Second, due to a significantly narrower tax base in emerging economies than in most OECD countries, a switch towards general taxation might not be as advantageous in terms of reducing the distortionary effects of taxes on labour. Raising income and corporate taxes, which weigh mainly on the formal sector, would limit the reduction in disincentives to formality. There is thus room for more risk pooling, as it would reduce the overall cost of contributoiy programmes. Risk pooling refers to the collection and management of financial resources in a way that spreads financial risks from an individual to all members of the programme. From a policy perspective, risk-pooling arrangements attempt to manage the need to subsidise care for people with the highest health risks (horizontal redistribution), the lowest ability to pay (vertical redistribution), or both when facing a health shock (Baeza and Packard, 2006). Besides, by exploiting economies of scale, risk pooling can reduce the average cost of the benefit package compared with multiple programmes, each with their own administrations and information systems.