Page 11 - Ebook health insurance IC27

Sashi Publications

have spent that amount as the healthcare expenses. Since they are having the policy they
think that they are not going to pay from their pocket and they intend to spend more.

Similarly the supply-side moral hazards occur from health providers i.e. hospitals and
doctors. Once the hospitals know that the patient is having mediclaim they charge more
amount than what they have usually done.

Both these hazard ultimately affect the insurance company. And since a third party is
involved it is very difficult for the insurer to ascertain who is right. Often the
policyholder in collusion with health providers inflates the bill to get more benefit out
of health insurance.

This is why health insurance is regarded as an imperfect market.

Why health insurance

The WHO, World Health Organization defines health as "Health is a state of complete
physical, mental and social well being and not merely an absence of disease or infirmity."
Good Health leads to productive life, social & emotional independence. Sound Body is
essential for Sound Mind and as we all know "Health is Wealth."

Buying health insurance protects us from the sudden, unexpected costs of hospitalization
which could make a major dent into household savings. It covers the risk of financial
difficulties in the event of long illness.

Financial benefit

 The importance of financial support provided by health insurance cannot be
overemphasized.

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