Optimal social health insurance with supplementary private insurance

This paper investigates the structure of a National Health Service in which there is compulsory social insurance covering a package of essentials, a given part of individuals' health expenditure, and supplementary private policy topping up the remaining services. The latter insurance contract provides for a co-payment by patients, limiting the so-called "third-party payer" effect. Thus, an individual's health expenditure is divided into three parts: the first covered by social insurance, the second by a private policy and the third out-of-pocket. Such mixed system design has received increasing attention in recent years and has been adopted by several industrialized countries. The conditions for optimal rates of social insurance coverage and of private coinsurance are analysed and discussed. The optimality requirements refer to efficiency as well as equity concerns.     

Assessing incentives for service-level selection in private health insurance exchanges

Even with open enrollment and mandated purchase, incentives created by adverse selection may undermine the efficiency of service offerings by plans in the new health insurance Exchanges created by the Affordable Care Act. Using data on persons likely to participate in Exchanges drawn from five waves of the Medical Expenditure Panel Survey, we measure plan incentives in two ways. First, we construct predictive ratios, improving on current methods by taking into account the role of premiums in financing plans. Second, relying on an explicit model of plan profit maximization, we measure incentives based on the predictability and predictiveness of various medical diagnoses. Among the chronic diseases studied, plans have the greatest incentive to skimp on care for cancer, and mental health and substance abuse.     

医疗保险中道德风险控制的关键

道德风险是各类保险经济学中出现频率非常高的词汇 ,在医疗保险的文献中也不例外。所谓道德风险是指在医疗保险提供的条件下 ,被保险人存在过度利用医疗服务的倾向。在传统的医疗保险中讨论道德风险防范和控制机制时 ,往往都是从如何抑制被保险人的医疗需求入手 ,从而到达控制医疗费用 ,进而控制道德风险的发生。由于在医疗保险市场存在着明显的信息不对称性 ,医生在疾病诊断与治疗方面具有权威性。该文认为充分发挥医生及医疗机构的主动性是控制医疗费用和道德风险发生的有效机制。     

Private expenditure and the role of private health insurance in Greece: status quo and future trends

The health care system in Greece is financed in almost equal proportions by public and private sources. Private expenditure, consists mostly of out-of-pocket and under-the-table payments. Such payments strongly suggest dissatisfaction with the public system, due to under financing during the last 25 years. This gap has been filled rapidly by the private sector. From this point of view, one might suggest that the flourishing development of private provision may lead in turn to a corresponding growth in private health insurance (PHI). This paper aims to examine the role of PHI in Greece, to identify the factors influencing its development, and to make some suggestions about future policies and trends. In the decade of 1985–1995 PHI show increasing activity, reflecting the intention of some citizens to seek health insurance solutions in the form of supplementary cover in order to ensure faster access, better quality of services, and increased consumer choice. The benefits include programs covering hospital expenses, cash benefits, outpatient care expenses, disability income insurance, as well as limited managed care programs. However, despite recent interest, PHI coverage remains low in Greece compared to other EU countries. Economic, social and cultural factors such as low average household income, high unemployment, obligatory and full coverage by social insurance, lead to reluctance to pay for second-tier insurance. Instead, there is a preference to pay a doctor or hospital directly even in the form of under-the-table payments (which are remarkably high in Greece), when the need arises. There are also factors endogenous to the PHI industry, related to market policies, low organisational capacity, cream skimming, and the absence of insurance products meeting consumer requirements, which explain the relatively low state of development of PHI in Greece.      

我国大病医疗保险报销规则研究

大病医疗保险中的道德风险对医疗保险基金的可持续运行带来挑战。本文对能够减少道德风险的大病医保报销模式展开了研究。理论分析表明,在最大化社会总福利的目标下,应对选择低费用治疗方案的消费者提供补贴,对选择高费用治疗方案的消费者设定自付比例。模拟表明这种差异化报销规则相对于单一报销规则,降低了医疗费用和医疗保险费。本文还对模拟所用的参数选择进行了敏感性检验,结果表明,不同的参数选择不会改变本文所揭示的机理。     

Tax incentives and the demand for private health insurance

We analyze the effect of an individual insurance mandate (Medicare Levy Surcharge) on the demand for private health insurance (PHI) in Australia. With administrative income tax return data, we show that the mandate has several distinct effects on taxpayers’ behavior. First, despite the large tax penalty for not having PHI coverage relative to the cost of the cheapest eligible insurance policy, compliance with mandate is relatively low: the proportion of the population with PHI coverage increases by 6.5 percentage points (15.6%) at the income threshold where the tax penalty starts to apply. This effect is most pronounced for young taxpayers, while the middle aged seem to be least responsive to this specific tax incentive. Second, the discontinuous increase in the average tax rate at the income threshold created by the policy generates a strong incentive for tax avoidance which manifests itself through bunching in the taxable income distribution below the threshold. Finally, after imposing some plausible assumptions, we extrapolate the effect of the policy to other income levels and show that this policy has not had a significant impact on the overall demand for private health insurance in Australia.     

Testing for selection bias and moral hazard in private health insurance: Evidence from a mixed public-private health system

Separating selection bias from moral hazard in private health insurance (PHI) markets has been a challenging task. We estimate selection bias and moral hazard in Australia's mixed public-private health system, where PHI premiums are community-rated rather than risk-rated. Using longitudinal cohort data, with fine-grained measures for medical services predominantly funded by PHI providers, we find consistent and robust estimates of advantageous selection among hospitalized cardiovascular disease (CVD) patients. Specifically, we show that in addition to their risk-averse attributes, CVD patients who purchase PHI use fewer services that are not covered by PHI providers (e.g., general practitioners and emergency departments) and have fewer comorbidities. Finally, unlike previous studies, we show that ex-post moral hazard exists in the use of specific “in-hospital” medical services such as specialist and physician services, miscellaneous diagnostic procedures, and therapeutic treatments. From the perspective of PHI providers, the annual cost of moral hazard translates to a lower bound estimate of $707 per patient, equivalent to a 3.03% reduction in their annual profits.     

The potential premium range of risk-rating in competitive markets for supplementary health insurance

In this paper, we simulate several scenarios of the potential premium range for voluntary (supplementary) health insurance, covering benefits which might be excluded from mandatory health insurance (MI). Our findings show that, by adding risk-factors, the minimum premium decreases and the maximum increases. The magnitude of the premium range is especially substantial for benefits such as medical devices and drugs. When removing benefits from MI policymakers should be aware of the implications for the potential reduction of affordability of voluntary health insurance coverage in a competitive market.      

Imperfect risk adjustment,risk preferences,and sorting in competitive health insurance markets

I develop a model of insurer price-setting and consumer welfare under risk-adjustment, a policy commonly used to combat inefficient sorting due to adverse selection in health insurance markets. I use the model to illustrate graphically that risk-adjustment causes health plan prices to be based on costs not predicted by the risk-adjustment model (“residual costs”) rather than total costs, either weakening or exacerbating selection problems depending on the correlation between demand and costs predicted by the risk-adjustment model. I then use a structural model to estimate the welfare consequences of risk-adjustment, finding a welfare gain of over $600 per person-year.     

The income distributive implications of recent private health insurance policy reforms in Australia

The Australian government implemented a series of private health insurance (PHI) policy reforms between 1997 and 2000. As a result, the proportion of the population with PHI coverage increased by more than 35%. However, this study found significant evidence that the policy reform disproportionately favours high-income earners. In particular, the 30% premium subsidy represents a windfall gain for households which would have purchased PHI even without the rebate. The amount of such gain is estimated to be around $900 million per year, a large proportion of which went to higher income households.

部分国家商业健康保险发展的特点及对我国的启示

本文分析了当前我国地方政府融资存在的财政自给率不足、对转移支付依赖加大、土地资源出让收入倾向最大化、地方政府债务隐性化和可持续贷款能力受限等问题,认为应正视未来20年我国地方政府在城市化进程中大规模融资行为的必然性,建议从五个方面入手来规范地方政府的融资行为,即以培育地方主体税种为基石深化分税制改革,以公共服务均等化为导向优化转移支付制度,通过正确处理土地出让金收入改变卖地财政境况,以地方政府债券发行收入来弥补市政建设缺口,以及鼓励符合条件的政府投融资平台上市融资等。     

Price vs. quantity in health insurance reimbursement

While “integrated” systems regulate the quantity of health services, “Bismarckian” systems regulate their price. This paper compares the consumers’ allocations implemented within the two reimbursement systems. In the model, illness has a negative impact on labor productivity while public insurance is financed through income tax. Consumers have private information with respect to a parameter which can be interpreted as heterogeneity either in intensity of their preferences for treatment or in the type of illness. The social planner may be constrained to adopt uniform insurance plans, or may be free to choose self selecting plans. The analysis of uniform plans shows that Bismarckian systems dominate integrated systems from the social welfare point of view; whereas the opposite ranking holds with self-selecting plans.     

Public health insurance Pareto-efficient allocative improvements through differentiated copayment rates

Moral hazard in an insurance system can be reduced by introducing copayments. Unfortunately, this may exert undesired distribution effects, which are generally regarded to be of specific relevance in the health sector. The article concentrates on an obligatory social health insurance system and tries to show that rightly adjusted and double-differentiated copayment rates can at least partially resolve the dilemma between allocation and distribution. The differentiation considered is with respect to income and to treatment sickness costs. The argument is presented by means of diagrammatic exposition. Rigmar Osterkamp Ifo Institute for Economic Research Munich, P. O. Box 860460, 81631 Munich, Germany, e-mail: osterkamp@ifo.de     

Crowd-in: the effect of private health insurance markets on the demand for Medicaid

OBJECTIVE: To investigate the effects of local labor market conditions and the availability of employer-sponsored health insurance on exits from the Medicaid program. DATA SOURCE: Data for this project come from a unique administrative database containing a 2 percent sample of all cases on California's Medicaid program in 1987 and a 2 percent sample of all new cases starting each year between 1987 and 1995. STUDY DESIGN: The results are estimated using a discrete duration model where the monthly exit probability is a function of demographic characteristics, local labor market variables, the probability of having employer-sponsored insurance, and fixed year and county effects. PRINCIPAL FINDINGS: Improvements in labor market opportunities (i.e., employment growth, wage growth, and increases in the availability of employer-sponsored health insurance) promote exits off the Medicaid program. A 2.5 percentage point increase in the availability of employer-sponsored insurance leads to a 6 percent increase in the probability that a completed spell lasts no more than 2 years. It would take a 2 percentage point decrease in unemployment rates or a 10 percent increase in average quarterly earnings to yield an equivalent increase in the likelihood of exiting Medicaid within 2 years. These effects are robust to the inclusion of county-level fixed effects and time effects. CONCLUSIONS: Medicaid expenditures and caseloads are sensitive to local economic fluctuations and secular trends in the availability of health insurance. Continued decreases in employer-based health insurance coverage will greatly increase the demand for public insurance coverage and the financial pressures on state governments.     

Compulsory private complementary health insurance offered by employers in France: Implications and current debate

In January 2013, within the framework of a National Inter-professional Agreement (NIA), the French government required all employers (irrespective of the size of their business) to offer private complementary health insurance to their employees from January 2016. The generalization of group complementary health insurance to all employees will directly affect insurers, employers and employees, as well as individuals not directly concerned (students, retirees, unemployed and civil servants). In this paper, we present the issues raised by this regulation, the expected consequences and the current debate around this reform. In particular, we argue that this reform may have adverse effects on equity of access to complementary health insurance in France, since the risk structure of the market for individual health insurance will change, potentially increasing inequalities between wage-earners and others. Moreover, tax exemptions given to group contracts are problematic because public funds used to support these contracts can be higher at individual level for high-salary individuals than those allocated to improve access for the poorest. In response to the criticism and with the aim of ensuring equity in the system, the government decided to reconsider some of the fiscal advantages given to group contracts, to enhance programs and aids dedicated to the poorest and to redefine an overall context of incentives.     

The role of government in health insurance markets with adverse selection

This paper analyzes the welfare economics of three arrangements for purchasing health insurance: competitive markets in which consumers are free to choose among options with different levels of coverage and prices; systems with compulsory partial pooling which permit private firms to sell supplementary coverage; and government-run pools that purchase comprehensive coverage at a single price for all consumers. Competitive insurance markets are assumed to face the problem of ‘adverse selection’. This refers to a situation in which the insurer cannot observe characteristics of individuals that affect the cost of insurance and that are known to the individuals. Competitive markets with adverse selection are not efficient because low risks cannot purchase comprehensive insurance coverage. However, government-run pools with comprehensive coverage are an inefficient solution to the problem of adverse selection. Compulsory partial coverage may represent an attractive alternative to both competitive markets and comprehensive pools. We discover two situations when government intervention of this type will succeed: when there are not many high risks in the population, and when the risk types are similar. We discuss the implications of these results for health insurance programs in several countries. Our results also have implications for the allocation of public funds for disease-prevention projects. A project targeted at high risks will produce external benefits for low risks, even though they are not directly affected by the program. However, a successful project might eliminate the market for private insurance; in this case the government should consider mandating partial insurance coverage.Copyright © 1998 John Wiley & Sons, Ltd.     

Minimum generosity levels in a competitive health insurance market

An important condition for optimal health insurance is that the level of health care coverage is inversely related to the elasticity of demand. We show that this condition is not satisfied for voluntary deductibles in the Netherlands, which are optional deductibles on top of the mandatory deductible introduced by the Dutch government. We find that low-risk types, that mainly choose voluntary deductibles, have a lower elasticity of demand than high-risk types. Moreover, we show that voluntary deductibles introduce equity problems as it results in non-trivial cross subsidies from high-risk to low-risk types. Capping the level of voluntary deductibles (imposing minimum generosity) is likely to be welfare enhancing in the Netherlands.     

Once covered,forever covered: The actuarial challenges of the Belgian private health insurance system

The Belgian Law of 20 July 2007 has drastically changed the Belgian private health insurance sector by making individual contracts lifelong with the technical basis (i.e. actuarial assumptions) fixed at policy issue. The goal of the Law is to ensure the accessibility to supplementary health coverage in order to protect policyholders from discrimination and exclusion, essentially when these operate on the basis of age. Due to the unpredictable nature of medical inflation risk and the difficulty to model future increases of health claims, the legislator introduced medical indices together with a specific updating mechanism, which aim at establishing standardized and fair premium adjustments across the sector. This paper considers two major issues of the current Belgian system. The first one is related to the transferability of the reserves, whereas the second one is related to age-discrimination. We discuss these issues and their interplay, and we address the conflict between the goal of the Law and the practical problems arising in the light of the actuarial techniques.     

Impacts of rising health care costs on families with employment-based private insurance: a national analysis with state fixed effects

Background

Given the rapid growth of health care costs, some experts were concerned with erosion of employment-based private insurance (EBPI). This empirical analysis aims to quantify the concern.

Methods

Using the National Health Account, we generated a cost index to represent state-level annual cost growth. We merged it with the 1996–2003 Medical Expenditure Panel Survey. The unit of analysis is the family. We conducted both bivariate and multivariate logistic analyses.

Results

The bivariate analysis found a significant inverse association between the cost index and the proportion of families receiving an offer of EBPI. The multivariate analysis showed that the cost index was significantly negatively associated with the likelihood of receiving an EBPI offer for the entire sample and for families in the first, second, and third quartiles of income distribution.The cost index was also significantly negatively associated with the proportion of families with EBPI for the entire year for each family member (EBPI-EYEM). The multivariate analysis confirmed significance of the relationship for the entire sample, and for families in the second and third quartiles of income distribution.Among the families with EBPI-EYEM, there was a positive relationship between the cost index and this group''s likelihood of having out-of-pocket expenditures exceeding 10 percent of family income. The multivariate analysis confirmed significance of the relationship for the entire group and for families in the second and third quartiles of income distribution.

Conclusions

Rising health costs reduce EBPI availability and enrollment, and the financial protection provided by it, especially for middle-class families.     

Private health insurance in Sweden: Fast-track lanes and the alleged attempts to stop them

According to the Health and Medical Services Act (1982:763), those who have the greatest need for healthcare shall be given priority. This is being challenged by the rapid emergence of private health insurance which increases the share of private funding and creates fast-track lanes where some people get faster access to healthcare than others. The Stop Law, implemented by a Social Democratic government in 2006, was generally regarded as a way to put an end to the fast-track lanes in Swedish healthcare. Based on a thorough examination of the law and its legislative history – official reports, propositions, comments on official reports – this article argues that the Stop Law was so full of exceptions and loopholes that it did not threaten the existence of fast-track lanes. The same goes for a similar Social Democratic proposal from 2016, which is also examined in the article. Further, the article analyses centre-right wing positions on fast-track lanes in Swedish healthcare. In summary, it is argued that politicians of all stripes have allowed the development to proceed in spite of unanimous support for the idea that Swedish healthcare shall be provided to all on equal terms.