condition that enables the individual to attain an ‘adequate state of physical and mental health’ should be considered for insurance coverage and progress to assessment level 2.

Second level – Wider consequences

The second level assesses aspects such as:

  • opportunity cost/economic cost-effectiveness – Would the money be better spent elsewhere?
  • practical feasibility – How far is the technology? Is there qualified personnel? How will the patient access the treatment?
  • third-party effects – Who else is affected? What is the societal impact?

Two not-so-straightforward examples

Gender dysphoria is a diagnosable condition in transgender people and gender-affirming surgery an indicated treatment for patients without any adequate therapeutic alternative. The purpose of this treatment goes well beyond cosmetic effects. Qualified personnel and facilities are available. There is evidence for cost-effectiveness, especially considering the high social cost of losing untreated transgender individuals to incapacitating mental conditions or suicide. Once the societal stigma of gender incongruence disappears, transgender people will still seek treatment due to an internal drive. Thus, gender-affirming surgery passes the two-level assessment and should be covered for eligible patients.

Go (2018) contrasts this with race-alteration surgery, which represents an even more difficult case. Whilst, for example, a dark-skinned person may experience diagnosable adverse mental states due to the societal perception of their skin colour, the decision to cover race-alteration with public funds can have morally critical third-party effects. It would reinforce the perceived or real stigma associated with dark skin in relevant communities or geographies. This would negatively affect all other dark-skinned people. Theoretically, changing social attitudes is the ideal intervention. Once the stigma is gone, it is less likely that the individual will still seek racial alteration. However, implementation of this theoretical solution takes time and is of little immediate comfort to the distressed individual.


  • GO, J.J., 2018. Should Gender Reassignment Surgery be Publicly Funded? Journal of Bioethical Inquiry, 15(4), pp. 527-534.
  • HUBER, M., KNOTTNERUS, J.A., GREEN, L., HORST, H.V.D., JADAD, A.R., KROMHOUT, D., LEONARD, B., LORIG, K., LOUREIRO, M.I., MEER,JOS W M VAN DER, SCHNABEL, P., SMITH, R., WEEL, C.V. and SMID, H., 2011. How should we define health? BMJ, 343, pp. d4163.
  • WHO, 2006. Constitution of the World Health Organization. Basic Documents, Forty-fifth edition, Supplement, October 2006.