Analysis of Public vs. Private Healthcare Insurance in Saudi Arabia

This discussion post analyzes the healthcare system in Saudi Arabia, focusing on the advantages and disadvantages of public versus private health insurance. It explores the government's response to rising healthcare costs and oil price fluctuations, considering the Vision 2030 and the National Transformation Program (NTP). The assessment delves into key economic factors like efficiency, information asymmetry, moral hazard, and adverse selection within both public and private insurance models. The pros and cons of each system are presented, highlighting the private sector's efficiency due to funding and technology, while also acknowledging the potential for increased inequality. Conversely, the public system's lower moral hazard is contrasted with its potential inefficiencies and information gaps. The discussion references supporting literature and provides a comprehensive overview of the healthcare landscape in Saudi Arabia, offering a nuanced perspective on the challenges and opportunities within its insurance models.

Running head: HEALTH CARE ECONOMICS
HEALTH CARE ECONOMICS
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1HEALTH CARE ECONOMICS
Discussion:
Due to fluctuations in the price of oil as well as increasing healthcare costs, the
government will not be able to sustain future demands which resulted in the development of
public insurance of the public and private health care in Saudi Arabia. the government, through
its Vision 2030 and the National Transformation Program (NTP), has developed strategy to
address the challenges of the current healthcare system. This discussion will focus on of pros and
cons of private vs. public insurance in healthcare in Saudi Arabia in terms of assessments of
efficiency, information asymmetry, moral hazard, and adverse selection.
Pros and cons the private health insurance:
Private sectors are well funded and well maintained as it charges the high health care cost
from the consumers and hence private insurance are more efficient compared to the public
insurance. The private health insurance uses various technology to document information which
resulted in reduced error regarding information. It reduces the administrative cost that enables
health care services to spend less on the billing and decrease the pressure from the public system.
It also has short response time which may reduce adverse clinical incidents (Mensi et al., 2018).
Moreover, in terms of adverse selections, it has less adverse selection since buyers and sellers
have equal information due to the presence of technology.
Considering the cons, compared to the public health insurance, the rate of the moral
hazard is high as the population is required to purchase additional health care cost. Consequently,
the population of different demographics especially with the low socioeconomic or
disadvantageous area cannot afford the private health care insurance that resulted in the high
inequalities in terms of access to the health cares (Banafea & Ibnrubbian, 2018).

2HEALTH CARE ECONOMICS
Pros and cons of public health insurance in Saudi Arabia:
Compared to private health insurance in Saudi Arabia, the rate of moral hazard is low
since the government is funding the majority of the health care services. In the Kingdom of
Saudi Arabia (KSA), the Ministry of Health has been the largest payer in healthcare.
Consequently, the population of different demographics especially with low socioeconomic or
disadvantageous area will have equal access to the health care services (Aljadhey et al., 2016).
The patients with chronic diseases living in the socially disadvantageous area can receive health
care services based on the severity of the chronic disease.
Considering the cons, it is less efficient in terms of the health care services since there is
a huge burden on the ministry of health of Saudi Arabia which resulted in the unequal
distribution of the services and staff salary that in turn impact the efficiency (Alharbi, 2019).
Moreover, public health insurance is funded by the government and the majority of the health
care sectors align with public health insurance are funded. Consequently, due to the high burden,
the government failed to provide funds for the technological use which resulted in information
asymmetry (Alharbi, 2019). Moreover, in terms of adverse selections, it is considered as adverse
selection since buyers and sellers have unequal distribution of information due to the absence of
technology.

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References:
Alharbi, M. F. (2019). National health insurance system for universal health coverage: prospects
and challenges in Saudi Arabia. International Journal of Community Medicine and
Public Health, 6(11), 5006.
Aljadhey, H., Mahmoud, M. A., Ahmed, Y., Sultana, R., Zouein, S., Alshanawani, S., ... & El
Kinge, A. R. (2016). Incidence of adverse drug events in public and private hospitals in
Riyadh, Saudi Arabia: the (ADESA) prospective cohort study. BMJ open, 6(7), e010831.
Banafea, W., & Ibnrubbian, A. (2018). Assessment of economic diversification in Saudi Arabia
through nine development plans. OPEC Energy Review, 42(1), 42-54.
Mensi, W., Shahzad, S. J. H., Hammoudeh, S., & Al-Yahyaee, K. H. (2018). Asymmetric
impacts of public and private investments on the non-oil GDP of Saudi
Arabia. International Economics, 156, 15-30.