In countries with private and voluntary health insurance

In countries with private and voluntary health insurance, the principle of community rating means that the insurance companies are not allowed to charge a premium which differs among the costumers according to their health conditions. Explain why this principle may lead to a situation where a considerable part of the population chooses not to have health insurance.

Expert Solution

The reason behind people not choosing health Insurance under the above given terms and conditions is because the Insurance Company will provide health Insurance to such category of people who does not have any kind of serious health issues or belong to a rich family or is able to pay the hospital bills.

Therefore, the maximum number of people in the country is either a middleman or a poor person. If the health insurance company only provides claim for common illnesses like cough cold or flu then it is of no use as because government itself provides free treatment and medication. If the health insurance company is unable to provide insurance or claim for certain common diseases like diabetes, heart problem or arthritis etc. then it is better to not take such premium free health Insurance and rather go for paid health Insurance which claims to give cashless service in times of emergency.

Nothing comes for free, therefore it is better to take a paid up services which will be beneficial in long run. Countries which provide health Insurance without any charges only to certain medical condition, over there maximum number of population will prefer to not have any health Insurance.

Health Insurance is done so that in times of emergency a person does not need to give away his savings for paying the hospital bills, the health insurance company will help in paying the hospital bills through the health insurance done by the person.

Rahul Sunny answered 2 years ago

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