Transcript Document

Social Health Insurance
Dr Kambiz Monazzam
Khoramabad – Lorestan
May 12-15, 2005
Goals of This Session

Provides an overall context that gives
rise to Social Insurance

Introduce market and government
failures that the design of a Social
Insurance program should consider

Introduce the essential characteristics of
Social Insurance
RISK
 At
Personal Level
 At
Social Level
RISK
And way to confront with
How Do people deal with risk?
• Savings
• Barrowing
• Family/ Friends Help
• Charity
• Insurance
Why would people
like to be insured?
In which circumstances?
Do people want to be insured
at any risks?
Why Do Nations Consider
Social Insurance?

Diseases and illnesses are uncertain;
serious illnesses can bankrupt families;

Health and health care are basic necessities
for life, EQUITABLE access to health care is
a national goal for most countries

Insurance (pooling risks) enhance people’s
well-being and prevent impoverishment
When Insurance
initiated/devised?
There are great risks
 People know the risks
 Risk imposes great burden on
individual
 Uncertainty at individual level

Health & Insurance
Can’t pay the cost of cure
 Don’t come back to healthy
state
 Long treatment period

 Loss
of work/discharge
 Falling down the poverty line
The basic Principle
behind Insurance:
Risk Aversion:
The desire to replace an
uncertain loss with a
steady
& certain premium payment
Insurance:

Individual view:
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Risk Aversion
Social view:
Risk Pooling way
 Cross Subsidy

Insurance: Pools the risks;
but, don’t vanish or decreased it
Bilateral Exchange Model for Goods
Service
Consumers
Providers
Money
Hospitals
Clinics
Physicians
Exchange Model for Goods
Government
Charit
y
User fees
Consumers
Providers
Service
Trilateral Exchange Model for Goods
Taxes
Treasury
Financing
Organization
Payments
Premiums
Service
Consumers
Providers
User fees
Hospitals
Clinics
Physicians
GOV
Charity
Insurance
Consumers
Provider
Rely On Free Market
For Insurance?

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Market and competition deal with efficient
allocation of resources, not EQUITY
There are serious market failures in the
insurance market and in the health services
markets. Regulations have not been able to
effectively remedy the market failures
Social insurance is a major approach to
promote equity and address these market
failures
Failures In The Private Insurance Market
Asymmetry of Information
Adverse Selection by
insurance buyers
Risk Selection by
insurance company
Absence of Optimal
Insurance Products
Elderly and less
healthy people left
uninsured
Market Failures In The Health Services Markets
Insurance
Asymmetry of Information,
Imperfect Agency, Barrier to Entry
Moral
Hazard
Monopolistic Power of Providers
Induce Demand
Inefficiency
High Prices/High Profits,
Excessive Quantity of Services
Rely On The Government For
Insurance?
There are serious government failures:
 Vested interest politics
 Government operates as a monopoly
 Government manages by top down hierarchy,
higher ranked officials’ interests dominant
over common people’s interest
 Government manages by bureaucratic rules
that stifle innovation and create inefficiency
Government Failures
Vested
Interest Politics
• Distorted PaymentMisallocation of
Resources
• Inequity
Public Monopoly,
Poor Public
Administration
• Inefficiency/Higher
Costs
• Unfriendly to Users
• Possible Corruption
Special Features
of Social Insurance




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Mandatory for designated population to avoid
adverse and risk selections
A social contract between government and the
enrollees
Eligibility for benefits require that the enrollee has
paid the premium (contribution) for a minimum
period. Thus SI is not a right of every citizen, and not
a welfare program
Financially autonomous and has to maintain its own
solvency
Benefits prescribed by law
Benefits not directly related to contributions
Advantages of Social Insurance

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Pools risks widely
Can improve equity
Mobilizes financial resources for health
care from workers in the formal sector
Low administrative costs
Can control health expenditure inflation if
the program is designed properly
Disadvantages of Social Insurance


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Requires sophisticated knowledge and
organization to do it properly
Alters locus of financial power and this
power can be misused
Can’t provide universal coverage unless
the government subsidizes the farmers
and workers in the informal sector
Impacts of Social Insurance

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Organize and mobilize funds for health
Pool risks between the healthy and the sick, cross
subsidy by the high-income to the low-income
Can provide cost effectiveness health care
Can control health cost inflation
Can improve efficiency and quality of health care
Potential negative economic impacts:
– Excess burden, labor market, price inflation
Major Planning Issues

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Covered population/eligibility
Enrollment/premium collection
Benefit package
Costing/financing
Macro organization
Public, Semi-public, Private non-profit,
for-profit
Monopoly or competition
Payment system
Major Planning Issues (2)

Administrative systems
– Eligibility card and enrollment
– Premium collection and accounting
– Claim card
– Monitoring quality and cost
– Management information
Social Health Insurance
History & Background:
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Poverty law in 19th century
Saving accounts introduced by GOV
Employer responsibility for work
injuries
Workers help association
Social Security history
Bismarck Model (Germany)
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Medical Care Benefits
Employment injury Benefits
Old age & Invalidity Benefits
Social Security Law
Social Assistance Law
1883
1884
1889
1911
1911
Social Security history
Beveridge Model (UK)
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8.Unemployment Benefits
Old age Benefits
Total coverage Insurance
Medical Care Benefits
Family Law
National Health System
Anti poverty Law
1906
1908
1911
1912
1945
1946
1948
Social Security Benefits (ISSA)
1. Old age
Benefits
) ‫( مزاياي بازنشستگي‬
2.Disability
Benefits
) ‫( مزاياي از كار افتادگي‬
3.Death
Benefits
) ‫( مزاياي فوت‬
4.Sickness
5.Maternity
Benefits
Benefits
6.Medical Care Benefits
7.Employment injury Benefits
8.Unemployment Benefits
9.Family
Benefits
) ‫( مزاياي بيماري‬
) ‫( مزاياي زايمان‬
) ‫( مراقبت هاي پزشكي‬
)‫( مزاياي حوادث ناش ي از كار‬
) ‫( مزاياي بيكاري‬
) ‫( مزاياي خانواده‬
R
(2)
Changing Vision toward
RISK REDUCTION
From
Medical INS
To
Health INS
So Can reduce the risk
Medical VS Health

Medical
 In
order to cover the costs Have to
increase premiums

Health
 Decrease
costs
 Decrease Invalidity or disease so
increase quality of life &
productivity
When we Have a good
health Insurance !?
 What’s
Insurance sales?
A PROMISE
SO,

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They know they have to do their
Promise
If they don’t do on time
Somebody obliged them to:
do the task
 Pay penalty for loss
 Pay penalty for breaking the social law

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They don’t have “rich father”
Do you have
Social
Health
Insuranc?
– If NO !!!

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Sweden & UK have no social
insurance! Make a Business!?
Why don’t you establish one?
JOlN
US