The purpose of this article is to examine the working of voluntary private health insurance works. While empirical evidence on the functioning of voluntary private individual health insurance markets is lacking, there is a large and well-developed theoretical literature describing the functioning of private insurance markets in other sectors. This article begins by discussing this extensive literature and the working of such markets if they exist in the health sector. It considers the functioning of the three common forms of voluntary insurance, namely, individual health insurance markets, voluntary private coverage, and voluntary private health insurance that are auxiliary to public systems. Finally, the article proposes that a political economy based explanation for the existence of the theoretically optimal market does not exist and it concludes with areas for future research.
Implications of family risk pooling for individual health insurance markets
