2/13/2025

Chapter 4.
Health Insurance

Lecturer: Nguyen Xuan Tiep, MSc.

Graduate School; Faculty of Insurance – NEU
tiepnx@neu.edu.vn

Contents
4.1. Health Insurance in the Social Security System
4.1.1. Definitions
4.1.2. Position and Role of Health Insurance
4.1.3. Health Insurance Systems
4.1.4. Types of Health Insurance
4.1.5. Terms in Health Insurance
4.2. Social Health Insurance
4.2.1. Insured
4.2.2. Coverage and Benefits
4.2.3. Eligibility Requirements
4.3. Private Health Insurance
4.3.1. Role of Private Health Insurance
4.3.2. Types and Content of Private Health Insurance
4.3.2.1. Complementary Coverage
4.3.2.2. Supplementary Coverage
2

Reading Material:

• George E. Rejda & Micheal J. McNamara (2017),

Principles of Risk Management and Insurance, Pearson
Financial Series, Ch. 15, 16.
• Etti. Baranoff (2004), “Risk management and
Insurance”, Virginia Commonwealth University, Leyh
Publishing, US, Ch.22.
• Nguyễn Thị Hải Đường & Nguyễn Lệ Huyền (2021),
International Experience in Health Insurance System and
Additional Health Insurance in Countries, Financing by
Asian Development Bank.

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4.1. Health Insurance

in the Social Security System

4.1.1. Definitions
4.1.2. Position and Role of Health Insurance
4.1.3. Models of Health Insurance
4.1.4. Types of Health Insurance
4.1.5. Terms in Health Insurance

Life Cycle

1 2 3 4 5

6 7 8 9

Social Security System

Social Unemployment Social Security

Insurance Health Care Insurance Assistances

Health
Insurance

State/Social/
Universal Private Health
Health Insurance
Insurance

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Personal Risks and

Insurance

Health Social
Life insurance Annuity Insurance Insurances

State/Social/
Universal Private Health
Health Insurance
Insurance

Global Risk E-commerce Car Accident Terrorism

Risk Risk Risk
Injury Risk Liability Risk Death Risk Disable Risk Fire Risk

Illness Risk “Living Too Weather Investment Risk

Long” Risk Catastrophe Risk

Health
Insurance

4.1.3. Models of Health Insurance

There are four major models for health

care systems applied by different
countries:
• the Beveridge Model,
• the Bismarck model,
• the National Health Insurance
Model,
• the out-of-pocket model

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4.1.3. Models of Health Insurance

The Beveridge Model

 The Beveridge Model is also referred to as the single-payer national

health service.

 This model was established in Britain in 1948 and then spread

throughout many areas of Northern Europe and other countries in
the world.

 The Beveridge Model is centralized through the establishment of a

national health service (Nguyen, 2017a). Fundings for health care are
from income taxes.

 The government acts as the single-payer, eliminating competition in

the market and generally keeping prices low.

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4.1.3. Models of Health Insurance

The Beveridge Model

 The patient does not have to pay any fees because of their contribution through
taxes.

 a large majority of health staff is composed of government employees.

 Private doctors and clinics also get payment from the government instead of
the citizens (Nguyen, 2017a).

 A central tenant of this model is health as a human right.

 the Beveridge Model has low cost per capita because the government defines
what doctors need to do and standardizes the costs across the country.

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4.1.3. Models of Health Insurance

The Beveridge Model

 Advantages:
 (i) All citizens can have access to health care services because
the plan covers every citizen;

 (ii) the Government is responsible for the quality of health care

services, and this can be advantageous if the government keeps
health care costs low;

 (iii) Citizens do not have to pay and are not responsible for
medical bills or copayments.

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4.1.3. Models of Health Insurance

The Beveridge Model

 Disadvantages:
 (i) Every citizen has to pay higher taxes regardless of using health
care services or not;

 (ii) the Government is responsible for the quality of health care

services, and this can be harmful if the government restricts
services that patients are allowed to have access to;

 (iii) Waiting lists will be long, especially for those with non-urgent
situations.

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4.1.3. Models of Health Insurance

The Beveridge Model

 Countries adopting the Beveridge Model:

Great Britain, Spain, Finland, Scandinavia, New

Zealand, Cuba, Hong Kong;

In the USA: access to the Beveridge Model is applied to

the Veterans Health Administration.

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4.1.3. Models of Health Insurance

1.2. Bismarck Model
 The Bismarck model (Social Health Insurance Model)
A more decentralized form of health care than the Beveridge, was
created in 1883 by the Prime Minister Otto von Bismarck. The
Bismarck model is regarded as a social welfare for the unification of
Germany.
Employers and employees fund health insurance through payroll
taxes, which is referred to as ‘sickness funds’
The National health care model of Bismarck is based on three
principles:
 The government is responsible for raising awareness of health care
among all citizens.
 Health care policies are implemented by the smallest administrative and
political management organizations in the society.
 Government authorities are elected to negotiate health care provisions
and reflect concern of different industries.

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4.1.3. Models of Health Insurance

1.2. Bismarck Model

 Healthcare providers are generally private
institutions, though the Social Health Insurance
funds are considered public.
In some countries, there is a single insurer (France,
Korea); other countries may have multiple, competing
insurers (Germany, Czech Republic) or multiple, non-
competing insurers (Japan).
In the USA, the Bischmarck model is applied to
employed people (those who are not eligible to enroll in
Medicare), however employers restrict the list of health
care insurers that employees can choose.

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4.1.3. Models of Health Insurance

1.3. The National Health Insurance Model

 The National Health Insurance model or single-payer national
health insurance incorporates aspects of both the Bismarck and
Beveridge models.
 This model uses private healthcare providers and payment for
these services are covered by the government insurance plans
contributed by all citizens.
 Like the Beveridge Model, the Government acts as the single
payer for medical procedures and like the Bismarck model,
healthcare providers are private.
 The universal insurance does not make a profit or deny claims.

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4.1.3. Models of Health Insurance

1.3. The National Health Insurance Model

 In recent years, countries with Beveridge-type health care systems
have a tendency to incorporate Bismarck characteristics or vice
versa, leading to the health care policies in a number of countries
like Hungary and Germany to trend towards the mixed model.

 In some countries like Canada, private insurance contracting is

permitted for those who would prefer them.

 The balance between public service and private practice allows

hospitals to maintain independence while also reducing internal
complications with insurance policies.

 Financial barriers to treatment are generally low, and patients are

usually able to choose their healthcare providers .

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4.1.3. Models of Health Insurance

1.3. The National Health Insurance Model

 Like the Beveridge Model, this system covers most
procedures regardless of income level. This model also
may reduce the costs involved with administration of
health insurance as the government processes all claims
and reduces the amount of duplication of services.
 disadvantage of national health insurance model: these
systems can suffer from long waiting lists for treatment.
 Countries adopting the National Health Insurance model:
Canada, Australia, Taiwan, Korea, in the USA: similar to
Medicare.

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4.1.3. Models of Health Insurance

1.3. The Out of Pocket Model

 The model involves payment of patients.

 In less developed areas with too few resources to

create mass medical care, patients must pay for their
procedures out-of-pocket.

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Health insurance
System

Fees, and other contributions not

(Social insurance contribution related to related to income, based on specific
income tax and payroll taxes) contracts
Public health insurance Private/Voluntary health insurance

Compulsory
Compulsory for (Eg: statutory
all citizens or a Compulsory for health insurance in
group of eligible some certain Switzerland,
citizens private health Voluntary
groups of citizens
insurance, (most private
(Eg: Systems of (Eg: medicaid compulsory long-
Social Security health insurance
program, SCHIP, term health care for
and tax basis; statutory health programs in
those who choose OECD countries)
Social Health insurance for low not to enroll in
Insurance of income people in social health
Germany and the Germany) insurance in
Netherlands) Germany

21

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4.2. Social Health Insurance

4.2.1. Insured
4.2.2. Coverage and Benefits
4.2.3. Eligibility Requirements

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ILO’s

- Convention No. 102 on minimum standards of social security, 1952;

- Convention No. 130 on Medical Care and Sickness Benefits, 1969; and
- Recommendation No. 134 on Medical care and sickness benefits, 1969

- General treatment, including home visits;

- all workers and their - specialized inpatient and outpatient treatment;
wives and children; or
- provide necessary medicines as prescribed by the
- at least 75% of the doctor;
population is
economically active with - hospitalization when necessary (including
their wives and children; transport);
or - dental treatment according to the law;
- at least 75% of
permanent residents. - rehabilitation, including providing maintenance and
improvement of orthopedic and prosthetic devices as
prescribed by the
23 physician.

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Social health Insurance in Vietnam

• Health Insurance Law 2008 and 2014:

• 2014: Universal health insurance
• Compulsory the entire population, and
the State Budget to fully support health
Regulation insurance premiums for population
in VN groups with special circumstances;
• The benefit package: includes almost
all high-tech medical services, which
are considered quite extensive
compared to many countries in the
region and around the world.

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Social Health Insurance in Vietnam

- 80% of people who do not participate in
health insurance are working in the
informal economic sector.
- Many services such as periodic health
check-ups, newborn screening, prenatal
Issues screening, using nutritional products in
treatment, use assisted reproductive
techniques, … not being covered by health
insurance has led to increased medical costs
for households, especially for women's
reproductive health care.

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4.3.
Private Health Insurance
4.3.1. Role of Private Health Insurance
4.3.2. Types and Content of Private Health Insurance
4.3.2.1. Complementary Coverage
4.3.2.2. Supplementary Coverage

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4.3.1.
Role of Private Health Insurance

Voluntary health insurance can be provided by different

types of organizations:
• commercial insurance companies,
• non-for-profit/profit insurance
companies/organizations,
• self-insured programs provided by companies for their
own employees,
• public health insurance developed by non-government
organizations or local government organizations
(Mathauer & Kutzin, 2018).

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4.3.2.
Types and Content of Private Health Insurance

 Substitutive Health Insurance: Insurance for groups of citizens

uninsured by public insurance system or who have to
contribute compulsory insurance but does not belong to the
compulsory insurance system.
 Complementary Health Insurance: is divided into two groups:
covering payment for some health services insured by the
statutory insurance system, for example co-payments of
patients; covering services exempted from insurance coverage
of the statutory insurance system.
 Supplementary Health Insurance: allows insured citizens to
have access to better health services or to select other health
services providers instead of providers assigned by medical
institutes.

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4.3.2.
Types and Content of Private Health Insurance

 Substitutive Health Insurance:

Some countries make substitutive health insurance
compulsory for some groups of citizens who are usually
employed workers. It is compulsory for employers and
employees to have access to health insurance, who are not
required to have statutory social health insurance of each
country.
Insurance Coverage: The government can regulate the
insurance coverage and control costs of health services
according to the regulation; or in some developed countries,
the insurance coverage is negotiated based on the contracts.
Premiums of health insurance are regulated and exempted
directly on payrolls or the negotiation between insured and
insurer.

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4.3.1.
Role of Private Health Insurance

 Complementary health insurance:

 This is a type of insurance covering costs of health services uninsured by
government/social health insurance (for example some copayments, dental care,
ophthalmology, and other treatment costs that are uninsured if possible).
 Insurance Coverage: Complementary insurance benefits of the complementary
health insurance plans are to cover copayment or uninsured costs in the coverage
of public health insurance (like dental care, ophthalmology treatment, and other
uninsured costs).
 Additional health insurance are mostly complementary insurance, covering
copayments of social health insurance, dental care and ophthalmology. This type
of insurance is provided nonprofit through career opportunities. Some profit-
based insurers are also allowed to provide this type of insurance together with
voluntary private health insurance but with limited services (Durand-Zaleski,
2016).
 In almost all countries, complementary health insurance can be paid directly by
insurance companies for health service providers (medical institutes) or refunded
to patients (Wagstaff & Neelsen, 2020).

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4.3.1.
Role of Private Health Insurance

 Supplementary Health Insurance :

 In most countries, private voluntary supplementary health insurance is the type
of insurance in which insured can enroll in health insurance and are provided by
private commercial insurers or private insurance programs (Voluntary Health
Insurance Health Plan), these insurance companies/programs generally operate
on profit basis. Private insurance companies/insurance programs are not often
managed by the Ministry of Health.
 Insurance Coverage: The insurance coverage of voluntary health insurance/
complementary voluntary health insurance is often applied to services uninsured
by the national health insurance program. Social/public health insurance pays for
services of private medical institutes, situations in which services/doctors are
selected or can cover health services insured by social health insurance/national
health insurance
 The mechanism of this type of insurance is often based on contracts signed
directly between insurance companies/insurance programs and
insureds/businesses. Insurance health services can be paid directly to medical
institutes or refunded to insured after they have completed their payment based
on the claim profiles.

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4.3.2.
Types and Content of Private Health Insurance

Private Health Insurance

Personal Serious Disability Long-term

Medicare
Accident Diseases Insurance Care
Insurance Insurance Insurance Insurance

32

32

Content of Medicare

Medical Care
• Group Health Insurance
• How to pay providers of health care?
• An increasing in health care cost  What is the
trade off between health care cost and benefits?
• The “old systems” vs. “defined contribution
health plans”: consumers are encouraged to
negotiate directly with providers.

33

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Content of Medicare

Medical Care
• Indemnity Health Plans: the Traditional Fee-for-
Service Plans:
• The traditional method for providing group medical
expense benefits has been paying health care providers
as fee for services rendered
• Health care providers include health professionals such
as physician and surgeons, and health facilities such as
hospitals and outpatient surgery centers.
• Medical expense benefits may be provided on
indemnity, service, or valued basis.

34

Content of Medicare

Medical Care
• Indemnity Health Plans: the Traditional Fee-for-
Service Plans:
• Indemnity benefits: the insured would receive the actual
cost incurred up to but not exceeding a level (ex. $300)
per day for up to 90 days while confined in a hospital.
• There are five major classifications of traditional fee-for-
service medical expense insurance: (1) hospital expense,
(2) surgical expense, (3) medical expense, (4) major
medical, and (5) comprehensive medical insurance.
• 1-3 are called “basic” coverage, provide a limited sit of
services or reimburse a limited dollar amount. 4-5
provide coverage for large losses.

35

Content of Medicare

Medical Care
• Basic Health Care Benefits:
• Cover hospital, surgical, and medical expenses at the limited
protection: generally provides first-dollar coverage instead of
protection against large losses.
• The basic hospital policy: covers room and board and
hospital ancillary charges (such as x-ray, laboratory tests,…).
Apply a small deductible.
• The basic surgical policy: pays providers according to a
schedule of procedures, regardless whether the surgery is
performed in a hospital or elsewhere.
• A basic medical expense policy: covers all or part of doctors’
fee for hospital, office, or home visits due to non surgical care.

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Content of Medicare

Major Medical Insurance:

• Major Medical Insurance: covers the expense of
almost all medical services prescribed by a doctor.
• Features of major Medical Insurance: high
maximum limits (ex. $1 million) or no limits, a large
deductible, coverage of a broad range of differ,
different medical services, and coinsurance
provisions.

37

Content of Medicare

• Comprehensive Medical Insurance:

• The insurer pays most of the cost for medical services
• Smaller deductibles (ex. $100-$300).
• Provides broad coverage for a range of inpatient and
out patient services.
• Is sold mainly on a group basis.

38

Content of Medicare

• Coordination of benefits:
• Happen when many employees and their dependents
are eligible for group expense coverage under more
than one plan.
• Establishes a system of primary and secondary
insurers.
• The total payments by primary and secondary insurers
are limited to 100% of the covered charges for the
applicable policies.

39

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Group Dental Insurance

• Dental insurance policies are available in both the

individual and group market.
• Pays for normal diagnostic, preventive, restorative, and
orthodontic services, as well as services required
because of accidents.
• Group dental insurance is provided by different plans
and insurers. It applies a maximum over one coverage,
deductible and coinsurance.

40

Group Long-term Care

• Mainly covers for nursing home or skilled nursing

facilities in case of an injury that requires lengthy
recovery time for any age group.
• This plan is being offered by an increasing number
of employers but is still only small part of the long-
term care insurance market.

41

Medical Care Systems worldwide

• Different between countries.

• Could be provided by both government and
insurers.

42

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4.
US: Health Insurance Coverages

Reading Material:
George E. Rejda & Micheal J. McNamara (2017), Principles of Risk
Management and Insurance, Pearson Financial Series, Ch. 15
(individual), 16 (group)
Etti. Baranoff (2004), “Risk management and Insurance”, Virginia
Commonwealth University, Leyh Publishing, US, Part 5, pp329-502.
43

43

4.4. Health Insurance

Medical Care
• Health insurance is provided by both government
and private
• Health insurance from the point of view of a risk
manager.

44

Health
care

Affordable
Medicare
Care Act

Health
Medicare Medicare Medicare Individual
Savings Others
part A part B part C Mandate
Accounts

45

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Medicare
• Medicare is an important part of the total Social Security
program that covers the medical expenses of:
• most persons age 65 and older;
• disabled persons younger than age 65 who have been entitled to
disability benefits for at least 24 months;
• persons younger than age 65 who need long-term kidney
dialysis treatment or a kidney transplant.

• The Medicare program is complex and controversial. The

present program also includes prescription drug plans and
health-care plans of private insurers. Medicare currently has
a bewildering array of plans, which include the following:
• The Original Medicare Plan
• Medicare Advantage Plan
• Other Medicare Health Plans
• Medicare Prescription Drug Plans

46

Medicare:
The Original Medicare Plan
• The Original Medicare Plan is the traditional
plan run by the federal government that
provides Part A and Part B benefits.
• Beneficiaries can elect any provider that
accepts Medicare patients.
• Medicare pays its share of the bill, and the
beneficiary pays the balance. Some services are
not covered.

47

Medicare:
The Original Medicare Plan
• Hospital Insurance Hospital Insurance (also called
Medicare Part A) provides coverage for inpatient
hospital stays and other benefits as well. Part A
benefits include the following:
• Inpatient hospital care.
• Skilled nursing facility care.
• Home health care.
• Hospice care.
• Blood transfusions.

48

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Medicare:
The Original Medicare Plan
• Payments to Hospitals Hospitals are reimbursed
for inpatient services under a prospective payment
system. Hospital care is classified into diagnosis-
related groups (DRGs) and a flat amount is paid
for each type of care depending on the diagnosis
group in which the case is placed. Thus, a flat,
uniform amount is paid to each hospital for the
same type of care or treatment.
• The amount paid varies among different
geographical locations and by urban and rural
facilities.

49

Medicare:
Medicare Part B
• Medical Insurance (also called Medicare Part B)
is a voluntary program that covers physicians’ fees
and related medical services.
• Beneficiaries who are covered under Part A on the
basis of their covered earnings are automatically
covered under Part B unless they voluntarily
decline the coverage.
• Part B pays for certain services that are medically
necessary. There are two broad categories of
covered services under Part B: (1) medically
necessary services and supplies, and (2) preventive
services.

50

Medicare:
• Exclusions: Medicare Part A and Part B have numerous
exclusions. They include long-term care in a skilled nursing
facility beyond the first 100 days, routine dental care, dentures,
cosmetic surgery, acupuncture, hearing aids, and exams for fitting
hearing aids.
• Amount Paid by Part B: The beneficiary must meet an annual
Part B deductible ($147 in 2013), which is indexed to the growth
in Part B spending. Part B then pays 80 percent of the Medicare-
approved amount for most covered services, including physicians’ services,
outpatient hospital services, outpatient surgery, diagnostic tests, and other
services.
• Part B Monthly Premiums: monthly premiums, Under previous
law, all Part B beneficiaries paid only 25 percent of the cost of the
program, and the federal government paid the rest. Part B
premiums are now means tested based on modified adjusted gross
income.

51

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Medicare:
Medicare Advantage Plans (part C)
• Medicare Advantage Plans (Part C) are private
health insurance plans that are part of the
Medicare program.
• Beneficiaries can elect to be covered under such
plans instead of the Original Medicare Plan.
Medicare Advantage Plans must cover all services
that Original Medicare covers except hospice care.
• Medicare Advantage Plans generally include
additional benefits, such as prescription drugs,
vision benefits, and dental care, and health and
wellness programs.

52

Medicare:
Medicare Advantage Plans
• In most plans, members generally must use plan
physicians, hospitals, and other providers or else
pay more or all of the costs.
• Plan members usually pay a monthly premium (in
addition to the Part B premium) and copayment or
coinsurance charges for covered services.
• Medicare Advantage Plans include the following:
• Health maintenance organization (HMO)
• Preferred provider organization (PPO)
• Private fee-for-service plans (PFFS)
• Special needs plans (SNP)
• Medical savings accounts (MSA)

53

Medicare:
Financial Help for Low-Income Beneficiaries

• The Medicare prescription program provides

financial help for beneficiaries with limited
incomes and financial resources.
• Depending on the amount of annual income
and financial resources, the monthly premiums
and yearly deductible are reduced or waived.
However, low-income beneficiaries must pay a
small copayment charge for each prescription
filled.

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Basic Provisions of
the Affordable Care Act
• The Affordable Care Act extends health-care coverage
to 30 million uninsured Americans, provides substantial
subsidies to uninsured individuals and small business
firms to make health insurance more affordable,
contains provisions to lower health-care costs in the long
run, and prohibits insurers from engaging in certain
abusive practices.

• Become effective since January 1, 2014

55

Basic Provisions of
the Affordable Care Act
Focus primarily on certain provisions that affect individual and
families, employers, insurers, and health-care providers:

• Individual Mandate • Premium Subsidies to Small

Employers
• Health Insurance Reforms
• Early Retirement Reinsurance
• Essential Health Benefits Program
• Affordable Insurance • Expansion of Medicaid
Exchanges
• Preexisting Condition Insurance
• Premium Credits to Eligible Plan
Individuals and Families
• Improving Quality and Lowering
• Employer Requirements Costs
• Cost and Financing

56

Individual Medical Expense Insurance

• Individual medical expense insurance is important in

providing economic security to individuals and families
who are not part of any group.

• Individual medical expense insurance protects an

individual or family for covered medical expenses because of
sickness or injury.

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Individual Medical Expense Insurance

Consumers have a choice of numerous policy options with

various deductibles, coinsurance percentages, copayments, and
premiums. Most individual medical expense policies sold
typically have the following characteristics:
• Major medical benefits
• Broad range of benefits

• Calendar-year deductible
• Coinsurance and copayments
• Annual out-of-pocket limits
• Exclusions

58

Health Savings Accounts

• Federal legislation allows all eligible persons under age

65 to establish health savings accounts and receive
favorable income-tax treatment.
• A health savings account (HSA) is a tax-exempt or
custodial account established exclusively for the purpose of
paying qualified medical expenses of the account beneficiary
who is covered under a high-deductible health insurance plan.
• Health savings accounts have two components:
• (1) a high- deductible health insurance policy that covers
catastrophic medical bills, and
• (2) an investment account from which the account holder
can with- draw money tax-free for medical costs.

59

Health Savings Accounts:

Eligibility Requirements
To establish a qualified HSA and receive favorable tax treatment,
insured must meet certain requirements:

• First, you must be covered by a high-deductible health plan

and must not be covered by any other comprehensive health
plan that is not a qualified high-deductible plan. (This
requirement does not apply to accident insurance, disability
insurance, dental care, vision care, long-term care insurance,
auto insurance, and certain other coverages).

• Second, insured must not be eligible for Medicare.

• Finally, insured must not be claimed as a dependent on

another person’s tax return.

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Health Savings Accounts:

High-Deductible Health Plan
• The insurance is sold with a high deductible (for 2013,
the annual deductible must be at least $1250 for an
individual and $2500 for family coverage).
• The family deductible applies to the entire family and
not to each family member.
• Qualified plans with higher annual deductibles are also
available with reduced premiums.
• The deductible does not apply to preventive services,
such as mammograms, pap smears, and maternity
screening.
• The deductible is also indexed annually for inflation.

61

Health Savings Accounts:

Contribution Limits
• HSA contributions can be made by individuals, their
employers, and family members (or 2013, total
contributions for individual coverage cannot exceed
$3250. Total contributions for family coverage cannot
exceed $6450)

• These amounts are adjusted annually for inflation.

• If you are age 55 or older, insured can make an

additional catch-up contribution of $1000.

• Favorable Income-Tax Treatment

62

Others Healthcare Insurance

• Long-term care insurance is a coverage that pays a
daily or monthly benefit for medical or custodial care
received in a nursing facility, in a hospital, or at home.

• Disability-income insurance: provides periodic

income payments when the insured is unable to work
because of sickness or injury. The amount of
disability insurance you can buy is related to your
earnings.

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Individual Health Insurance

Contractual Provisions
• Renewal Provisions: Guaranteed renewable, non-cancellable,
conditionally renewable, nonrenewable, guaranteed issue.
• Preexisting-Conditions Exclusions
• Notice of 10-Day Right to Examine Policy: 10 days to return
the policy after receiving it. The entire premium will be refunded,
and the policy will be void.
• Claims: Under the claim forms provision, the insurer is required to
send you a claim form within 15 days after notice is received.
• Grace Period: is a 31-day period after the premium due date to pay an
overdue premium.
• Reinstatement: permits the insured to reinstate a lapsed policy.
• Time Limit on Certain Defenses: after two years, the insurer
cannot deny a claim unless it can prove the insured made a
fraudulent misstatement when the policy was first issued

64

Healthcare Problems in US

PROBLEMS AND ISSUES

• Social Security and Medicare are currently
faced with serious financial problems and
issues. Two timely issues that merit discussion
are the following:
• Long-range OASDI actuarial deficit
• Medicare financial crisis

65

Healthcare Problems in US
• Major problems that lead to enactment of the Patient
Protection and Affordable Care Act in March 2010
include the following:
• Rising health-care expenditures
• Large number of uninsured in the population
• Uneven quality of medical care
• Considerable waste and inefficiency
• Defects in financing health care
• Abusive insurer practices

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