Design of Health Insurance Policies
Added on 2023-06-11
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Running head: DESIGN OF HEALTH INSURANCE POLICIES 1
Design of Health Insurance Policies
Students Name
Institutional Affiliation
Design of Health Insurance Policies
Students Name
Institutional Affiliation
DESIGN OF HEALTH INSURANCE POLICIES 2
Design of Health Insurance Policies
Obligations of the employer and the government in insuring the two populations of
individuals described in the scenario
It is the role of the employer and the government to ensure that individuals who are
healthy and those with chronic diabetes are provided for with the best health insurance
policies. These health insurance policies will cover up for the losses that one receives due to
sickness and also from medical expenses. According to Pilzer and Lindquist (2014), affordable
coverage on health should be given to employees otherwise they will be penalized. The
employer is obliged to ensure that all the workers are given health benefits. Nevertheless, the
employer should give its employees who are 50 years and above an equal share of
responsibility. It is also important for the employer to provide a paid leave and health benefits
to individuals who are 40-50years and have chronic diabetes. The government also is obliged
to ensure that all individuals have a right to health care and should support initiatives and
businesses of people by providing better health care systems (The Common Wealth Fund,
2016).
The impact of moral hazard and adverse selection on these insurance provisions
Moral hazard and adverse selection id described as situations in which one party tends
to be disadvantaged. Einav, Finkelstein and Cullen (2015), argue that adverse selection
happens as a result of a lack of asymmetric information which moral hazard occurs when there
is lack of asymmetric information. Under adverse selection, accurate information is provided
to the employer by one party as compared to the other party (Boncz et al., 2015). In this case,
the party that has lesser information will be disadvantaged as compared to the one with more
information. In the scenario, individuals aged between 40-50 years and have chronic diabetes
will disadvantage those workers with no known health conditions as the two groups will have
Design of Health Insurance Policies
Obligations of the employer and the government in insuring the two populations of
individuals described in the scenario
It is the role of the employer and the government to ensure that individuals who are
healthy and those with chronic diabetes are provided for with the best health insurance
policies. These health insurance policies will cover up for the losses that one receives due to
sickness and also from medical expenses. According to Pilzer and Lindquist (2014), affordable
coverage on health should be given to employees otherwise they will be penalized. The
employer is obliged to ensure that all the workers are given health benefits. Nevertheless, the
employer should give its employees who are 50 years and above an equal share of
responsibility. It is also important for the employer to provide a paid leave and health benefits
to individuals who are 40-50years and have chronic diabetes. The government also is obliged
to ensure that all individuals have a right to health care and should support initiatives and
businesses of people by providing better health care systems (The Common Wealth Fund,
2016).
The impact of moral hazard and adverse selection on these insurance provisions
Moral hazard and adverse selection id described as situations in which one party tends
to be disadvantaged. Einav, Finkelstein and Cullen (2015), argue that adverse selection
happens as a result of a lack of asymmetric information which moral hazard occurs when there
is lack of asymmetric information. Under adverse selection, accurate information is provided
to the employer by one party as compared to the other party (Boncz et al., 2015). In this case,
the party that has lesser information will be disadvantaged as compared to the one with more
information. In the scenario, individuals aged between 40-50 years and have chronic diabetes
will disadvantage those workers with no known health conditions as the two groups will have
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