Question

True/false/uncertain, Support your answer

⦁ A health insurance policy for catastrophic illness only is the worst type of health insurance plan from an economist’s perspective because people should self-insure for this risk

Answer 1

The given statement is False.

Explanation: Example of Catastrophic illness are heart attack, cancer, stroke and others. It refers to severe illnesses that requires hospitalization and takes a long time to recover. Catastrophic illness is not included in any insurance. It is wrong to say that health insurance that provide insurance for catastrophic illness is worst type of health insurance because people should be self insure. Illness like heat attach and cancer does not come with an alarm and people may or may not know that they are suffering from this illness. These illnesses are inevitable and can happen at any point of life of may not happen. No person will keep an amount of money aside in order to cope up with catastrophic illness because they may or may not have it. So keeping aside money for the illness you may not have is a waste of money and time. So we cannot assume that people should have been keeping money aside for catastrophic illness and are becoming self insured. Health insurance plan should contain a special plan for catastrophic illness because these type of illness can be a matter of life and death and usually people does not have finances to deal with these illnesses.

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