Health insurance market

We start by considering the (free) health insurance market. An actuarially fair insurance premium is one that equals the expected value of its yield in health... 

For a more general discussion of health insurance markets, including the roles of moral hazard and adverse selection, see Cutler and Zeckhauser (2000). 

Nearly half of the individual purchasers have access to group coverage through professional organizations, nonprofit associations, or former employers. An estimated 8.6 million persons purchase this coverage in what is called the individual health insurance market. 

Center for Studying Health System Change (2002). The individual health insurance market. In Issue Brief Findings from HSC. Washington, D.C. Center for Studying Health System Change. 

Lee, C. Rogal, D. Risk Adjustment A Key to Changing Incentives in the Health Insurance Market, Alpha Center Washington, DC, 1997 1-26. 

Morrisey, MA, Jensen, GA, Morlock, RJ (1994) Small Employers and the Health Insurance Market. Health Affairs, 13 (5) 149-61. 

Voluntary insurance would be the market solution to uncertainty for risk-averse individuals. In this context, the user chooses the optimum co-insurance rate. Theory offers some analytical results on optimal health insurance contract designs.1 The consumer decides the extent of the coverage and the optimum co-insurance rate, and ultimately the price to be paid for the premium. In competitive markets, with actuarially fair premiums, the optimum co-insurance rate varies between individuals and depends on the risk of falling sick and the price elasticity of demand. 

However, these results are not applicable to compulsory pubhc insurance, nor to National Health Systems. The most notable differences between drag co-payment in an insurance market and in a National Health System or compulsory public insurance environment lie in their voluntariness or otherwise (users ability to choose their coverage) and the ultimate financing of the services (risk-adjusted premiums as opposed to taxes or social insurance contributions adjusted according to economic capacity). Hence, in compulsory public insurance systems, co-payment regulation is used not only as a health policy instrument but also as one of redistribution of income. 

A more in-depth discussion of reference pricing lies beyond the compass of this essay (in this regard, see Kanavos and Reinhardt 2003). Suffice it to say, it is a powerful method of introducing market power on the demand side of prescription drugs covered by health insurance, and one likely to be embraced, sooner or later, by private health insurers, as they seek to cope with the ever-rising cost of health care. 

Substantially less is known about the cost of R D for particular vaccines and for improvements to existing vaccines. To a lesser extent, there is also insufficient information in the public domain about the marginal cost of producing vaccines, especially reflecting actual and optimal safety precautions in the production process. We also know too little about consumer demand for vaccines, including the role of price and nonprice factors. There are insufficient data on coverage of vaccines by private health insurance currently. For this reason, it is not possible to precisely predict market responses to any specific proposal. 

Conceptually and administratively, the most substantial problems are with setting the public subsidy. We have discussed a limited subsidy plan not mentioned in the lOM report, which would be set only at the level of estimated medical and financial externalities. Such a subsidy would address the main market failure attributable to individuals not taking account of the benefit to others when they are vaccinated, which is likely to be reflected in insufficient demand for vaccinations as a covered private health insurance benefit. 

We used the cumulative number of drugs with NMEs approved and launched in Taiwan to measure pharmaceutical innovations. The annual number of NMEs introduced into Taiwan between 1985 and 2002 followed cyclic patterns (Fig. 13.1). In 1985, 95 NMEs were introduced in this market. This number decreased to 52 and 49 in the next two years, but increased subsequently. In 1995 only 15 NMEs were introduced, possibly reflecting delays in approvals caused by the transition from the then-existing health care financing system to national health insurance in Taiwan in that year. ... 

Currie, J., and Brigitte C. Madrian. 1999. Health, Health Insurance and the Labor Market, in Handbook of Labor Economics, ed. by Orley Ashenfelter and David Card, 3309-3415. Amsterdam Elsevier Science. 

The cost of prescriptions has risen dramatically in the last several decades. The average price for a single prescription in the USA in 2003 was more than 50.00. This rise is occasioned by new technology, marketing costs, and stockholder expectations. The pharmaceutical industry typically posts double-digit profits annually while the retail business sector shows a 3% profit. The cost to the patient for many new drugs like "statins" exceeds 1000 per year. Pharmaceuticals are the highest out-of-pocket health-related cost for the health sector because many other health care services are covered by health insurance whereas prescriptions are often not. 

Once employer-sponsored health insurance began to cover more people in the U.S., it became increasingly popular. As medical expenses increased, insurance became a greater necessity. Expanded insurance coverage increased compensation without additional taxes, and it provided vital financial protection if hospitalization was necessary. The benefits to employers became codified as well. The Revenue Act of 1954 defined employers contributions to health plans as tax-exempt and clarified that these were deductible business expenses. Recognizing that the burgeoning system was leaving out many workers. President Eisenhower proposed, but failed to achieve, market reforms in 1956. 

Each nation that has implemented universal health insurance has created its system in the context of cultural, political, and economic values. The values held by other advanced countries that support universal health care include a sense of national and community responsibility, social solidarity, universality, equity, acceptance of the role of government, and skepticism about markets in addressing social and human needs. Political and economic values shape the administrative and financial dimensions of their health systems. As a result, each system is unique in its balance of central and local decision-making, the power and role of hospitals and physicians, and the extent to which market forces allocate resources. 

In contrast to people in other advanced nations, people in the U.S. value choice, competition, individual and family accountability, and volxmteerism, and are skeptical of the government. As in other nations, political and economic forces have further shaped the U.S. health system, specifically the system of health insurance. As a result, people in the U.S. tolerate a three-tiered system of coverage those with private health insurance, those with public insurance, and those without any coverage. Any reforms are likely to reflect the core values of individual accountability, voluntary participation, and a level of confidence in market forces. 

What exactly is the market for a drug and a drug company At one level it is the number of patients who have adequate health insurance with the disease and in whom the disease is diagnosed properly at another level it is, in the United States, the 90,000 general practitioners, or the... 

---