Abstract

The concept of health insurance is of vital importance for health policy. Beneficiaries are able to share the risk arising from health expenses, and are ensured access to health care provisions whenever necessary. The need to share an individual’s risk to become ill is the direct consequence of the uncertainty that surrounds the health sector. Chilean health insurance companies are able to reach financial balance (the state-owned insurer) or profits (privately-owned insurers) by setting a premium rate. Information flow tends to be asymmetric and one of the shortcomings of this system is that the private health insurance companies have better information, which leads to risk selection. A form of regulation would be to set a premium rate proportional to income thus incentivizing contributions in accordance with income (independent of risk) and pool efficiency if the whole population is included. A natural solution that would be functional to the current system is the creation of a single pool together with a broad community premium rate to finance the fund. The article analyses the feasibility of a single fund, its requisites, and the health plan that the Chilean government is proposing in its bill to reform the private health insurance sector.