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PubMed2001

A comment on Neudeck and Podczeck's "adverse selection and regulation in health insurance markets".

Using the Grossman equilibrium concept, Neudeck and Podczeck [Journal of Health Economics 15 (1996) 387] show that imposing a minimum standard on a perfectly competitive insurance market can result in anti-competitive effects: decreased welfare with some insurers earning positive profits. However, the Grossman concept precludes an insurer from offering two separating, cross-subsidizing health plans. When an insurer can offer multiple plans (as under both the Nash and Miyazaki-Wilson equilibrium concepts), I show that minimum standards result in a doubleton equilibrium, never allow positive total profits, and increase welfare. This is of interest since in 1997 more than half of establishments in the US offering choice of multiple plans did so through a single insurer.

Economic Competition↗
PubMed2002

Genetic testing when there is a mix of compulsory and voluntary health insurance.

When the insurer has access to information about test status, genetic insurance can handle the negative effects of genetic testing on insurance coverage and income distribution. Hence, efficient testing is promoted. When information about prevention and test status is private, two types of social inefficiencies may occur; genetic testing may not be done when it is socially efficient and genetic testing may be done although it is socially inefficient. The first type of inefficiency is shown to be likely for consumers with compulsory insurance only, while the second type of inefficiency is more likely for those who have supplemented the compulsory insurance with substantial voluntary insurance. This second type of inefficiency is more important the less effective prevention is. It is therefore a puzzle that many countries have imposed strict regulation on the genetic information insurers have access to. A reason may be that genetic insurance is not yet a political issue, and the advantage of shared genetic information is therefore not transparent.

Access to Information↗
PubMed2002

Alternative health insurance schemes: a welfare comparison.

In this paper, we present a simple model of health insurance with asymmetric information, where we compare two alternative ways of organizing the insurance market. Either as a competitive insurance market, where some risks remain uninsured, or as a compulsory scheme, where however, the level of reimbursement of loss is to be determined by majority decision. In a simple welfare comparison, the compulsory scheme may in certain environments yield a solution which is inferior to that obtained in the market. We further consider the situation where the compulsory scheme may be supplemented by voluntary competitive insurance; this situation turns out to be at least as good as either of the alternatives.

Actuarial Analysis↗
PubMed2002

Community rating in health insurance and different benefit packages.

This paper presents a model of a competitive health insurance market with two risk types and two health benefits. In the benchmark case, community rating insurers (CRIs) are only allowed to offer the basic benefit. The additional benefit is sold by risk rating insurers (RRIs). It is shown that low risk types can only be better off at the expense of high risk types if CRIs are allowed to offer the additional benefit and no additional measures are taken. However, high risk types can be made better off if CRIs must offer the additional benefit or if community rating health insurers offering the additional benefit are subsidized while those selling only the basic benefit are taxed.

Actuarial Analysis↗
PubMed2003

Moral hazard and adverse selection in Australian private hospitals: 1989-1990.

The Australian hospital system is characterized by the co-existence of private hospitals, where individuals pay for services and public hospitals, where services are free to all but delivered after a waiting time. The decision to purchase insurance for private hospital treatment depends on the trade-off between the price of treatment, waiting time, and the insurance premium. Clearly, the potential for adverse selection and moral hazard exists. When the endogeneity of the insurance decision is accounted for, the extent of moral hazard can substantially increase the expected length of a hospital stay by a factor of up to 3.

Adult↗
PubMed2003

Cream-skimming, incentives for efficiency and payment system.

Reform proposals of health care systems in several countries have advocated variations of a risk adjustment/capitation system. These proposals face a serious objection: incentives to risk selection are prevalent in the system. By now, considerable literature has been devoted to finding ways of mitigating, if not eliminating, this problem, while at the same time preserving incentives to efficiency. We contribute to this debate presenting a transfer system that, under some circumstances, attains both provider efficiency and no risk selection. The transfer system extends typical linear payment systems. It can be interpreted as a fixed transfer in the beginning of the period plus an ex-post fund at the end of the period. The novelty rests in the way contributions to this fund are defined.

Capitation Fee↗
PubMed1996

Adverse selection and regulation in health insurance markets.

In this paper we look at various ways to regulate the health insurance market and ask whether they provide an answer to the problem of adverse selection. To avoid inefficiency, government policy must either effectuate some cross-subsidization of insurance policies within the state sector or grant private insurance firms an exclusive right to serve certain groups of the population. Recent reforms in the Netherlands and Germany and President Clinton's proposals for the US could be adapted to fulfil these requirements. Efficiency cannot be achieved, on the other hand, if the regulator tries to "prescribe" cross-subsidization within the private sector.

Economic Competition↗
PubMed1997

Optimal non-linear health insurance.

Most theoretical and empirical work on efficient health insurance has been based on models with linear insurance schedules (a constant co-insurance parameter). In this paper, dynamic optimization techniques are used to analyse the properties of optimal non-linear insurance schedules in a model similar to one originally considered by Spence and Zeckhauser (American Economic Review, 1971, 61, 380-387) and reminiscent of those that have been used in the literature on optimal income taxation. The results of a preliminary numerical example suggest that the welfare losses from the implicit subsidy to employer-financed health insurance under US tax law may be a good deal smaller than previously estimated using linear models.

Canada↗
PubMed1997

Adverse selection and the purchase of Medigap insurance by the elderly.

This study uses data on 8561 elderly respondents from the 1991 Medicare Current Beneficiary Survey to examine adverse selection in the supplemental private insurance market. Logit models of supplemental insurance choices provided modest but mixed evidence of self-selection on the basis of observable health status. Wealth had a strong influence on coverage. Two part models of Medicare utilization and expenditures showed that beneficiaries with individually purchased policies had higher total, part B and physician expenditures than those with employer-provided policies, even after controlling for observable differences, suggesting adverse selection. Results were similar for basic and more comprehensive policies.

Aged↗
PubMed2000

Deductibles in health insurance: can the actuarially fair premium reduction exceed the deductible?

The actuarially fair premium reduction in case of a deductible relative to full insurance is affected by: (1) out-of-pocket payments, (2) moral hazard, (3) administrative costs, and, in case of a voluntary deductible, (4) adverse selection. Both the partial effects and the total effect of these factors are analyzed. Moral hazard and adverse selection appear to have a substantial effect on the expected health care costs above a deductible but a small effect on the expected out-of-pocket expenditure. A premium model indicates that for a broad range of deductible amounts the actuarially fair premium reduction exceeds the deductible.

Actuarial Analysis↗
PubMed2001

A descriptive framework for country-level analysis of health care financing arrangements.

Health financing policies are marked by confusion between policy tools and policy objectives, especially in low and middle income countries. This paper attempts to address this problem by providing a conceptual framework that is driven by the normative objective of enhancing the 'insurance function' (access to needed care without financial impoverishment) of health care systems. The framework is proposed as a tool for descriptive analysis of the key functions, policies, and interactions within an existing health care system, and equally as a tool to assist the identification and preliminary assessment of policy options. The aim is to help to clarify the policy levers that are available to enhance the insurance function for the population as efficiently as possible, given the 'starting point' of a country's existing institutional and organizational arrangements. Analysis of health care financing systems using this framework highlights the interactions of various policies and the need for a coherent package of coordinated reforms, rather than a focus on particular organizational forms of 'health insurance'. The content of each main health care system function (revenue collection, pooling of funds, purchasing of services, provision of services) and the market structure with which the implementation of each is organized are found to be particularly important, as are policies with respect to the benefit package and user fees.

Delivery of Health Care↗
PubMed2002

Free choice of sickness funds in regulated competition: evidence from Germany and The Netherlands.

Sickness funds became the focal point of health insurance reforms in the 1990s. Policy makers expected funds to become more consumer-oriented and more active in managing the provision of health care. This is especially true for two countries in the heart of Europe that, on first view, have many similar institutional characteristics. Both Germany and The Netherlands have introduced competition between sickness funds in the last decade. We present extensive quantitative, as well qualitative, data with regard to the behaviour of consumers after the introduction of free choice between sickness funds. National data was used with regard to contribution rates and member flows and survey data was used to investigate personal motives for actual change and perception of differences between sickness funds. In Germany, contribution rates between sickness funds differ significantly. Accordingly, these differences are the main reason for consumers to switch funds, which occurs on a considerable scale. However, survey data show that other reasons may be important too. In The Netherlands, premium differences are much lower. The same is true for the degree of change. Survey data show that consumers perceive very small differences between sickness funds and do not see much reason for change. Our findings support the claim that the degree of actual changing depends strongly on economic incentives, especially with regard to the extent of financial risk sickness funds have to bear and to the extent premiums or contribution rates can differ. However, the higher the financial risk of individual sickness funds actually is, the higher the incentives for risk selection.

Choice Behavior↗
PubMed2003

Impact of long-term care insurance on institutional dementia care in Japan.

Japan started long-term care insurance for nursing and home help services in April 2000 to cope with growing medical expenditures for the population aged over 65. To study the impact of the new insurance on utilization of dementia care, we compared demographic and clinical characteristics including diagnosis, degree of disability and behavioral disturbance before and after the launch among people with dementia covered by either long-term care or medical insurance. The subjects of the study were randomly selected patients/residents of specialized dementia care units in both psychiatric hospitals and geriatric care facilities before (1145 patients/residents in early 2000) and after (262 for medical insurance and 205 for long-term care insurance in 2001) the new system was launched. Although patients/residents in 2000 and 2001 were similar as a whole, the 2001 sample showed differences between patients in each of the types of insurance systems. Logistic regression analysis revealed that patients/residents covered by long-term care insurance were significantly more likely to be females and require higher levels of care. Patients covered by long-term care insurance were significantly less likely to be transferred from a psychiatric department nor did they display behavioral disturbance or an inability to put out or deal with fire. These results suggest that health care facilities have shifted to the new insurance system for patients requiring higher levels of care but without behavioral disturbances as it was intended. On the other hand, there were policy concerns of that demented persons with moderate activities of daily living impairments and behavioral disturbances would be at risk being excluded from the long-term care scheme.

Aged↗
PubMed2003

A comparison of single- and multi-payer health insurance systems and options for reform.

A major choice confronting many countries is between single-payer and multi-payer health insurance systems. This paper compares single-payer models in the areas of revenue collection, risk pooling, purchasing, and social solidarity. Single-payer and multi-payer systems each have advantages which may meet countries' priorities for their health insurance system. Single-payer systems are usually financed more progressively, and rely on existing taxation systems; they effectively distribute risks throughout one large risk pool; and they offer governments a high degree of control over the total expenditure on health. Multi-payer systems sacrifice this control for a greater ability to meet the diverse preferences of beneficiaries. Several major reforms of single-payer insurance systems--expansion of the role of private insurance and transformation to a multi-payer system--are then described and illustrated using specific country examples. These reforms have been implemented with some success in several countries but face several important challenges.

Consumer Behavior↗
PubMed2003

Risky business: insuring adults with congenital heart disease.

Accurate prognostication in congenital heart disease is vital for purposes of obtaining insurance, yet can be problematic for patients, physicians and insurers. This article discusses the scope of the problem, and describes the process of evaluating life insurance. Mortality data as well as predictors of adverse outcomes for individual congenital heart lesions are reviewed. Practical tips for patients and their physicians are given to aid in successful application for insurance. To expand the possibility of future patients obtaining insurance coverage, the ongoing reporting and constant updating of very long-term survival data in congenital heart disease is emphasized.

Adult↗
PubMed1993

Insurability for asymptomatic hematuria or proteinuria during childhood.

The objective of this survey was to describe life insurance underwriting practices concerning children with asymptomatic hematuria and proteinuria. A questionnaire was sent to 200 companies licensed to issue life insurance policies in the state of New York. The medical director of each company was asked to respond to the insurability of children with asymptomatic hematuria and proteinuria. Two case summaries were provided with the questionnaire. Of 97 companies, 66 would offer insurance to the patient with hematuria, although 38 (58%) would charge additional premiums. In response to the problem of proteinuria, 61 companies would offer life insurance, although 50 (82%) would require higher premium charges (P < 0.002 compared with hematuria). We conclude that children with asymptomatic hematuria and proteinuria can usually obtain life insurance, although often at higher cost. Invasive diagnostic tests are not necessary for insurers to offer insurance.

Child↗
PubMed1996

Insurance for autosomal dominant polycystic kidney disease patients prior to end-stage renal disease.

There recently has been substantial dialogue about access to health insurance for Americans. This discussion has highlighted the issues of pre-existing diseases and portability as barriers to adequate health insurance coverage. For these reasons we decided to investigate the issues relating to health insurance and life insurance coverage experienced by patients with autosomal dominant polycystic kidney disease (ADPKD). A questionnaire-based study was conducted. Two hundred thirty-eight of 354 subjects responded. There was no significant difference in gender, age, number of children, or level of renal function between responders and nonresponders. Twenty-eight of the 238 respondents had eight-stage renal disease and were eligible for Medicare; these patients were not used in the analyses relating to health insurance, but were used in the analyses relating to life insurance. Although 87% of the ADPKD patients were concerned about the availability of health insurance, 88% were currently insured. Eight-three percent of subjects with health insurance obtained it through their own or their spouse's employer. Of those individuals with employer-based health insurance who were aware of their ADPKD, only 25% informed their employer and 35% informed their insurer at the start of coverage. Fifty-seven percent of those with employer-based health insurance had this availability determine their job choice and 37% stayed in the job because of health insurance. Thirty percent of the subjects had previously been denied health insurance. Although subjects were less concerned about life insurance, many of the same types of issues and factors were present. Thus, the current lack of universal health care in this country creates anxiety and difficulties for patients with ADPKD. The effect of a pre-existing condition and the lack of portability resulted in denials, work choice limitation, and unwillingness to share health information for this patient population with a hereditary, systemic disease.

Adult↗