Option 2:Universal public insurance Higher taxes are the main cost of public insurance. Further,most taxes distort behavior by discouraging labor and commerce,so the entire economy may become less efficient as a result. But some argue that universal public insurance is more efficient than private insurance markets because of low overhead costs.Higher taxes are one cost of public insurance. Note:this is"single-payer"health care because one entity(the government)pays for all care. Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Option 2: Universal public insurance Higher taxes are the main cost of public insurance. Further, most taxes distort behavior by discouraging labor and commerce, so the entire economy may become less efficient as a result. But some argue that universal public insurance is more efficient than private insurance markets because of low overhead costs. Higher taxes are one cost of public insurance. Note: this is “single-payer” health care because one entity (the government) pays for all care
Option 3:Compulsory insurance A mandate (a legal requirement that everyone in a population purchase private insurance)confronts adverse selection by effectively banning it. For example,even healthy customers who would prefer to opt out are legally required to buy into the system. But a mandate is not free for governments and does not absolve them of regulating the market. A mandate can be expensive,and many citizens cannot afford it. Thus,mandates are usually either coupled with subsidies to the poor or paid for with payroll taxes. A mandate must also be carefully defined or it may be completely ineffective. Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Option 3: Compulsory insurance A mandate (a legal requirement that everyone in a population purchase private insurance) confronts adverse selection by effectively banning it. • For example, even healthy customers who would prefer to opt out are legally required to buy into the system. But a mandate is not free for governments and does not absolve them of regulating the market. A mandate can be expensive, and many citizens cannot afford it. • Thus, mandates are usually either coupled with subsidies to the poor or paid for with payroll taxes. A mandate must also be carefully defined or it may be completely ineffective
Option 4:Employer-sponsored insurance Under such a system,employers are required or encouraged to offer a private insurance contract to all of their employees. Job-specific human capital provides a strong incentive for healthy employees with a low risk of illness to pool with high risk,unhealthy employees.This mitigated adverse selection. Drawbacks:can create labor market inefficiencies, and not appropriate for unemployed populations (children,retirees,disabled). Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Option 4: Employer-sponsored insurance Under such a system, employers are required or encouraged to offer a private insurance contract to all of their employees. Job-specific human capital provides a strong incentive for healthy employees with a low risk of illness to pool with high risk, unhealthy employees. This mitigated adverse selection. Drawbacks: can create labor market inefficiencies, and not appropriate for unemployed populations (children, retirees, disabled)