A.K. Nandakumar, Michael R. Reich, Mukesh Chawla, Peter Berman, Winnie Yip

In June 1992, the People's Assembly of Egypt passed Law 99 expanding health insurance to cover all school children. This was one of the most important initiatives undertaken in recent years by the Ministry of Health, and it effectively increased the number of beneficiaries covered by the Health Insurance Organization (HIO) from 3.75 million in 1988 to about 14 million in 1993. This paper first examines the policy processes for the introduction of this innovation in Egypt's health system. Next, the paper discusses the implementation and consequences of the new policy in terms of coverage, financing, benefits, and delivery of services, along with data on utilization and expenditures. Several important lessons derive from this analysis. First, major reform efforts are possible when there is a strong political commitment and the proposed program and solutions are acceptable to the key stakeholders. Second, compromises and trade-offs are essential to construct a politically feasible and ethically acceptable reform initiative. Third, while these trade-offs might yield short-term gains, the trade-offs in the long term may undermine the reform's capacity to achieve the anticipated equity enhancements and can potentially undermine the financial sustainability of the reform.