Health insurance worldwide
According to the latest United States Census Bureau figures, approximately 85% of Americans have health insurance.Approximately 60% obtain health insurance through their place of employment or as individuals, and various government agencies provide health insurance to over 29% of Americans.
Health Insurance:
A Health insurance policy is an annually renewable contract between an insurance company and an individual.With health insurance claims, the individual policy-holder pays a deductible plus copayment (for instance, a hospital stay might require the first $1000 of fees to be paid by the policy-holder plus $100 per night stayed in hospital).Usually there is a maximum out-of-pocket payment for any single year, and there can be a lifetime maximum.Health insurance is a type of insurance whereby the insurer pays the medical costs of the insured if the insured becomes sick due to covered causes, or due to accidents.The insurer may be a private organization or a government agency.Market-based health care systems such as that in the United States rely primarily on private health insurance.Prescription drug plans are a form of insurance offered through many employer benefit plans in the U.S., where the patient pays a copayment and the prescription drug insurance pays the rest.
Any private insurance system will face two inherent challenges: adverse selection and ex-post moral hazard.
Adverse Selection:Insurance companies use the term "adverse selection" to describe the tendency for only those who will benefit from insurance to buy it.Specifically when talking about health insurance, unhealthy people are more likely to purchase health insurance because they anticipate large medical bills.Because of adverse selection, insurance companies use a patient's medical history to screen out persons with pre-existing medical conditions.Before buying health insurance, a person typically fills out a comprehensive medical history form that asks whether the person smokes, how much the person weighs, whether the person has been treated for any of a long list of diseases and so on.In general, those who look like they will be large financial burdens are denied coverage or charged high premiums to compensate.On the other side, applicants can actually get discounts if they do not smoke and are healthy.
Moral hazard describes the state of mind and change in behavior that results from a person's knowledge that if something bad were to happen, the out-of-pocket expenses would be mitigated by an insurance policy--in this case, one which provides reduced prices for medical care.Other factors affecting insurance price Because of advances in medicine and medical technology, medical treatment is more expensive, and people in developed countries are living longer.The population of those countries is aging, and a larger group of senior citizens requires more medical care than a young healthier population.(A similar rise in costs is evident in Social Security in the United States.) These factors cause an increase in the price of health insurance.
Some other factors that cause an increase in health insurance prices are health related: insufficient exercise; unhealthy food choices; a shortage of doctors in impoverished or rural areas; excessive alcohol use, smoking, street drugs, obesity, among some parts of the population; and the modern sedentary lifestyle of the middle classes.
Medicare
In the United States, government-funded Medicare programs help to insure the elderly and end stage renal disease patients.Some health care economists (Uwe Reinhardt of Princeton and Stuart Butler among others) assert that (the third party payment feature) these programs have had the unintended consequence of distorting the price of medical procedures.As a result, the Health Care Financing Administration has set up a list of procedures and corresponding prices under the Resource-Based Relative Value Scale.
Starting in 2006, Medicare Part D provides a program for the elderly to buy insurance for the purchase of prescription drugs.
Medicare Advantage plans expand the health care options for Medicare beneficiaries.The option for Medicare Advantage plans is a result of the Balanced Budget Act of 1997, with the intent to better control the rapid growth in Medicare spending, as well as to provide Medicare beneficiaries more choices.While Medicaid was instituted for the very poor, beginning in 1972, the number of individuals in the United States who lacked any form of health insurance for any period during the year increased each year, every year with the exceptions of the years 1999 and 2000.[citation needed] It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to relatively high administrative costs and low reimbursements.
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