Health Insurance

Protect an individual or family for covered medical expenses because of

sickness or injury
Medical spending is increasing, due to …
• Advances in technology
• Cost insulation because of third-party payers
• Employer-sponsored health insurance
• Fee-for-service defects
• High administrative costs
• Lack of transparency in cost and quality information
• Rising prices in the healthcare sector
• Defensive medicine (e.g. supplements …)

Medical insurance can be more complex than other protection, especially

those provided under employment scheme and social scheme.
Medical insurance divided into many coverage provisions (e.g. inpatient,
outpatient, surgery, hospitalisation).
As such, include features to tackle moral hazards.

Insurer Insured

Medical Government
Provider

One-to-One Interaction: 6
Interaction (Complexity affect easiness for control)
Complexity further aggravated by:
- Expertise from medical providers. They have more info on insured’s
condition.
- Involve behavioural factors of insured
- Some health conditions do not have physical symptoms
- There maybe alternative treatments for an illness. Usually rely on medical
providers for advises, recommendations, procedurals, frequencies …

Medical insurance and excessive usage of medical treatment.

Excessive medical treatment: Cosmetic and judgmental treatments

Some examples of essential health coverages: Ambulatory patient services,

Emergency services, Hospitalization, Maternity and new-born care, Mental
health and substance use disorder services, Prescription drugs, Rehabilitative
services and devices. Laboratory services, Preventive and wellness services and
chronic disease management, Paediatric services, including oral and vision care

Policies normally contain deductible/coinsurance/co-payment. Why?

Calendar-year limit and life-time limit

Pre-existence medical condition

Pre and post hospitalisation coverages

Deductibles, Co-insurance, maximum out of pocket per annum.