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Description
The main motive to regulate health insurance is to (1) eliminate the social costs caused by insolvency by preventing insolvency, or (2) mitigate the social costs caused by insolvency while accepting the possibility of insolvency (Zweifel and Eisen, 2003, ch. 8.1). Indeed, individuals losing their health insurance protection may face hardship and poverty that affect society as a whole. The two issues are taken up below.
(1) Regulations designed to eliminate insolvencies also seek to avoid instability in insurance markets that may occur due to adverse selection processes. Typically, they are very comprehensive and detailed because current operations of insurers must be monitored to attain the objective. However, this... |
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