Should prescription drugs be insured

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THE PURPOSE OF HEALTH
INSURANCE IS TO MANAGE…

As described in the presentation -- http://www.slideshare.net/...

PERSON PAYS
PREMIUM

PERSON FOR INSURER
PAYS A PROTECTION
SMALL, ...

FOR EXAMPLE

GROWING OLD IS NOT USUALLY
INSURABLE BECAUSE IT IS NOT…

GROWING OLD IS INEVITABLE
AND GRADUAL

AND WE CAN SAVE MONEY, TAKE CARE
OF OURSELVES, AND DEVELOP PERSONAL
NETWORKS TO HELP US IN OUR OLD AGE

INSURABLE HAZARDS ARE TYPICALLY
UNEXPECTED AND/OR SUDDEN

LIKE WITH AN ACCIDENT

AND DIFFICULT TO AVOID OR
PREPARE FOR

INSURANCE ONLY WORKS WHEN
THE INSURED AND INSURER…

FAIRLY SHARE THE BENEFITS AND
RISKS OF AN INSURANCE
AGREEMENT

UNFAIR INSURANCE CONTRACTS
ALLOW ONE PARTY TO BENEFIT
AT THE OTHER’S EXPENSE

FOR EXAMPLE

IF I INSURE MY CAR FOR MORE
MONEY THAN IT IS WORTH

THEN

I UNFAIRLY BENEFIT AT THE
EXPENSE OF THE INSURER

AND IF MY INSURANCE
COMPANY TOOK MY PREMIUMS
UNTIL I FELL UNEXPECTEDLY ILL

AND THEN
CANCELED (A.K.A. RESCINDED)
MY CONTRACT…

MY INSURER UNFAIRLY BENEFITS
AT MY EXPENSE

GOOD INSURANCE CONTRACTS
CAN PROTECT BOTH INSURER
AND INSURED FROM…

A HAZARD BECOMES “INSURABLE”
WHEN THE FOLLOWING SIX
ELEMENTS ARE PRESENT

Chapter 14 Private Health Insurance fr...

1. THE PROBABILITY OF A PERIL
IN A POPULATION MUST BE
ACCURATELY CALCULATED

FOR EXAMPLE: THE PERIL OF A HEART AT...

THEREFORE, AN INSURANCE
COMPANY CAN CALCULATE THE
RISK TO INSURE INDIVIDUALS

AND WHAT TO CHARGE TO MAKE AN ACCEPTABL...

2. THE PERIL IS UNPREDICTABLE
FOR ANY SINGLE INDIVIDUAL

ALTHOUGH WE MIGHT KNOW THAT RISK OF
HEART ATTACK FOR INDI...

OTHERWISE, INSURERS CAN DROP
INSURANCE FOR THE INDIVIDUAL
BEFORE THE PERIL STRIKES

OR THE INDIVIDUAL CAN ADD INSUR...

http://www.flickr.com/photos/greg-
palmer/3490903215/sizes/l/in/photostream/

3. LOSS ASSOCIATED WITH AN
...

ARSON, MURDER, SUICIDE, AND
OPTIONAL COSMETIC SURGERY
ARE EXAMPLES OF NON-
ACCIDENTAL EVENTS

4. THE EVENT MUST RESULT IN A
SUBSTANTIAL LOSS

LOSSES MUST THREATEN THE
FINACIAL HEALTH OF THE
INSURED

SMALL LOSSES ARE NOT WORTH
THE TIME AND COST OF
INSURING

FOR EXAMPLE, YOU WOULD NOT
INSURE AGAINST A MIL...

5. LOSS MUST BE SPREAD
ACROSS LARGE POPULATIONS

THE LARGER THE POPULATION,
THE SMALLER THE POTENTIAL
RISK OF LOSS TO INDIVIDUALS IN
THE POPULATION

6. ECONOMICALLY FEASIBLE TO
COVER
WITH REASONABLE PREMIUMS AND
LOW ADMINISTRATIVE COSTS

PREMIUMS MUST BE LOW
ENOUGH TO ATTRACT
CUSTOMERS BUT HIGH ENOUGH
FOR A FAIR PROFIT TO INSURERS

PREMIUMS ARE KEPT LOW BY
REDUCING PAYOUTS FOR
EVENTS & INSURANCE
ADMINISTRATION COSTS

1. CAN THE PROBABILITY OF NEED
FOR PRESCIPTION DRUGS IN A
POPULATION BE ACCURATELY
CALCULATED?

YES!!...

2. IS THE NEED FOR PRESCRIPTION
DRUGS UNPREDICTABLE FOR ANY
SINGLE INDIVIDUAL?

YES!! ALTHOUGH WE MIGHT KNOW THE...

http://www.flickr.com/photos/greg-
palmer/3490903215/sizes/l/in/photostream/

3. IS THE LOSS ASSOCIATED WITH
...

4. DOES PRESCRIPTION DRUG
USE THREATEN THE FINANCIAL
HEALTH OF THE INSURED?

IN MANY CASES, YES!! THE DRUG
BILL...

5. CAN THE COST OF PRESCRIPTION
DRUGS BE SPREAD ACROSS LARGE
POPULATIONS?

YES!! PRESCRIPTION DRUG USE IS
WI...

6. IS PRESCRIPTION DRUG
COVERAGE ECONOMICALLY
FEASIBLE?
YES!! USE OF TECHNOLOGY AND AUTOMATION
CAN ALLOW I...

6. IS PRESCRIPTION DRUG
COVERAGE ECONOMICALLY
FEASIBLE?
WHETHER INSURERS ACTUALLY OFFER COVERAGE
WITH RE...

FOR ANY QUESTIONS…?

Should prescription drugs be insured

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