What are the key issues in regulating private health insurance schemes?
Governments have to establish adequate regulatory frameworks in order to address market failures of health insurance markets and to enhance solidarity and equity in the health system. The following discusses some regulation issues pertaining to health insurance schemes; broader regulatory policies aimed at the enabling environment for effective insurance markets, such as contract law, judicial review, labour codes and financial regulations focusing on solvency and licensing, are not addressed here. Overall, a certain institutional capacity is important for adequate implementation of the regulative framework, including data collection and analysis, both to monitor performance and to adjust the regulative framework to the dynamics of the insurance markets as needed. Cream-Skimming An unregulated market will lead to risk selection on the part of the insurer where sicker individuals are discouraged from joining and the insurer tries to attract mainly healthier people. This will leave many
