Moral Hazard In Social Health Insurance And The Scheme To Contain It

Moral hazard, which can impair social health insurance fund and fairness, should be effectively contained and controlled in order to keep the fund secure and the health care system running. However, due to the highly specialized medicine field and asymmetric information, such moral hazard is difficult to observe and the problem become a conundrum both theoretically and practically.First, moral hazard in social health insurance is divided into two parts: the moral hazard of health service supplier (supplier moral hazard), and that of health service demander (demander moral hazard). Furthermore, the two sorts of moral hazard are classified into two levels: 1) behaviors that break regulation; 2) behaviors that do not break regulation. In addition, the schemes of containing moral hazard are categorized into two types: supervising scheme and incentive scheme. The former is containing moral hazard by ex-post supervision and punishment, which is an outside controlling mechanism; while the latter means weakening the motivation of moral hazard through ex-ante incentive scheme that transferring risk from principal to agent, which is an inside incentive mechanism. Both supervising and incentive scheme can be used to contain moral hazard behaviors that break regulations, and more punishments will discourage such behaviors and save costs for the social insurance bureau. However, as for moral hazard behaviors that do not break regulations, supervising scheme is null because the costs for supervision are too high and there is no way to observe and define such behaviors, so that incentive scheme is the only way out in this situation.The roles and behaviors of each main body in the social health insurance system depend on their share of costs; therefore, changing payment system is the most direct incentive scheme to transfer risk, and a fundamental way to solve moral hazard problem through weakening the motivation of such behaviors. In this research, two payment models, Block Model and Channel Model, are compared in their influence on patients'choice between fraud and obeying the rules, and incentives to moral hazard behaviors are analyzed. Then, the influences of different payment methods (such as fee-for-service, capitation, and DRGs) on hospitals are compared. Measures to avoid hospital moral hazard are discussed. The conclusions are that the Block Model is better than the Channel Model in preventing patient fraud while the combination of various payment methods is better in preventing physician fraud. In conclusion, it is argued that it is unwise to avoid fraud at the cost of medical service quality.In this research, hospital and health insurance bureau are considered as a"black box"which pursues optimal utilization or income automatically without being analyzed as groups of different people (physicians and government employees). But it is discussed that the principal-agent relation between hospitals and physicians and the internal supervision within social health insurance bureau would have effects on moral hazard in social health insurance and be worth further study.