Evolution Of Health Insurance

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Evolution and Awareness of Health Insurance in India Of all the risks facing households, health risks pose the greatest threat to lives and livelihoods. The uncertainty of illness and the cost of health expenditure is always a peril. The high cost of hospital services coupled with the unpredictability of health needs and the inadequacy of personal savings is the primary reason for the growing importance of insurance as a means of financing health services. Medical insurance coverage separates time of payment from the time of use, thus making treatment within the reach of the insured. Inspite of the growing importance of health insurance schemes the number of people covered by health insurance is very less in India with only 1.6 percent of…show more content…
Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual insurance plan that exclusively covers healthcare costs and is called Health Insurance. In effect, insurance companies act to transfer insurance premiums from those who remain healthy to 9 those who become ill. Health insurance is substantially more valuable to the consumer and its additional income generates purchases of additional high-value care, often allowing sick persons to obtain life-saving care that they could not otherwise afford (Nyman, 2001).Health insurance is, thus, seen as financial protection against health related risk for everyone in the society and not only for working class. The concept of insurance is closely concerned with security. Insurance acts as a shield against risks and unforeseen circumstances. Urban India experiences some coverage whereas rural India, where majority of the population resides, receives poor access of healthcare services and excess burden of diseases but has least coverage. Since income and employment status are the major determinants for the demand for health insurance, the insurance coverage…show more content…
Offering low-cost insurance to low-income households is one innovative method to finance healthcare problem and to avoid catastrophic out-ofpocket health expenditure. Currently private healthcare expenditures are a major source of revenue which is crowded out by government expenditure (Gaag, 2007). The success of this approach depends on the effective and sustained demand for these voluntary pre-paid insurance schemes. Determining the demand or willingness-to-pay for health is therefore crucial in ascertaining the feasibility of such scheme, establishing prices and setting potential subsidy levels. It is essential to obtain reliable information on the amounts that potential clients would be willing to pay, since it is the major determinant in influencing the choices (Dror, 2006). Information about willingness to pay (WTP) for basic health insurance (BHI) can be defined from a normative perspective and a behavioural perspective. The maximum willingness to pay equals the compensation gain (i.e.) the income reduction that would maintain a respondent’s initial level of utility (Gafni, 1998). Willingness to pay is positively related with risk behaviour of the people. To assess the willingness to pay for health insurance there are many methods: contingent valuation method and bidding game method. The contingent valuation method (CVM) and choice experiments (CE), method normally known as

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