Research on Adverse Selection of Chinese Commercial Health Insurance
|School||Northeast Normal University|
|Keywords||Health Insurance Adverse Selection Expected Utility Asymmetric Information|
Since 20c 80s, insurance industry began to develop. Although after the past 20 years it takes on a new look today, insurance industry is still in its infancy. Because of the dynamic economic evolution and serious problems of aging population, the demand of medical service is getting greater and greater. According to the special environment, social medical security of our country observes the principle of“low level but all cover”. Thus, objective environment provides expansive space and abundant opportunity for commercial medical insurance.However, our commercial medical insurance market is still undeveloped. Until 2004, there was the first company specialized in health insurance. And until now, there are only four such companies. All the others are attached to some big life insurance companies. This thesis is based on a series of data of company’s performance and gets a conclusion that the premium incomes and indemnities are not balanced. This situation proves the existence of adverse selection.The adverse selection of insurance market is that high-risk insured edges low-risk insured. In health insurance market, all the insured want to pay low premium and get high indemnity. But for the insurer, health condition of his client is private information and unknown. Thus, he prices the premium by average risk, which is preferred by high-risk insured but disadvantaged to low-risk insured. Gradually, low-risk insured will choose to leave health insurance market.There are five parts in this thesis. The first one summarizes research background, significant and related reference. After explaining adverse selection, the second part analyzes its reasons. And its influences are elaborated thoroughly in the following part. In the forth part, adverse selection phenomenon is analyzed with the help of expected utility theory and a simulation experiment, which prove all the expositions. On the basis of above chapters, four suggestions are made. Networking of information and specialized management are macroscopic perspective methods. While normalization of underwriting-adjust and diversification of categories are specific advice. At last, there is a summary of whole paper, and makes a plan of further research.