Definition Health insurance is insurance against the risk of incurring health care related expenses. It indemnifies the insured for the related financial loss. It is important to note that health insurance is a form of short term insurance. Disability, critical illness and long-term care insurance are all subclasses of health insurance Health insurance Essays. 13 essay samples found. Health Insurance Market Structure. One of the main issues with the health insurance market in the U.S. is the nature of the market itself: oligopoly market. In America, health insurance markets are usually extremely concentrated with a single insurer commanding almost 50 percent of the market Apr 25, · Words: Length: 3 Pages Document Type: Essay Paper #: Read Full Paper. Health Insurance in the U.S.: Health insurance has become an important part in the modern health care system even before the American government started to discuss the issue of compulsory medical insurance
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Health insurance is a contractual arrangement through which individuals spread the financial risk of unexpected and costly medical health insurance essay. By enabling the voluntary health insurance essay of health-related financial risks, health insurance enhances social welfare, health insurance essay.
However, incentives inherent in a health insurance contract can result in the inefficient use of health services, leading to reductions in social welfare. Additionally, health insurance essay, disparities in information about health status between persons seeking insurance and entities providing coverage can affect the efficient and equitable pricing and provision of health insurance and result in welfare losses.
Consequently, the conflict between the welfare gains from risk pooling and the welfare losses from the inefficient use of medical care known as moral hazard and asymmetric information the problem of adverse risk selection remains an ongoing tension in the design of health plans and in efforts to expand coverage. According to standard theory, risk-averse individuals prefer a monetary loss with certainty to a gamble with the same expected value. To protect against health-related financial losses, such individuals are willing to transfer income pay a health insurance premium to a risk-bearing entity an insurance company to protect themselves against monetary losses associated with illness.
Because such monetary transfers are voluntary, the pooling of resources by individuals with similar risk profiles is welfare enhancing. This additional payment enables insurers to make coverage available, because it compensates them for their administrative and marketing costs and allows a margin for profit, health insurance essay.
Despite the theoretical construct of an actuarially fair health insurance premium, controversy remains as to how premiums should be established. Some view health insurance as a form of mutual health insurance essay and social solidarity among citizens health insurance essay believe health insurance essay premiums should be community rated, reflecting the health care experience of an entire insured group.
Under this principle, all individuals pay the same premium regardless of their own health care experience. In contrast, others suggest that premiums should more appropriately reflect the actuarial value of individual health care experience or the experience of a group of very similar individuals and should be experience rated.
These analysts assert that community rating is health insurance essay because it imposes an implicit tax on low risks that is used to subsidize high risks. Such pricing also results in the inefficient provision of coverage as the low risks purchase too little insurance and high risks overinsure. Because health insurance reduces out-of-pocket costs, individuals and their providers have an incentive to overuse health care.
In doing so, individuals obtain additional health services whose value to them is less than the resource costs incurred in its production. This moral hazard welfare loss represents a major source of inefficiency in the provision of health care, health insurance essay. Efforts to address moral hazard include the use of deductibles and coinsurance. The growth of managed care added a number of innovations to control utilization, including constraints on provider choice, health insurance essay, capitated or fixed-dollar payments for the care of each enrollee, utilization review, health insurance essay, and case management and quality assurance activities.
Most recently, efforts to instill greater cost consciousness on the part of consumers have led to the development of consumer-driven health plans, typified by health savings accounts combined with high-deductible health plans. Individuals and their employers make tax-free contributions to a health savings account up to a proscribed dollar limit. By assuming responsibility for substantial first-dollar expenditures, health insurance essay, the expectation is that consumers will use services prudently.
However, some individuals with these plans have delayed or postponed care and have expressed dissatisfaction with such plans. Concern also exists that tax-free health accounts will attract high-income persons in good health, leaving low-income persons with health problems in traditional insurance plans. Moral hazard remains a concern, and its interpretation and policy implications may be more complex than generally appreciated.
A distinction exists between inefficient moral hazard resulting from the insurance-induced reduction in out-of-pocket price and efficient moral hazard resulting from the income transfer the ill receive from members of the insurance pool. Efficient moral hazard is welfare enhancing, as it enables individuals to overcome barriers to affordability. In certain cases, such as the treatment of chronic illnesses, cost-sharing provisions to address moral hazard may need to be relaxed. The out-of-pocket costs of such provisions may deter compliance with treatment and lead to future health care costs.
Informational asymmetries between potential enrollees and insurers regarding enrollee health status can contribute to adverse risk health insurance essay. Because potential enrollees are often better informed than insurers, they may be able to enter health plans and pay premiums that do not reflect their expected health care use.
Instead, they may pay the lower premiums faced by good risks. Such behavior can yield inefficiencies over time, health insurance essay, as enrollment by poor risks causes health plan costs to rise and low-risk enrollees respond by seeking lower-priced but more restrictive coverage.
In the extreme, adverse selection may lead to unsustainable health plans as low-risk enrollees defect and plans become dominated by high-risk enrollees. To avoid adverse selection, health insurance essay, health insurers compete by selecting favorable health risks, health insurance essay. Such behavior is inefficient because it diverts resources from efforts to reduce plan costs and enhance quality and may leave certain individuals uninsured.
State and federal reforms have sought to counter such insurer behavior by requiring open enrollment and guaranteed renewal of coverage and by limiting exclusions and waiting periods for preexisting health conditions.
Efforts to counter adverse selection have included reinsuring the expenses of high-cost enrollees, establishing high-risk insurance pools, health insurance essay, and risk-adjusting payments to health plans. Whereas most industrialized countries have established national health insurance systems, the Health insurance essay States stands out as providing a patchwork of private and public sources of coverage that leave a sizable proportion of its citizenry uninsured Of the insured U.
population incoverage from employers represents the largest source The lack of a uniform health insurance system in the United States has resulted in significant gaps in coverage, health insurance essay.
Persons most likely to lack insurance are young adults ages 19 to 34racial and ethnic minorities especially Hispanicspersons with health insurance essay educational attainment, persons with low incomes, those in fair or poor health, low-wage earners, workers in small firms, and the self-employed.
Compared with insured persons, the uninsured are less likely to have a usual source of health care, more likely to report difficulties obtaining timely care, and less likely to use medical care. The provision of health insurance in the United States has also raised a number of equity and efficiency issues, especially with regard to employment-based coverage.
Providing coverage through the workplace also yields labor market inefficiencies. Workers may be discouraged from changing jobs or retiring early, and they may alter their labor force activity to qualify for coverage.
Although the United States has failed to address these problems through comprehensive health insurance reform, public policy has not been entirely passive. Medicaid expansions and SCHIP implementation during the s contributed to a reduction in the number of uninsured children. Inhowever, President Bush vetoed legislation that had health insurance essay support to expand the number of children covered by SCHIP.
Moreover, recent policy initiatives stressing voluntary enrollment in private coverage through the use of tax credits, small-group and individual insurance market reforms, and premium subsidies for employers have not reduced the number of uninsured. In response, several states have mandated that individuals obtain private coverage.
In addition, outreach efforts have sought to provide information to those eligible but not enrolled in public health insurance essay. It remains to health insurance essay seen whether public policy can effectively expand coverage and address the problems of moral hazard and adverse selection.
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Health insurance Essays. 13 essay samples found. Health Insurance Market Structure. One of the main issues with the health insurance market in the U.S. is the nature of the market itself: oligopoly market. In America, health insurance markets are usually extremely concentrated with a single insurer commanding almost 50 percent of the market Health Insurance Of The United States Essay. Words6 Pages. Health insurance in the United States is a highly politicized issue. In recent years, many strides have been made to extend health insurance coverage to all Americans with the passage of the Patient Protection and Affordable Care Act (PPACA). While the program has been vigorously debated in the public Apr 25, · Words: Length: 3 Pages Document Type: Essay Paper #: Read Full Paper. Health Insurance in the U.S.: Health insurance has become an important part in the modern health care system even before the American government started to discuss the issue of compulsory medical insurance
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