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Insurance companies usually would like to assess premiums on an experience-rated basis, wi

Insurance companies usually would like to assess premiums on an experience-rated basis, wi

Insurance companies usually would like to assess premiums on an experience-rated basis, with high cost groups paying high premiums, and low cost groups paying low premiums. Sometimes, govt. policy has forced insurers (e.g. BC/BS) to utilize community rating as a rate setting device, forcing uniform premiums for all clients. Such uniform rates are designed to insure that high cost clients will be more able to afford insurance. Analyze the welfare aspects of this policy, i.e., is it "fair" to all parties? What might happen if new insurance competitors enter the market and are allowed to offer policies to the existing clients of established insurers? What would competition do to the rates paid by each group, and to the profits of the established and new insurers? Would it make much of a difference if the new competitors were required to practice community rating also 1) 2) Why do people desire health insurance? Why do private insurers typically not insure events with either extremely low or extremely high probabilities, and those events with small costs? Can we expenses that are covered? If insurance policy B covers more medical care but is otherwise identical to policy A, can we say that B is a better policy? Explain. Discuss preferred risk selection. How do insurers limit the risks arising from adverse selection and moral hazard? Discuss the reasons why public health insurance may be more efficient in meeting health needs than private insurance. Possible negatives? measure the adequacy of health insurance coverage by the percent of medical c Part B Medicare insurance is commonly bought from private insurers. Do you think it is surprising that most of these Part B plans are set up to happily cover up-front deductibles and visits but are very "light" when it comes to covering "high risk" needs? Whom do you think selects to buy Part B and who doesn't? Is that a good thing? 3) Show using two separate graphs (or describe throughly) the effect of a health insurance policy that (a) pays for 80% of the medical care purchased by an individual, and (b) pays a fixed amount for each "unit" of medical care purchased (e.g., an MD office visit). Which one might appeal to most to those most risk-averse? Why?.. what do you think would be the more expensive premiums? Why might insurance companies want to go with one format over the other? 4)

Abhinav 04-Dec-2019

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