Insurance Function in Health System

1. Insurance Function in Health System ShahidBeheshti University of Medical Sciences School of Medical Education Strategic Policy Sessions: 28

2. Relations between functions and objectives of a health system Functions the system performs Objectives of the system Stewardship (oversight) Responsiveness (to non-medical expectations) Creating resources (investment And training) Delivering services (provision) Health Fair (financial) contribution Financing (collecting, pooling And purchasing)

3. Low Risk High Risk Low Income High Income Pooling to redistribute risk, cross-subsidy for greater equity Contribution Net Transfer Utilization Pooling across equal incomes Subsidy across equal risks

4. Classification of health insurance models • Public health insurance: • Tax-based public health insurance. • Social security schemes. • Private health insurance: • Private mandatory health insurance. • Private employment group health insurance. • Private community-rated health insurance. • Private risk-rated health insurance.

5. Classification of health insurance models • Public health insurance: • Tax-based public health insurance. • Social security schemes. • Private health insurance: • Private mandatory health insurance. • Private employment group health insurance. • Private community-rated health insurance. • Private risk-rated health insurance. An example of Tax-based public health insurance is the Canadian Medicare instituted by the Canada Health Act

6. Classification of health insurance models • Public health insurance: • Tax-based public health insurance. • Social security schemes. • Private health insurance: • Private mandatory health insurance. • Private employment group health insurance. • Private community-rated health insurance. • Private risk-rated health insurance. • An example of Social security schemes is French ‘Securité Sociale’. • Public health insurance is usually mandatory. The mandate can apply to the entire population (universal/national public health insurance) or to groups within it (e.g., individuals with income below a threshold). • Possible exceptions are portions of Medicare coverage and Medicaid in the USA, where eligible individuals need to apply to public insurance agencies to receive health cover.

7. Classification of health insurance models An example of private mandatory health insurance is: Basic social health insurance in Switzerland, which has been mandated for the Swiss population with the 1996 Health Insurance Law. • Public health insurance: • Tax-based public health insurance. • Social security schemes. • Private health insurance: • Private mandatory health insurance. • Private employment group health insurance. • Private community-rated health insurance. • Private risk-rated health insurance.

8. Classification of health insurance models • Public health insurance: • Tax-based public health insurance. • Social security schemes. • Private health insurance: • Private mandatory health insurance. • Private employment group health insurance. • Private community-rated health insurance. • Private risk-rated health insurance. An example of private employer group health insurance is: employer-based health insurance in the United States.

9. Classification of health insurance models • Public health insurance: • Tax-based public health insurance. • Social security schemes. • Private health insurance: • Private mandatory health insurance. • Private employment group health insurance. • Private community-rated health insurance. • Private risk-rated health insurance. Examples of private community-rated individual health insurance include: Voluntary health insurance in Ireland and Australia, and voluntary health insurance in the Netherlands provided under the WTZ Act, which is open to above-65 individuals not eligible to the sickness fund scheme for curative services (ZFW).

10. Classification of health insurance models • Public health insurance: • Tax-based public health insurance. • Social security schemes. • Private health insurance: • Private mandatory health insurance. • Private employment group health insurance. • Private community-rated health insurance. • Private risk-rated health insurance. An examples of private risk-related individual health insurance is: Individual health insurance in the UK.

11. Un-insured Under-insured Defective Insurance Coverage • Population Coverage • Service Coverage • Services not covered • Lack of coverage for long-term care • Cost Coverage • Lack- of- coverage for catastrophic expenses • Insurance deductibles and co-payments • Time Coverage • Exclusion of coverage for preexisting illnesses • Quality Coverage

12. Non-financial barriers to health care • Distances between patients and health care facilities • Language and cultural incompatibilities between patients and health care givers • Gender • Race

13. Functional classification of private health insurance schemes

14. Functional classification of private health insurance schemes

15. Functional classification of private health insurance schemes

16. Functional classification of private health insurance schemes

17. Functional classification of private health insurance schemes

18. Cost Sharing Policies • Service benefit policies use three cost-sharing features, sometimes in concert: the deductible, the coinsurance rate, cost caps and the stop loss amount

19. Deductible • The deductible is the amount that an individual must pay before the insurance company pays anything. • The deductible is usually set annually; the typical deductible in 1991 was about $200 for an individual and $500 for a family. • Consumers pay the full price for care consumed under the deductible.

20. Coinsurance rate • The coinsurance rate is the percentage of the total bill above the deductible that a patient pays. • Nearly all indemnity plans had a coinsurance rate of 20 percent.

21. Stop loss • The coinsurance is paid until the patient reaches the stop loss - the maximum out-of-pocket payment by the person in a year. • A typical stop loss in an indemnity policy was about $1,000 to $1,500 in a year.

22. Caps • In addition to these features, many policies impose further cost sharing through caps on various types of expenditures. • For example, policies may permit 8 mental health visits per year, or have a $1 million lifetime limit on overall medical expenditures. • Such provisions discourage use

23. Cumulative Individual Payments Patients Cost Total Payment Insurer Payment Insurer Payment Individual Payment Stop-loss Coinsurance Deductible Medical Expenditure

24. Risk-sharing features of indemnity insurance policies, 1991

25. Optimal insurance given moral hazard

26. Thank You !Any Question ?