Premiums and Policy Coverage
In countries like Netherlands, private insurance companies have the freedom to set financial criteria, determine range of benefits to be provided under the policy cover, adjust premiums according to risks covered under the health insurance policy cover and have the right to accept or reject the applicants. A mind-boggling range of health insurance policies with varying coverage, deductibles and eligibility criteria are offered by the Insurance companies. The policy cover being provided is comparable to that of Social Health Insurance which constitutes medical care, hospital stay, pharmaceutical expenses, medical aids and some additional healthcare services. Since there is an absence of standardized package of health insurance policy product cover, there is a great variation in the coverage being provided. Private health insurance companies have the option of excluding pre-existing diseases from the coverage. To date, there is no government regulation regarding the control of premiums or coverage.
In Germany, Public Health Insurance is an alternative insurance wherein premium calculation is capital funded and risk-related. In theory, premiums are not supposed to increase with the increase in age. Instead the premiums are adjusted from time to time to account for increasing healthcare expenses from the time of calculation of the first policy premium (i.e. since the inception of the policy) of the then healthcare costs in existence. Moreover, there is a government regulation on restricting the rating of risks. Hence, based upon this law, the insurance company assesses the risks of the insured individual once only i.e. at the commencement of the insurance contract which is known as Underwriting. But these health insurance companies do not have the liberty to reassess the risks during the contract period or cancel the health policy. With the commencement of the contract, alterations in health risks do not lead to changes in the payment of premiums by the policyholder. Moreover, in Germany, self-employed and employees in high-income bracket have the choice to leave Social Health Insurance and opt for the alternative Public Health Insurance. But it should not be surprising that many individuals who are self-employed and high-income bracket individuals with poor health prefer Social Health Insurance on account of lower premiums and instead have to shell out more in case such individuals opt for an alternative Private Health Insurance. Moreover, if the spouse is a home-maker or a family with many children the attractiveness to join Private Health Insurance gets diminished. The private health insurance is attractive to single individuals or to double-income couples who are young and in good state of health. But once an individual decides to switch over to Private Health Insurance, it is extremely difficult to revert back from Private Health Insurance to Social Health Insurance.
In Private Insurance Companies, numerous benefits are offered to the policyholders. Waiting period extends upto three months prior to the commencement of the coverage. Newborns are insured irrespective of their health status. Children are charged with a static premium. There is absence of waiting period for an individual who decides to switch over from Social Health Insurance to Private Health Insurance.
In countries like Germany and Netherlands, there is no legal obligation to accept any individual seeking insurance; many a times private insurance companies deny insurance cover to individuals or charge higher premiums to high-risk individuals or groups or exclude the coverage of pre-existing diseases altogether from the policy coverage. Elderly citizens and high-risk individuals or groups based on genetic disposition( any history of chronic illness running in the family ), or presenting symptoms or past history of the policyholder, may face difficulty in seeking alternative health-policy cover.
For the payment of the premium for health insurance policies, premiums are adjusted annually based on the historical data pertainining to the average costs over a moving three year average, but there are possibilities of deviating from this principle based on other financial considerations.
In a standard contract, premium is calculated by applying the average contribution rate to the income ceiling of Social Health Insurance. If the household income is below the income ceiling, then spouses may pay only 50% of the maximum premium on health insurance policies.
