Health Care System in the Industrialised Countries and the Role of Private Insurance

One of the reasons why health care is so expensive in America may be the lack of competitiveness of the health service and an imbalance in the provision of medical care. In fact, historically, such imbalances between the public and private health care systems have given rise to speculation and gainful expenses imposed by both hospitals and doctors who can charge much higher fees than their counterparts in other countries.
To stem the concern, Managed Care Organisations began to appear in the United States in the 1970s and 1980s. Their main objective was to contain the costs of health care services, by merging the role of the financer with that of the service provider. In this case, the members of the managed care network are guided to make use of services in the health care facilities that are part of such organisations, but the member is still entitled to choose, and can utilize services outside the network on payment of a deductible.
On the other hand, if the sizeable proportion of the population with no access to health care is taken out of the equation, the quality of care offered by the American system is the best in the world (Docteur, et al. 2003). In this respect, the availability of new and costly technology helps provide a rapid diagnosis and improves the quality of care.
The insurance industry has made significant steps forward around the globe on the subject of costs. Practical evidence drawn from international comparative studies shows that market operators are in the process of concentrating their resources in the strive for economies of scale, premiums have fallen considerably, while distribution methods have been streamlined to provide simpler, more direct sales for even greater savings in expenditure.
In line with their free market economy guiding principles, most advanced nations tend not to regulate services provided through private health care insurance. Notwithstanding, some supervisory bodies are very active in overseeing that policy prospectuses are explicit and provide comprehensive information to enable the insured party to properly evaluate the different policies available on the market. A series of EU directives have been issued in this regard to uphold disclosure and scope for comparing insurance products.
Insurance is often considered grounds for concerns regarding equity implications because its availability depends fundamentally on the financial capacity of the single individual. In addition, policies impose limiting conditions, dictating the level and type of guarantees provided and, in some cases, risks may be uninsurable. In this regard, in-depth studies on the income redistribution effect resulting from refunds of medical expenses show that inequalities have been recorded in France and Ireland, a very limited impact has been recorded in Germany and the Netherlands and no impact has been recorded in Denmark.
Moreover, the provision of health care services has the potential to favour the insured and deflect resources from other patients. This risk is present above all in systems where the line between the public and private sectors is not well defined, where services require payment under both systems and the public health care system is limited in its ability to satisfy all demands.
However, it should be noted that two types of risks are responsible for limitations being imposed on the provision of care to policy holders, as they are so significant that they can pose a threat to financial stability in extreme cases. These risks are moral hazard and adverse selection.
The first risk is generally addressed by the inclusion in the policy of deductibles and maximum amounts. Depending on the type of coverage, maximum amounts and deductibles are applied to claims for accidents and/or per year of contract, to the degree of disability or the duration of professional incapacity or hospital stay. The aim in this case is to make the insured party responsible and discourage him/her from misusing the third payer, as well as containing policy costs.
Limitations on hospital and medical expense insurance are normally applied to more common expenses, while there tends to be fewer limitations where hospital stays or serious pathologies are concerned. Regular health care — such as dental care or medications — is generally excluded because it does not involve any risk and is consequently unavailable under health insurance funds, which is why the sector becomes accessible by insurance companies.
The risk of adverse selection is present in individual policies and voluntary collective ones, and is addressed by requiring a physical exam on the signing of the policy or by filling out an anamnestic questionnaire to determine whether the insured party misuses the insurance to cover medical expenses for pre-existing pathologies.
The type of policy determines the type of care provided and level of coverage offered by the insurance. In individual contracts where the risk of adverse selection exists, it is essential that the state of health of the insured party is assessed at the time the policy is signed to prevent fraudulent behaviour. Where collective policies are concerned, the risk of adverse selection is, on the other hand, non-existent.

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