Risk Equalization and deductibles

In this blog, I have written about the Swiss (part one, part two) and Dutch healthcare system extensively. Both systems have a “regulated competition” where insurance is mandatory and insurance companies are mandated to provide a specific insurance benefit package. In the Swiss system, 85% of medical expenditures are financed by insurance premiums and 15%…

Health Insurance: Why rent when you could own?

Devon M. Herrick writes an article (“Why rent…“) creating a clever analogy comparing HSAs to equity in a house. He likens traditional health insurance to renting a home, while having a Health Savings Account (HSA) is more like owning the home. Making contributions to HSAs in essence gives you “equity” towards future health care expenses.…

Minimum Insurance Benefit

Many reform advocates have claimed that the federal government should mandate a package of insurance benefits that all private and public health insurers would be legally compelled to provide. Switzerland is one country in which the government defines a what the insurance benefit will be for all standard health insurers. The National Coalition on Health…

Cross-border health insurance

The San Diego Union Tribune has an article (“Cross-border coverage“) profiling entreprenuer Jim Arriola and his low cost health insurance plan covering medical care in both the U.S. and Mexico. His company, Sekure Healthcare, provides a limited-benefit insurance program through employers along with a discount health card program. Both can be used by Sekure members…

Consumer Channeling and Preferred Providers

Doctors often complain that health insurers are squeezing their profit margins. These insurers offer the physicians access to patients as part of their network in exchange for discounted fees. Physicians can decide not to join the network and charge higher prices, but may be left with fewer patients. The bargaining power of the health insurer…

Self-protection and insurance

Typically, economists when economists look at the health insurance market, they focus on the insurance side of it. By this I mean to define insurance as the purchase of a product which will reimburse the buyer in the case of an adverse event. However, one must also look at the concept of protection. Protection is…

Insurance Markets and Advantageous Selection

Adverse selection is often seen as a major impediment to the efficient functioning of insurance markets. Rothschild and Stiglitz (1976) create a model where high risk people buy full insurance while low risk individuals buy partial insurance. Yet empirically, one finds that in some insurance markets, low risk individuals purchase more insurance than high risk…