Factors Affecting Health Insurance Premium Cost in Saudi Arabia



Introduction3

Health status rating3

Demographic rating3

Industry rating4

Experience rating4

Tier rating4

Durational rating5

Rating bands5

Health insurance premium7

Primary Factors8

Ease to Pay9

Policies and Payment system10

Conclusion11

Factors Affecting Health Insurance Premium Cost in Saudi Arabia

Introduction

Many health insurers set the premiums based on the health conditions and risk status of the people they cover. Insurers consider things like how old people are, what kind of jobs they have, their gender, and whether they have been sick before. This assessment helps insurers predict how much money they will spend for those people in the year ahead. Insurers use a variety of methods to set their premiums so they do not lose money on people who are sick or disabled and need a lot of care. Sometimes these methods, called rating practices, can encourage healthier people to buy coverage while discouraging sicker people from doing so by making premiums too expensive for them (Abaluck, 2009, P. 12-15). Insurer rating practices are currently regulated state-by-state, but various options insurers use include:

Problem Statement

The government of Saudi Arabia has given high priority to the development of health care services at all levels: primary, secondary and tertiary. As a consequence, the health of the Saudi population has greatly improved in recent decades. However, a number of issues pose challenges to the health care system, such a shortage of Saudi health professionals, the health ministry's multiple roles, limited financial resources, changing patterns of disease, high demand resulting from free services, an absence of a national crisis management policy, poor accessibility to some health care facilities, lack of a national health information system, and the underutilization of the potential of electronic health strategies.

Health status rating

Some insurers charge higher premiums to people who have medical conditions that might increase the chances that they will need health care. This is known as health status rating. For example, an insurer might charge a person who has allergies more for insurance than a person who does not. Health status rating is usually used the first time a person joins a health plan, most commonly for individual and small-group market plans.

Demographic rating

Some insurers charge higher premiums to people based on their age, gender, or where they live. Typically, insurers charge more for older individuals than for younger ones, known as age rating. Insurers also charge higher premiums to women of child-bearing age because they tend to use more health care services than men, known as gender rating. Insurers also charge more for people who live in areas where medical costs are high, called geographic rating (Anderson, 2010, Pp. 1-9). These kinds of rating practices are used when a policy is first issued and when it is renewed.

Industry rating

Some insurers charge higher premiums to people who work in industries and professions that tend to have higher health care costs. For example, premiums can be higher for loggers, miners, construction workers, crop dusters, bartenders, taxi drivers, parking lot attendants, hairdressers, and hospital workers. Industry rating is applied mostly in the group market, although individual plan premiums can also ...