Private Voluntary Health Insurance: Consumer Protection and Prudential Regulation

Health insurance can offer protection against catastrophic medical expenses and improve access to health care. There are, however, imperfections in the insurance market that require intervention such as asymmetry of information between the policy holder and the insurance company, moral hazard that can occur on the side of the insured or the provider of health services, risk selection that may lead to cream skim a particular market, and others. To encourage the effective development of Voluntary Private Health Insurance, it will be necessary for policymakers to establish and enforce regulatory standards that will attempt to correct inefficiencies from market failures and that will achieve desired social objectives.