The Moral Foundations of Health Insurance

Abstract:     
The US and numerous developing countries do not provide universal health insurance coverage to their populations. Academic approaches to health insurance have typically adopted a neo-classical economic perspective, assuming that individuals make rational decisions to maximize their preferred outcomes, and businesses (including insurance companies) make rational decisions to maximize profits. In this approach, individuals who are risk-averse will purchase health insurance to reduce variation in the costs of health care between healthy and sick periods. In empirical studies, however, individuals do not always make rational choices. They also find it difficult to assess their health risks and to know how much insurance they need.

By contrast, medical ethics has focused on the issue of equal access to health care, but provided little in the way of philosophical justification for risk management through health insurance per se. Nor has it shown how the practice whereby many at-risk individuals pay premiums to cover one individual's expensive health outcome ("risk-pooling"), is ethically desirable, except insofar as it ensures equal access to health care and equal income to purchase it for all contributors.

This article offers an alternative moral framework for analysing health insurance: that universal health insurance is essential for human flourishing. The central ethical aims of universal health insurance coverage are to keep people healthy, and to enhance their security by protecting them from both ill health and its economic consequences, issues not adequately considered to date.

Universal health insurance coverage requires redistribution through taxation, and so individuals in societies providing this entitlement must voluntarily embrace sharing these costs. This redistribution is another ethical aim of universal health insurance unaddressed by other frameworks. This article is part of an alternative approach to health and social justice, offered here and elsewhere, that builds on and integrates Aristotle's political theory and Amartya Sen's capability approach.

Keywords: health insurance, universal health insurance, Amartya Sen, social justice

JEL Classifications: H51, H53, I10, I18, I31

Accepted Paper Series