M10: Private and Social health insurance
20 important questions on M10: Private and Social health insurance
The demand for insurance depends on 6 things, which?
- The consumer’s risk aversion;
- The loss-probability
- The loss;
- The loading fee;
- The consumer’s income/wealth;
- Moral hazard.
Where does the premium consist of?
Where does the risk premium consists of?
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
For my 1st exam I got a C. Then, I started looking for ways to learn better and I came across Study Smart. Since then I have scored a A+, A, A- and another A. I highly recommend it to everyone who wants to hear it. I am so happy with it!!
I was struggling to finish all my first-year subjects for 3 years. Then I discovered Study Smart, which helped me to finish all of them within 3 months.
Because of StudySmart, things are going well in many ways. Before, I always had study stress and no time for anything. Now I feel calm and confident (because of the program). I used to score a B, now I usually score an A or A+.
Hey Chris, I really want to thank you very much for developing the platform, I usually got around C for my exams, now I scored an A+, an A and a A- !!
Since using Study Smart, my average has increased significantly. I even completed a statistics course with a A+ while I'm bad at statistics. I took on extra courses this year, because of Study Smart. Thanks so much!
Ever since I started studying with StudySmart I passed all my exams !!! No more re-sits!! At first, I was happy with a pass and now I only get good grades. Many thanks!
I aced all the courses I studied with Study Smart. For law, I first scored a D, and now an A! I’m 100% sure that I’ll pass all the courses I study with Study Smart.
I always thought I studied well. My grades were fine. I could never have imagined that applying these study skills would have such a huge and direct impact on my grades, my speed and the pleasure I have in learning.
For the first time, I finally feel totally confident about the way I learn. I have the perfect overview and make great progress in terms of speed and the grades I get. Thanks, Chris!
I immediately started to enjoy learning again, and my grades soared. All of a sudden, everything went better. I highly recommend Study Smart to all students..
Being able to create my materials online made the process of studying so much smoother and quicker. I no longer have to spend a huge amount of my time on creating my summaries.
At first, my notes were a mess. Now I use Study Smart to take my notes in a perfectly structured way. It helps me to save a lot of time and do other things I enjoy.
Students that study with Study Smart get better grades. The system applies all the learning methods in such a way that both well-performing students and students who struggle perform much better.
Hi Chris, I would like to thank you very much. Last year I scored C on a course, and this year I got an A+ thanks to your method! Thank you very much!
The largest effect is that my child is more enthusiastic about school! Every parent wants their children to be happy at school, Study Smart made it happen.
In high school, I failed several exams, and that has really changed now. I actually needed this tool very much back then. Since I started studying with StudySmart, I haven't had any D's. My average score is now an A and those are results I would have never had in the past
With my old method, I passed only 3 out of 8 courses. Since I started taking my notes digitally in Study Smart, I have passed all my courses on the first try. For me, StudySmart takes away the stress of wondering if I will pass or not.
Thanks to StudySmart, I passed all my exams, and with better grades than before! On top of that, I have mastered a very good study method now, which I am confident will help me earn my degree.
What happens with the expected profits with perfect competition?
Give two advantages and two disadvantages of health insurance
- Welfare gain for risk-averse individuals
- Access to care that would otherwise be unaffordable
Disadvantages:
- High expenses due to moral hazard;
- High expenses due to loading fee
Enthoven understands health insurance as social insurance. What is his definition of social insurance?
What are the non-essential and essential aspects of SI?
- mandatory
- taxes
- community rating
- earmarked contribution
Essential:
- cross-subsidies
Give the three distinct health care systems prior to 1989
- Bismarck system (Germany, 1883): social insurance system;
- Semashko system (Soviet Union, 1918): centralized systems of communist countries;
- Beveridge system (United Kingdom, 1948): National Health Service (NHS).
Give two economic arguments to enforce mandatory crosssubsidies
- Externalities (altruistic preferences; communicable diseases);
- The financial risk of becoming a high risk in the future. (mandatory crosssubsidies can provide assurance against long-term health risks).
Give four economic arguments to make health insurance mandatory (assuming health insurance is affordable):
- The prevention of free riding (some people may purposely not buy health insurance);
- A lack of foresight (individuals do not always know what is in their best interest, which may lead to underinsurance);
- Transaction costs of organizing crosssubsidies;
- Prevention of adverse selection
Demand for insurance exists if individuals are risk averse, what are the characteristics of the individuals utility? (3x)
- The disutility of losing money exceeds the utility of gaining a similar amount;
- The individual’s marginal utility of wealth is diminishing;
- The individual’s utility function is concave (bowed out to the x-axis).
Give six tools for scaling up health insurance
- providing information about “what insurance is”;
- regulation of the insurance market (e.g. concerning solvency requirements);
- tools to reduce (supply-induced) moral hazard;
- providing subsidies
- mandatory community rating;
- mandatory health insurance.
What are the four disadvantages of community rating?
- Selection
- Cross-subsidies most likely disproportional:
- Also cross-subsidies for risk factors such as oversupply and inefficiency;
- Also subsidies to high-income high-risks;
- Indirect premium differentiation via product differentiation.
- Sponsor forbids the high risks to pay extra premium to buy good quality care.
What are the four advantages of community rating?
- Transparency;
- Low transaction costs;
- Implicit cross-subsidies are mostly not considered as ‘public finance’ (like explicit contributions);
- It is believed to be a good guarantee for making health insurance affordable for high risks (holds only in the short term).
Why is community rating so popular? Give four reasons
- The direct effect on affordability is immediately visible;
- Potential indirect effects, such as poor-quality care or high premiums for the high risks may only show up after some years.
- Unawareness of the disadvantages;
- The perception that risk selection is not a problem
Give the characteristics of the Health Insurance Act (since 2006)
- Mandate for everyone in the Netherlands to buy individual private health insurance from a private insurer;
- Standard benefits package;
- Broad coverage: e.g. physician services, hospital care, drugs, medical devices, rehabilitation, prevention, mental care, dental care (children);
- Mandatory deductible: €385 (in 2018) per person (18+) per year
- Individual insurer is assumed to be(come) the prudent buyer of care;
- Much flexibility in defining the consumer’s concrete insurance entitlements;
- Selective contracting insurers - providers;
- Open enrolment & ‘community rating per insurer’ for each type of health insurance contract;
- Income-related care allowances per household;
- Risk equalization
Give the characteristics of the consumer choice in the Health Insurance Act
- Annual consumer choice of insurer and choice of insurance contract:
- in kind, or reimbursement, or a combination;
- preferred provider arrangement;
- voluntary additional deductible: at most + €500 per person (18+) per year;
- premium rebate (<10%) for groups.
- Voluntary supplementary insurance.
In what ways does health insurance differ from other indemnity insurance? (4x)
- Ex-ante appraisal of the loss is difficult --> MH
- Hard to relate the premium to preventive activities --> MH
- Reimbursement also in case of „own fault‟ --> MH
- Social HI --> cross subsidies
What are the essential differences between social and private health insurance? Note this question is odd because the opposite of social is asocial and of private is public.
- The benefits, eligibility requirements and other aspects of the program are defined by statute;
- Explicit provision is made to account for the income and expenses (often through a trust fund);
- It is funded by taxes or premiums paid by (or on behalf of) participants (but additional sources of funding may be provided as well); and
- The program serves a defined population, and participation is either compulsory or so heavily subsidized that most eligible individuals choose to participate.
What are similarities between social insurance and private insurance?
- Wide pooling of risks;
- Specific definitions of the benefits provided;
- Specific definitions of eligibility rules and the amount of coverage provided;
- Specific premium, contribution or tax rates required to meet the expected costs of the system.
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
