1. Premium Calculation in Health Insurances

2. Method of premium calculation in health insurance 1.Community rated premiums. 2.Risk-related (Experience rated) premiums. 3.Income-related premiums.

3. Community Rated Premiums In community rating, premiums are adjusted for the average risk of a group, so that all insurees participating to the pool pay the same premium.

4. Community Rated Premiums There may be instances of modified community rating where certain factors are permitted to affect the premium to a specified degree, for example premium loading for late entry into a health insurance scheme.

5. Community Rated Premiums While insurers can choose to apply community rated premiums as a product strategy, in some cases government regulation mandate community rating (e.g., voluntary health insurance in Australia and Ireland; mandatory private health insurance in Switzerland).

6. Risk-related Premiums Premiums are related to individual risks and calculated from actuarial principles on the basis of expected medical claims.

7. Community rating achieves redistribution in two ways: 1.Within each economic group, people who become ill receive benefits in excess of the premiums they pay, while people who remain healthy pay premiums while receiving few or no health benefits. 2.Among different economic groups, the healthier rich, who use less health care than their premiums are worth, help pay for the diseased poor, who use more health care than their premiums could buy. (It may be reversed)

8. Experience rating is far less redistributive Within each economic group, those who become ill are subsidized by those who remain well, but among the different economic groups, healthier groups do not subsidize poor high-risk groups. Thus, the principle of health insurance, which is to distribute health care more in accordance with human need rather than exclusively on the ability to pay, is weakened by experience rating.

9. Income-related premiums This is typically the case of social security schemes, where contributions are calculated as a share of earned income. It may be regressive, proportional, progressive

10. The Burden of Financing Health Care Different methods of financing health care place different burdens on the various income levels of society Payments are classified as progressive if they take a rising percentage of income as income increases, regressive if they take a falling percentage of income as income increases, and proportional if the ratio of payment to income is the same for all income classes Burdening low-income families with high levels of payments for health care (regressive payments) reduces their disposable income, amplifies the ill effects of poverty, and thereby worsen their health.

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