Case 2: Beveridge vs Bismarck Flashcards
What is social health insurance (SHI)?
Health insurance with compulsory coverage by nonprofit insurance organisations & not allowed to deny coverage due to age, gender, or poor health
*How are SHI contributions collected?
- on earnings (wages, salaries) & overall income
- Contributions paid by employees, by employers, or both & collected by government or by multiple health insurance funds.
- Non-contributors (e.g. unemployed, retired individuals, non-working dependents) may be covered by contributions, too.
What do do individuals pay compulsory insurance for?
Pay compulsory insurance contributions related to their income & not to their risks
What are the guiding principles of SHI?
- Solidarity
- Redistribution
How has SHI moved toward UHC?
SHI has moved toward UHC & that traditional values of solidarity & social security have even been strengthened over the past decades
How is TFHS funded?
From direct & indirect taxes colled by central, regional or local governements.
What does the size of the budget for TFHS depend on?
Political considerations & negotiating ability of health ministry which allows for control over level of spending on health but can lead to underfunding.
What are the pros of the bismarck model?
- All funds designated to HC
- More choice of providers = competitive market = higher quality
- Higher income often = better health insurance
- Better quality of care than Beveridge
- Less strain on PH care system
What are the cons of the Bismarck model?
- Access to HC is lower, not everybody insured
- Inequalities in insurance types, related to income
- complex & expensive administration
- ageing populations = more pensioners = fewer people working
What are the pros of the beveridge model?
- idea of UHC already implemented in model
- less adminstrative costs
- access to HC with citizenship
- People with higher income = higher taxes
What are the cons of the beveridge model?
- migrants, non citizens, access is difficult
- lower quality of care
- higher OOP for specific diseases
- longer waiting lists
- limited choice of providers
- if unsatisfied with public HC = get private insurance = health inequalities coz not everyone can afford private insurance.
- economic crisis = HC cuts = unresillient HC system
What is health insurance?
Contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium
What is the solution for market failure?
Health insurance is solution to market failure (HC becomes too expensive)
What is people’s demand for health insurance driven by?
- Risk aversion (prevention)
- risk of needing treatment
- level of potential income loss
- price
- ability to pay
Why do people buy health insurance?
- To cover unpredictible health costs
What are 2 forms of market failure in insurance markets?
- Adverse selection
- Moral hazard
Main market failure between health insurers and consumers?
- Moral hazard
- Adverse selection
What is moral hazard?
Tendency of poeple with insurance to change behaviour in way that = higher costs for insurance companies.
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What are the problems with moral hazard?
- less attention paid to prevention coz costs for medication covered by insurance. e.g. high BP medication available & covered
- more health care consumption
- individual behaviour is costly to monitor (insurance can’t observe for each individual necessity to see doctor)
When does moral hazard occur?
After insurance purchase & people changer behaviour once they have insurance. e.g. more inclined to visit GP for every small thing if insured.
How is moral hazard solved?
- co-payments
- deductibles
- co-insurance
What are co-payments?
fee paid by insured patient each time they access a medical service (e.g. part of the costs for a drug)
What are deductibles?
- amount person pays before insurance coverage begins to have an effect (e.g. in NL 385/yr)
- Insurers can use this to distinguish high & low risks.
- Policy with high deductible & low premiums will be attractive to low risks but NOT to high risks.
Policy with low deductibles & high premiums will be attractive to high risks but NOT to low risks
What is co-insurance?
fixed % that insured pays after deductible is exceeded
What is adverse selection?
Adverse selection arises from consumers having more complete information on their own health status than insurers, which may result in selecting plans that give them the greatest utility
What is risk selection?
insurance companies more interested in selling insurance to low risk individuals because they make profit from them
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When does adverse selection occur?
before insurance purchase
How to solve adverse selection?
- Compulsory insurance
- Different prices for different risk groups
- Package differentiation
- Prevented by ‘cream skimming’ or ‘cherry picking’ healthy individuals to enrol in insurance
What are problems with adverse seleciton?
insurance price (premium) is same for each consumer independent of costs involved → insurer doesn’t know the expected costs → consumers will only buy insurance if they expect a benefit
What is supplier induced demand?
- providers of care influence demand for medical services due to supply-side influence & increased healthcare spending
- When patients covered by insurance = less sensitive to costs of HC & providers can recommend additional services
What are 3 main areas of government activity?
- Redistribution of wealth & income
- Stabilisation of macroeconomy (keep unemployment, inflation & economic growth at reasonable levels)
- Correction of microeconomic market failure.
What is diseconomies of scale?
Situations where increasing size of HC providers & insurers, decreases efficiency & increases costs
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What is voluntary private health insurance (VPHI)?
set of health services that are financed by a third-party through private non-income related payments called premiums
What are the types of private health insurance?
- Principle
- substitute
- complementary
- supplementary
- duplicate
Explain the private health insurance type “principle”
when public health insurance is not available
Explain the private health insurance type “substitute”
when a person opts-out of public coverage
Explain the private health insurance type “complementary”
private health insurance covers co-payments incurred in the public system but not covered by public insurance
Explain the private health insurance type “supplementary”
covers costs other than co-payments not covered by public insurance
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What are determining factors that affect probability of having private health insurance?
- quality of HC system in country - waiting lists, access to appointments, etc
- Individual health status
- Risk preferences
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What is the purpose of VPHI?
- access to or faster treatment
- waiting list avoidance
- choice of physician or hospital
- out-of-pocket reimbursement
What is horizontal equity?
3 popular ways of defining horizontal equity in healthcare:
* Equal access to health care for equal need
* Equal use of health care for equal need
* Equal health care expenditure for equal need.
How is equal access influenced?
horizontal equity
by distance, cost, language or cultural issues
What does equal use require?
horizontal equity
policymakers to ensure those with same level of need actually use same amount of service.
What does equal expenditure require?
horizontal equity
requires 2 people with equal needs to be allocated the same amount of expenditure.
What is the goal of horizontal equity?
ensuring people with same level of disadvantage are treated the same.
What is vertical equity?
unequal individuals are treated unequally with respect to the inequality
Why is vertical equity more complicated to implement than horizontal equity?
because it involves difficult judgements about how to meet different needs differentially
What does equality of access require for different communiteis?
- Travel distance to facilities is equal
- Transport and communication services are equal
- Waiting times are equal
- Patients are equally informed about the availability and effectiveness of treatments
- Chargers are equal (with equal ability to pay)
What is UHC?
provides protection from paying for HC OOP at time of service use & especially protection from suffering catastrophic health expenditures
What are 3 concepts in relation to equitable financing for UHC?
- progressive
- regressive
- proportional
What dimensions is UHC challenged in?
- Breadth of coverage: # of people who have access to affordable & quality care
- Depth of coverage: range of accessible services available to population in need
- Height of coverage: proportion of HC costs covered by financing system
Explain the concept progressive in equity in HC financing
contributions to HC where richest segment of population contributes a higher proportion
Explain the concept regressive in equity in HC financing
contributions to HC where richest segment of population contribute a lower proportion
Explain the concept proportional in equity in HC financing
everyone contributes same proportion of their income
