1. Health Economics & Policy 2 nd Edition James W. Henderson Chapter 5 The Market for Health Insurance Copyright 2002, South-Western, a division of Thomson Learning, James W. Henderson, Health Economics and Policy, 2e

2. The Health Insurance Industry l Historical setting (See Table 5.1) l Types of insurance –Social insurance –Indemnity insurance

3. Types of Health Insurance Coverage l Hospitalization l Physicians’ services l Major medical l Dental l Disability income protection l Long-term care

4. The Theory of Private Insurance Demand l Important concepts –Probability –Risk –Expected value l Total utility of income l Expected utility of income l Why people choose to insure

5. The Choice of Insurance

6. Health Insurance and Market Failure l Income tax treatment –The economics of a subsidy l Information problems –Moral hazard –Adverse selection –Free riders

7. Insurers’ Response to Market Failure l Deductibles l Coinsurance l Capitation l Practice guidelines

8. Health Insurance in the U.S. l Community rating l Experience rating l Cream skimming l Self-insurance

9. Medical Care for the Uninsured l How many are uninsured? l Who are the uninsured? l Why are they uninsured?

10. Individuals Without Health Insurance, 1999

11. Insurance and Health l Do the uninsured have access to medical care? l Do the uninsured receive quality care? l Do we have a two-tiered system of care?