Lecture 11A
Typology of health care systems:
● Traditional sickness fund insurance → Bismarck
● National health insurance
● National health services → Beveridge, Somashko
● Mixed systems
Rationale for a third-party in healthcare:
1. Risk and uncertainty
2. Information asymmetry
3. Externalities → ‘altruistic preferences’, contagious diseases
Main functions for third parties in healthcare:
1. Insurance function
2. Agency function
○ Reducing moral hazard
○ Providing information about the quality of care
○ Being a prudent buyer of care on behalf of the consumer
3. Access function → to guarantee universal access to basic health services.
Major goal of healthcare reforms:
● In may European/OECD countries → a third party acting as an effective
agent on behalf of the consumer (the second function)
● In low income countries → all three functions!
● Always ask → who is the purchaser (or payer) of health care?
Who can perform the third-party role:
● Insurance companies
● Employers
● Unions
● Providers of care → e.g. polyclinic-fundholder
● Integrated insurer-provider organisations
● Government → national, regional and local
Three models of paying
providers by third-party
payers:
● Reimbursement model
● Contract model
● Integrated model
, Aspects crucial for the functioning, regulation and classification of health care systems:
● Yes/no competition among the third-party-payers?
● Yes/no competition among the providers of care?
● Which type of payment from the third-party payer to the providers of care?
Other aspects crucial for the functioning and regulation of health care systems:
● Who is the third-party payer/purchaser?
● Voluntary or mandatory health insurance?
● Which benefits are (not) covered?
● Cost sharing → how much? which forms?
● Yes/no for-profit insurers and/or providers of care?
Lecture 11B
Rationale of a competitive health insurance market:
● The insurer being a prudent purchaser of care on behalf of their insured.
● Alternative purchasers:
○ Consumer/patient?
■ Insufficient information and market power
■ Due to insurance: no incentive for efficiency
○ Government → federal, state, local
No rationale for model 3 (price competition for insurers and no price competition for
providers of care):
● Giving consumers a free choice of insurer only makes sense if the individual insurer
is the third-party purchaser of care and if there is price competition among the
providers of care.
● Otherwise the considerable effort in solving problems of risk selection is largely
wasted because the potential efficiency gains are negligible.
Competition in health care:
● England → Towards competition only among providers; not among third-
party purchasers of care. moved from 4c → 2b.
● Netherlands → Towards competition among both providers and social
health insurers: from moved from 4b → 1b
Model 1b or model 2b?
● Purchaser power
● Transaction costs
● Coordination of local health care delivery
Typology of health care systems:
● Traditional sickness fund insurance → Bismarck
● National health insurance
● National health services → Beveridge, Somashko
● Mixed systems
Rationale for a third-party in healthcare:
1. Risk and uncertainty
2. Information asymmetry
3. Externalities → ‘altruistic preferences’, contagious diseases
Main functions for third parties in healthcare:
1. Insurance function
2. Agency function
○ Reducing moral hazard
○ Providing information about the quality of care
○ Being a prudent buyer of care on behalf of the consumer
3. Access function → to guarantee universal access to basic health services.
Major goal of healthcare reforms:
● In may European/OECD countries → a third party acting as an effective
agent on behalf of the consumer (the second function)
● In low income countries → all three functions!
● Always ask → who is the purchaser (or payer) of health care?
Who can perform the third-party role:
● Insurance companies
● Employers
● Unions
● Providers of care → e.g. polyclinic-fundholder
● Integrated insurer-provider organisations
● Government → national, regional and local
Three models of paying
providers by third-party
payers:
● Reimbursement model
● Contract model
● Integrated model
, Aspects crucial for the functioning, regulation and classification of health care systems:
● Yes/no competition among the third-party-payers?
● Yes/no competition among the providers of care?
● Which type of payment from the third-party payer to the providers of care?
Other aspects crucial for the functioning and regulation of health care systems:
● Who is the third-party payer/purchaser?
● Voluntary or mandatory health insurance?
● Which benefits are (not) covered?
● Cost sharing → how much? which forms?
● Yes/no for-profit insurers and/or providers of care?
Lecture 11B
Rationale of a competitive health insurance market:
● The insurer being a prudent purchaser of care on behalf of their insured.
● Alternative purchasers:
○ Consumer/patient?
■ Insufficient information and market power
■ Due to insurance: no incentive for efficiency
○ Government → federal, state, local
No rationale for model 3 (price competition for insurers and no price competition for
providers of care):
● Giving consumers a free choice of insurer only makes sense if the individual insurer
is the third-party purchaser of care and if there is price competition among the
providers of care.
● Otherwise the considerable effort in solving problems of risk selection is largely
wasted because the potential efficiency gains are negligible.
Competition in health care:
● England → Towards competition only among providers; not among third-
party purchasers of care. moved from 4c → 2b.
● Netherlands → Towards competition among both providers and social
health insurers: from moved from 4b → 1b
Model 1b or model 2b?
● Purchaser power
● Transaction costs
● Coordination of local health care delivery
