Unit 4 Market for Health Insurance and Competition Essay

Unit 4 Market for Health Insurance and Competition - Essay Example by Congressional Budget Office, the health market challenges the federal and state governments as health care premiums continue to take an upward trend. More to these, health care costs seem to exceed the growth of American income, thus making it very expensive to afford health care in America. Consequent to these, fewer individuals get to enroll for the service, following the high cost involved. These factors compel the government to take measures that regulate the operation of the health market, thus ensuring that the insurance companies do not exercise their market power in a manner that can harm consumers, as well as the economy. Such measures include the evaluation of insurers who undertake mergers and acquisitions, to ensure that monopolies do not rule the health sector. The medical loss ratio refers to a statistical measurement of the fraction of the total premium revenue from health plans that get to be devoted to clinical services. In other words, the MLR relates to the portion of the premium revenue from health insurance plans paid to settle medical claims. Therefore, this ratio does not serve as a measure of the quality of care provided as premiums paid and expenditures incurred do not indicate the quality of care being given to individuals. Other measures, such as patient satisfaction surveys, and severity-adjusted clinical outcomes, provide better measures for gauging health performance. Consequently, the MLR should not be used to measure health performance, as it would lead to biased results (Austin, 43). Risk-adjusted premiums help in determining the expected treatment cost that an insured person would incur, if they were to fall ill. Higher rates exist for elderly individuals, compared to the younger population (Feldstein, 245). This ensures that insurance providers do not choose to insure healthier patients, and leave out the sick patients. Consequent to this, individuals who need health care most get to access insurance, and effective