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This chapter explores the wide‐ranging and well‐known problems of medical insurance, including uncertainty about future probabilities, adverse selection, and moral hazard, which lead to uninsurable conditions and upward pressures on medical spending. The chapter goes on to discuss methods of cost containment, and to assess different strategies: private funding plus private production, public funding plus public production, and public funding plus private (or mixed) production. A key conclusion is that attempts to adapt private arrangements end up looking like social insurance, in the sense that premiums are not based on individual risk and insurers are not allowed to exclude high‐risk applicants. A second key conclusion is that different strategies for financing health care have different but largely predictable problems.

This chapter examines the origins and consequences of Medicare's peculiar bifurcated structure, focusing on the role played by former House Ways and Means Committee chair Wilbur D. Mills. It shows that fiscal conservatism has been no less central to Medicare than the commitment to social insurance principles. The chapter first reviews the scholarly literature on Medicare finance and welfare state before discussing the logic of Mills's financing design. Three aspects of Medicare's legislative design are analyzed: the financing scheme chosen for Hospital Insurance; the financing scheme chosen for Supplementary Medical Insurance; and why Medicare's financing came to be divided in the first place. The chapter concludes with an assessment of recent Medicare reform proposals that featured competing financing approaches.

This chapter addresses three main questions. First, how well do markets for medical malpractice insurance function? Second, to the extent that there is a case for government intervention in these markets, how effective have such interventions been? Third, what types of policy changes, if any, are indicated? It argues that medical malpractice insurance market has been fixed so often that it is difficult to contemplate a market for medical malpractice insurance absent from government intervention. While regulation is necessary to address unique potential problems for insurance consumers, in practice the record of insurance regulation is mixed. While regulation probably has not caused more than minor harm, it is not clear that society has been well served by it either. The chapter concludes that in light of the evidence, additional regulation is not recommended.

This chapter explores the key features and structure of the Chinese healthcare system in 1978. It also examines China's healthcare initiatives after 1978, including change in the nature of hospital management and ownership, the introduction of the medical insurance scheme for urban workers and the building of a New Rural Cooperative Medical Scheme. Furthermore, the impact of Chinese government medical reforms on the well-being of patients is considered. The present health services in China have become hospital-oriented, and the link between clinics and hospitals is now relatively weak. It is noted that the development of health services was shaped by the Chinese government's approach to the privatisation and decentralisation of social policy. The Chinese government is also taking a more active role in correcting the deficiencies of market forces and making more investments in public health.

This chapter examines the “insurance cycle” or “underwriting cycle” that arises in the property-casualty insurance industry, of which medical malpractice insurance is part. Cycles in medical malpractice insurance are important because they can be at least temporarily disruptive to health care delivery, and they elicit strong demands for change in the political arena. The chapter considers how deeply entangled medical malpractice is with the insurance cycle; provides insight into the functioning of the medical malpractice insurance business; and explores the dynamics of the cycle by looking at both internal and exogenous causes.

The chapter introduces the core arguments of the book: that the welfare state exists not only to relieve poverty (the ‘Robin Hood’ function) but also to provide insurance and consumption smoothing over the life cycle (the ‘piggy‐bank’ function). The latter is the focus of this book, which discusses insurance (unemployment insurance, medical insurance, long‐term care insurance), pensions (i.e. redistribution from one's younger to one's older self) and education finance, notably student loans (i.e. redistribution from one's older to one's younger self). The state has a major role in these areas because private institutions face problems of imperfect information, risk, and uncertainty.

This chapter focuses on public policy reforms that show promise in terms of improving quality of care and determining injuries in health care settings. It recommends locating insurance coverage with the hospital as the insuring unit for all care delivered within its walls. Much of the loss is incurred in hospital settings. Certainly the high premiums in such specialties as obstetrics/gynecology and neurosurgery reflect the medical malpractice risk from care delivered at hospitals. Nevertheless, even though physicians would be covered for the care they deliver in hospital inpatient and outpatient facilities, they would still purchase medical malpractice coverage for services delivered in their own practices. Enterprise liability with the hospital as the enterprise is also an attractive option, but it is a somewhat more radical change that may face greater resistance. Under enterprise liability, only the enterprise (the hospital) would be sued.

Hong Kong's insurance industry has weathered the ups and downs of more than a century and can boast an impressive record of development. New developments in 2009, namely, the new requirements of Merchant Shipping (local vessels) (Compulsory Third Party Risks) Insurance and Building Management (Third Party Risks) Insurance, will serve only to further growth. Most people in Hong Kong rely on the public health care system, which is funded mostly by taxpayers but heavily subsidized by government dollars. The services are very affordable, compared with private health care, and of high quality. However, private health care remains too expensive even for the middle class, so more and more increasingly seek out private medical insurance. This chapter further examines the emerging mainland market, growing appeal of long-term assurance schemes, and the rise of independent regulatory regime.

Three main structural barriers limit the implementation of prevention in the US: (1) higher standards for acceptance of prevention than treatment or “cure” modalities; (2) a built environment favoring efficiency and expediency over health, and (3) lack of medical insurance coverage. In this chapter I examine the historical reasons for barriers (2) and (3), concentrating on the third, lack of medical insurance coverage. The Patient Protection and Accountable Care Act will help alleviate this barrier, but a lack of resources to implement PPACA, along with ongoing built environment issues, will continue to cause prevention to lag behind its optimal implementation.

China’s rural communes collapsed with the reform of the household responsibility system starting in 1978, followed by the collapse of the old rural cooperative medical system, the direct consequence of which was a continuous decline in health insurance coverage in rural China over the subsequent two decades. With the privatization of the health care system, the costs of medical care escalated. A new wave of rural cooperative medical insurance was first promoted in selected areas in 2003 and has since spread to the whole nation. Using a unique longitudinal data set covering the period of 1991–2006, this chapter evaluates the impact of rural cooperative health schemes on individual subjective health, including both the old and new schemes. The results show that, prior to the 2003 new insurance scheme, individual participation in rural cooperative insurance had a significantly positive impact on self-reported health, while there is no evidence of significant impacts of the new scheme. This differential impact is probably due to the existence of individual adverse selection under the new scheme, biasing the coefficient downward to zero.

This chapter discusses private markets for reinsurance and the rationale for and experience with government provision of such insurance. Volatility in reinsurance markets is one cause of cycles in markets for primary medical malpractice insurance. One approach for reducing the amplitudes of cycles, which can be quite disruptive, especially in some geographic locations and physician specialties, is to substitute publicly provided for privately provided reinsurance.

This chapter examines the pros and cons of no-fault programs. No-fault programs have some important advantages. Injury victims are people who are compensated who would otherwise not be compensated, and compensation is made at a much lower administrative cost and much more quickly, on average, than by tort. However, the successes of no-fault in other countries have been impossible to replicate in the United States. The chapter recommends the expansion of voluntary, hospital-based, no-fault insurance as a substitute for tort liability/insurance and that this should be done by contract.

Rising medical costs for treatment of illnesses and increasing awareness of the right of action against doctors for the results of medical misadventure have contributed to the growth of schemes for health insurance. Doctors take out insurance to cover the risk of medical malpractice claims against them. States encourage people to cover risk both of medical expenses and medical negligence through insurance as a measure of healthcare policy. In the USA, the State undertakes a sizeable outlay of expenses for healthcare but it looks to a shared responsibility from its citizens through compulsory health insurance. Health insurance is a contract of uberrima fides (utmost good faith) and contentious issues centre on whether there was full disclosure of past clinical history before taking out health risk cover. Renewal of policies and reluctance to underwrite risk by the insurer are the other areas of widespread litigation. Courts have come out in support of the patient/ policy holder and read down clauses disowning liability.

Early studies of medical harm appeared in the 1950s, with rates of injury little different from those reported 50 years later. Philosopher Ivan Illich criticized medicalization of everyday life, using annual deaths from auto accidents as an example. Malpractice concerns became entangled with safety, and the first malpractice crisis in the US came about due to advances, rather than deficiencies, in care. The Harvard Medical Practice Study (HMPS) renewed interest in medical harm as a cause of malpractice suits in a series of four papers in the prestigious New England Journal of Medicine. Although it was not a pre-defined outcome of the study, one paper by Lucian Leape reframed the problem as one of medical “error”; the other three did not use the term. Lucian Leape fortuitously drew on error research in cognitive psychology and other safety science work on “error” stemming from the research triggered by the Three Mile Island nuclear disaster and other accidents. He formulated those concepts in a form digestible by health professionals and published them in the widely read medical journal JAMA—Journal of the American Medical Association. The figure of 100,000 annual deaths was first circulated.

This chapter addresses the demand for nicotine gum in Japan. It explores the smoking cessation assistance policy with nicotine replacement therapy (NRT) using original survey data gathered in late 2001. A high price is preventing the diffusion of nicotine gum. The price of nicotine gum had a negative effect on nicotine gum purchasing, the price of cigarettes had a positive effect, and access to the gum had positive effects on nicotine gum purchasing. The benefits associated with the subsidy for nicotine gum are a decrease in smoking-related illnesses through successful smoking cessation. This would make annual medical insurance payment fall by 67.6 billion yen. When the change in the lifetime medical insurance payments and health capital accumulation are taken into account, 3,300 billion yen should be added to the benefits in the long run.

This chapter outlines the basic social services available to a schizophrenic patient on their way to recovery. The U.S. government provides Social Security benefits for the mentally ill; Medicaid, Medicare, and private medical insurance policies can help take care of outstanding medical bills. This chapter also contains plenty of tips and instructions on how to deal with questions of eligibility for these benefits, proceed with applications, and in worse cases, appeal to these service providers should a claim be denied. It is a patient’s responsibility, overall, to remain informed of the available services and seek advice from a case manager or similar, and apply for claims where applicable. The paperwork will doubtless be a long and arduous process, but the benefits will certainly be worth the trouble.

The socialist phase in the history of the American left was mainly over by the 1940s, but in the latter part of that decade Republican politicians seeking political advantage alleged that the Democratic Party was still nurturing “creeping socialism”. The chapter details the Great Scare and persecution of genuine left-wing figures like the actor Charlie Chaplin. It shows how Democratic politicians were smeared for allegedly voting the same way as Vito Marcantonio. The presidential candidate Senator Robert Taft rode the wave of anti-socialist rhetoric. Senator Robert Wagner’s attempt to round out the welfare state by introducing universal medical insurance foundered in this hostile climate, as did left-led attempts to end Jim Crow.