Health Insurance Concepts Quiz

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Questions and Answers

What is a potential consequence of risk rating in insurance?

Reduction in the number of available benefit packages

Higher premiums based on expected medical benefits (correct)

Increased coverage for all individuals

Equal premiums for all risk categories

What is the primary purpose of community-rated premiums?

To consider the overall risk characteristics of the entire plan membership (correct)

To charge individuals based on their health history

To incentivize high usage of medical services

To offer personalized insurance packages

What is a potential effect of adverse selection in the insurance market?

Enhanced competition among providers

Improvement in patient outcomes

Increased availability of insurance plans

Price spirals leading to higher premiums (correct)

Which of the following is a strategy insurers may use to address moral hazard?

Charging deductibles and copays Signup and view all the answers

How can declining block pricing affect out-of-pocket spending?

By allowing high spending to be capped at a stop loss threshold Signup and view all the answers

What is one of the policy goals for voluntary health insurance (VHI)?

To reduce fiscal pressure on public budgets Signup and view all the answers

What is the purpose of implementing risk equalization schemes in insurance?

To prevent adverse selection and ensure equitable access to insurance Signup and view all the answers

What challenge might low users face as they age in relation to health insurance?

Higher likelihood of developing chronic conditions necessitating more extensive coverage Signup and view all the answers

What is one major concern regarding voluntary health insurance (VHI)?

It may exacerbate fiscal pressure. Signup and view all the answers

Which principle is essential for the effective integration of public and private resources in health policy?

Clarity about goals. Signup and view all the answers

How can VHI affect public spending?

It may undermine equity and value in public spending. Signup and view all the answers

Which of the following countries operates under a competitive public insurance model?

Germany Signup and view all the answers

What is a common characteristic of the social insurance unreformed system?

It is occupationally based with no choice of insurance fund. Signup and view all the answers

What is a key characteristic of a centralised single payer health system?

It involves national taxes that allocate resources centrally. Signup and view all the answers

Which of the following best describes a competitive private social insurance system?

Premiums and payment methods defined by government. Signup and view all the answers

What does careful policy design and capacity for regulation aim to achieve in health systems?

Minimize risks associated with health insurance. Signup and view all the answers

What is the primary characteristic of voluntary health insurance (VHI)?

It can be purchased at the discretion of individuals or employers. Signup and view all the answers

Which type of funding source potentially decreases equity in health care distribution?

Private revenues through voluntary health insurance. Signup and view all the answers

What can lead to a 'death spiral' in voluntary health insurance markets?

Healthier enrollees opting out due to rising premiums. Signup and view all the answers

What is a common effect of adverse selection in health insurance?

Increased average cost per enrollee. Signup and view all the answers

Which type of insurance is primarily used to cover 'good' risks like employed individuals?

Private insurance Signup and view all the answers

What strategy is used to reduce adverse selection in voluntary insurance markets?

Risk-rated premiums based on individual characteristics. Signup and view all the answers

What effect does opting out of a public insurance system potentially have?

Segmentation of public risk pools Signup and view all the answers

Which factor is NOT typically used to assign individuals to different risk categories?

Geographical location Signup and view all the answers

What distinguishes voluntary health insurance from statutory or public health insurance?

VHI is optional for individuals and employers. Signup and view all the answers

Which of the following questions relate to evaluating a funding system's impact on equity?

Is the funding system progressive and horizontally equitable? Signup and view all the answers

How does public financing of health care primarily detach payment from health status?

By pooling funds regardless of individual health risks. Signup and view all the answers

In the context of healthcare funding systems, what does allocative efficiency refer to?

Optimizing resource distribution for health services Signup and view all the answers

Which of the following is NOT a key policy question related to raising revenue for healthcare?

How does the financing affect the environmental situation? Signup and view all the answers

What is a significant risk associated with high user charges in complementary VHI?

Inadequate financial protection Signup and view all the answers

Which factor is necessary for the successful development of complementary VHI covering excluded services?

Technical, financial, and political resources Signup and view all the answers

What is a notable concern regarding regressive VHI premiums in France?

They create income-related inequality in VHI access Signup and view all the answers

Which demographic was highlighted as lacking VHI in France, primarily due to financial barriers?

4 million individuals without VHI Signup and view all the answers

How does supplementary VHI create healthcare access disparities?

By providing faster access to a select few Signup and view all the answers

What might high transaction costs in VHI lead to?

Undermined value-based user charges policy Signup and view all the answers

What does the term 'dual practice' refer to in the context of supplementary VHI?

Private and public healthcare providers serving simultaneously Signup and view all the answers

Which of these factors contributes to the rare occurrence of large VHI markets?

Regulatory pressures over time Signup and view all the answers

What was the approximate increase in the number of private supplementary insurance holders from 1997 to 2018?

15 million Signup and view all the answers

What was the main condition for those over 55 wishing to return to GKV in Germany?

They cannot return to GKV at all Signup and view all the answers

Which demographic had the highest prevalence of GP contact between public plan and VHI holders?

People aged 65+ Signup and view all the answers

What percentage of the total spending is administrative spending for SHI in Chile?

1.2% Signup and view all the answers

In terms of waiting times for a gastroscopy, how do public plans compare to VHI?

Public plans have longer waiting times Signup and view all the answers

What impact did the 10% surcharge on new premiums have on VHI for those over 55?

Funded ageing reserves Signup and view all the answers

In substitute VHI in Chile, how are premiums calculated?

Risk-rated premiums Signup and view all the answers

What is the public plan's population coverage percentage in Chile?

79% Signup and view all the answers

Which of the following conditions reflects a statistically significant difference between public plan and VHI users?

Chronic disease prevalence Signup and view all the answers

What percentage of VHI holders reported difficulties paying for outpatient prescriptions?

9% Signup and view all the answers

Study Notes

Financing Health Care Lecture 3

Health care financing sources include public (taxation, social health insurance) and private (voluntary insurance, medical savings accounts, user charges, informal payments).
Policy choices regarding funding mix significantly impact financial protection and equity.
Public funding detaches payment from health status.
The higher the private revenue share, the lower the equity in financial burden distribution.
All health financing systems use multiple sources.

Voluntary Health Insurance (VHI)

VHI is taken up and paid for by individuals or employers at their discretion.
It can be offered by public, quasi-public, for-profit, or non-profit organisations.
Voluntary versus statutory is a more useful distinction than public versus private.

Adverse Selection

Adverse selection occurs in community-rated, self-pay health plans, where healthier individuals are less likely to join, causing average costs to increase.
This can lead to a "death spiral", where premiums increase so much that healthier individuals drop out, further increasing costs, and potentially crippling the market.
Risk-rated premiums mitigate adverse selection by assigning individuals to risk categories based on factors like age, gender, occupation, family history, and prior illnesses, making premiums more closely aligned with expected medical benefits. This encourages healthier lifestyles and helps to keep the insurance market stable.

Risk-Rated Premiums

Risk-rated premiums assign individuals to different risk categories based on personal characteristics.
This system is designed to align premiums more closely with expected health care costs, thereby mitigating adverse selection and potential market failure.
Premiums are based on benefit design and coverage, relating risk category to expected costs.
This system encourages healthier behaviors but can lead to financial access problems for high-risk populations.

Community-Rated Premiums

Community-rated premiums are based on entire plan membership risk characteristics and their expected medical costs.
This approach does not consider individual health histories, which can lead to potential adverse or favorable risk selection and either price spirals or under-insurance.
It requires risk equalisation schemes and regulation for effective implementation.

Insurer Responses to Adverse Selection and Moral Hazard

Insurers sometimes counter adverse selection by charging deductibles/copays, excluding individuals with pre-existing conditions, limiting providers, charging more for individual policies.
They apply strategies of market/risk segmentation, offering different plans with high or low benefits to separate "high" and "low" users.

Insurance Declining Block Pricing

Insurance premiums and out-of-pocket costs (like copays and deductibles) often decrease with increasing spending.

Policy Goals for VHI

Relieve fiscal pressure on public budgets.
Strengthen health system performance.
Address coverage gaps.
May need to consider other factors like financial protection and available services; population covered, and risk.

VHI Roles

Substitutive: replace public health insurance.
Complementary: provide additional coverage for specific services.
Supplementary: handle cost-sharing arrangements.

Is VHI the Right Policy Tool?

Does VHI address coverage gaps?
Does VHI provide access to those who need it?
Does this result in undermining public spending on health? (e.g. making those reliant on existing statutory coverage worse off)
Global VHI markets are relatively small.
Variation in VHI types and coverage.

Inefficiency in VHI

Inefficient practices can arise in VHI systems, such as rising administrative costs or high premiums, leading to fewer benefits.
Administrative costs in VHI can be substantial.

VHI and Out-of-Pocket Spending

Voluntary health insurance (VHI) has a generally weak correlation with out-of-pocket health spending worldwide

Regulatory Goals, Approaches, Examples

Regulatory goals include market stability, consumer protection, access to care.
Approaches may involve financial requirements (solvency), material changes (open enrolment, standardized benefits, prohibiting pre-existing condition exclusions), and community ratings to address risk selection.

Recap: Financing Health Care

Is the funding progressive and horizontally equitable?
Does it result in redistribution?
How does it impact health coverage, access, allocative efficiency, technical efficiency, cost containment, and the wider economy?

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Description

Test your knowledge on key concepts related to health insurance such as risk rating, community-rated premiums, and adverse selection. This quiz explores various strategies insurers use to manage risks and the implications for policyholders. Perfect for students or professionals looking to reinforce their understanding of health insurance fundamentals.