Issue of Adverse Selection in Health Insurance Market in Assam
Mausumi Das1, Jugal Kumar Deka2
1Mausumi Das, Department of Humanities and Social Sciences, IIT Guwahati, Guwahati, India.
2Jugal Kumar Deka, Economics, OKD Institute of Social Change and Development, Guwahati, India.
Manuscript received on January 02, 2020. | Revised Manuscript received on January 15, 2020. | Manuscript published on January 30, 2020. | PP: 1917-1920 | Volume-8 Issue-5, January 2020. | Retrieval Number: E5887018520/2020©BEIESP | DOI: 10.35940/ijrte.E5887.018520
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Health insurance acts as an important support system, which protects the health as well as the wealth of people. But health insurance is hardly present in developing countries and in many countries it is totally absent. Presence of asymmetric information among the buyers and sellers makes the insurance market more complicated. Due to which insurance companies finds it is difficult to enter into the insurance market and eventually leads to market failure. To get rid of this problem insurance company increased the price of insurance policies. This has more impact on the poor people as they cannot meet their medical expenses. Adverse selection is the one of issues related to asymmetric information. This paper tries to examine the presence of adverse selection in health insurance market in Assam and about the various factors that influence on decision to buy an insurance policy. Based on primary survey this study used a probit model to analyses the presence of adverse selection in health insurance market. Findings of the study shows that adverse selection is absent in health insurance market but income is found to be an important determinant of insurance coverage. About one third of the population in Assam is living below poverty line and the cost of medical is too higher for the people. So health insurance is necessary in recent time to improve the health status of people in Assam. Therefore government should provide health insurance policies for poor people to improve their health status.
Keywords: Health Insurance, Asymmetric Information, Adverse Selection, Market Failure, Poverty Line.
Scope of the Article: Information and Data Security.