Welfare gains from changes in insurance coverage Welfare gain is the contribution or the benefits that the society has gained from the insurance. The changes that have occurred in health insurance coverage have benefited the society to a great extent. The introduction of new covers for instance has enabled people who initially might not have qualified to get the cover. Other changes like the development of customized product have enabled the members of society to take the cover they feel suited for them. 6. People buying health insurance are looking for protection from the uncertainty, however they will know how much that uncertain issue will cost to them. Risk-averse people will be reluctant to accept a bargain with uncertain payoff rather than another bargain with more certain, but maybe lower anticipated pay off. The importance of risk aversion will be dependent on the size of risk in relation to an individual's assets and t his/her needs; this can be attached to the individual’s wealth. By buying insurance, I think the individuals will be seeking to protect their wealth, by reducing the risk of paying full cost for health services. Playing the lottery could bring the possibility to increase their wealth. However the returns from both insurance and lottery are uncertain. If the risk of playing the lottery will affect individual wealth, they will be reluctant to take.
- Winter '17