Alternative health insurance schemes: a welfare comparison.
In this paper, we present a simple model of health insurance with asymmetric information, where we compare two alternative ways of organizing the insurance market. Either as a competitive insurance market, where some risks remain uninsured, or as a compulsory scheme, where however, the level of reimbursement of loss is to be determined by majority decision. In a simple welfare comparison, the compulsory scheme may in certain environments yield a solution which is inferior to that obtained in the market. We further consider the situation where the compulsory scheme may be supplemented by voluntary competitive insurance; this situation turns out to be at least as good as either of the alternatives.
D000206:Actuarial Analysis; D004465:Economic Competition; D006801:Humans; D007342:Insurance Benefits; D015271:Insurance Pools / Q000706:statistics & numerical data; D015273:Insurance Selection Bias; D007348:Insurance, Health / Q000191:economics* / Q000706:statistics & numerical data; D007349:Insurance, Health, Reimbursement / Q000706:statistics & numerical data; D017059:Models, Econometric; D009313:National Health Programs / Q000191:economics*; D011057:Politics; D020379:Risk Adjustment; D012946:Social Welfare / Q000191:economics*